Day: April 4, 2023

(C) Reuters. U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The U.S. dollar sank to a two-month low on Tuesday as another round of weak economic data reinforced investor bets that the Federal Reserve is nearly done with its tightening cycle even as other central banks are seen still raising interest rates to overcome persistently high inflation.

Sterling rose to a new 10-month high against the dollar, while the euro reached its highest since February.

Data showing U.S. job openings in February dropping to the lowest in nearly two years, and the continued decline in factory orders, undermined the dollar as the numbers indicated that rate hikes may be nearing an end.

Job openings, a measure of labor demand, decreased 632,000 to 9.9 million in February, the lowest since May 2021, according to the monthly Job Openings and Labor Turnover Survey, or JOLTS report.

“The main trigger was the JOLTS data, which is starting to point to labor market moderating. So we have this kind of grind lower in the dollar and we’re also looking at yields,” said Vassili Serebriakov, FX strategist at UBS in New York.

“The question is: Is the dollar hurt more by lower yields or is it helped more by weaker equities in the kind of risk-off environment? It seems like yields have a bigger impact.”

On Tuesday, U.S. two-year Treasury yields, which tend to reflect interest rate expectations, dropped 12 basis points (bps) to 3.86%. For the month of March, two-year yields plunged nearly 74 bps, the worst monthly fall since January 2008 in the midst of the global financial crisis.

U.S. factory orders also declined for a second straight month, down 0.7% in February after falling 2.1% in January.

In afternoon trading, the dollar index dropped to a two-month low of 101.45 and was last down 0.4% at 101.58.

“We have a lot of data to chew on this week that will either show that the U.S. economy is resilient enough to withstand the Fed’s ongoing rate-hike mentality or if markets will get their break,” said Juan Perez, director of trading at Monex USA in Washington.

“Add poor data to a banking crisis, plus the rise in oil supply costs, and you may get more favorable odds for rate cuts by next year.”

On Tuesday, the rate futures market priced in a roughly even chance of a 25-bp rate hike in May, with the rest of the odds tilted toward a pause from the Fed. On Monday, the probability of a 25-bp hike next month was more than 65%.

The rates market has also factored in Fed cuts by end-December.

Sterling rose to $1.2525, the highest since June 2022, after breaching a significant resistance level. The pound last changed hands at $1.2497, up 0.7%.

The euro reached $1.0973, the most in two months. It was last up 0.4% at $1.0951, with traders convinced that the European Central Bank has more rate hikes to come.

“We have the view for some time that the dollar has seen its peak and we’re sticking with it. We have a $1.15 forecast for the euro against the dollar in the second half,” UBS’ Serebriakov said.

The Reserve Bank of Australia (RBA), as expected, left its cash rate unchanged at 3.6%, breaking a run of 10 straight hikes as policymakers said additional time was needed to “assess the impact of the increase in interest rates to date and the economic outlook”.

The Australian dollar was last down 0.6% at US$0.6743.

Elsewhere, the dollar fell 0.6% against the Japanese yen to 131.635.

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Currency bid prices at 2:53PM (1853 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 101.5800 102.0300 -0.42% -1.846% +102.2700 +101.4500

Euro/Dollar $1.0952 $1.0903 +0.45% +2.21% +$1.0973 +$1.0884

Dollar/Yen 131.6600 132.4800 -0.62% +0.42% +133.1650 +131.5300

Euro/Yen 144.18 144.37 -0.13% +2.77% +145.4100 +143.9700

Dollar/Swiss 0.9058 0.9127 -0.75% -2.03% +0.9142 +0.9055

Sterling/Dollar $1.2495 $1.2417 +0.64% +3.33% +$1.2525 +$1.2398

Dollar/Canadian 1.3455 1.3440 +0.12% -0.69% +1.3467 +1.3407

Aussie/Dollar $0.6742 $0.6787 -0.64% -1.08% +$0.6793 +$0.6720

Euro/Swiss 0.9921 0.9947 -0.26% +0.26% +0.9971 +0.9914

Euro/Sterling 0.8765 0.8781 -0.18% -0.89% +0.8785 +0.8730

NZ $0.6299 $0.6297 +0.08% -0.76% +$0.6315 +$0.6274

Dollar/Dollar

Dollar/Norway 10.3070 10.2800 +0.38% +5.15% +10.3450 +10.2450

Euro/Norway 11.2904 11.2027 +0.78% +7.59% +11.3088 +11.2097

Dollar/Sweden 10.2794 10.3643 -0.29% -1.24% +10.3978 +10.2609

Euro/Sweden 11.2572 11.2902 -0.29% +0.97% +11.3195 +11.2436

(C) Reuters.

By Geoffrey Smith

Investing.com — The Labor Department releases its Job Openings survey for February, a day after the ISM’s manufacturing survey prompted fresh hopes of an early Fed pivot. Donald Trump is set to be arraigned in New York, as his main rival for the Republican nomination next year gets a tongue-lashing from Walt Disney CEO Robert Iger. Oil extends its gains after the surprise output quota cut by OPEC at the weekend. Here’s what’s moving markets on Tuesday, April 4th.

1. JOLTS survey to show test of labor market strength

A week full of labor market data kicks off with the Job Openings and Labor Turnover Survey at 10:00 ET (14:00 GMT), a day after a weak ISM survey stoked hopes of a quick pivot from the Federal Reserve.

Job vacancies across the country are expected to have fallen for a second straight month, although it’s worth noting that consensus forecasts have been on the low side for five months in a row. Some analysts argue that the JOLTS is overstating the strength of hiring, given that it only extrapolates from data on externally advertised jobs, which appear to account for more of total job vacancies today than they did before the pandemic.

On Monday, Federal Reserve Governor Lisa Cook had highlighted the strength of the labor market in arguing for at least one more interest rate hike. A lower-than-expected number may cause that narrative to come into question. Cook speaks again on Tuesday, at 13:30 ET. Boston Fed President Susan Collins speaks a quarter of an hour later, and Cleveland’s Loretta Mester speaks at 19:45 ET.

2. Disney boss ratchets up dispute with DeSantis as Trump faces arraignment

Walt Disney (NYSE:DIS) CEO Robert Iger blasted Florida Governor Ron DeSantis’ actions to crack down on its privileged status in the state as “anti-business” and – in what appeared to be a veiled threat to scale down investment in the state – “anti-Florida”.

DeSantis’ running battle with Disney over a controversial law banning the teaching of gender and sexuality-related issues in state classrooms is widely seen as a key part of the governor’s positioning ahead of the race for the Republican Party presidential nomination next year, allowing him to present himself as a scourge of ‘woke’ culture and over-mighty corporations.

His biggest rival for the nomination, former President Donald Trump, is set to be arraigned in New York today on charges relating to hush-money payments made to a porn star during the 2016 election campaign.

3. Stocks set to open flat; CS shareholder meeting in focus; FTC bares its teeth

U.S. stocks are set to drift at the open, with most market participants apparently more interested in the political-criminal drama expected to unfold in New York later.

By 05:10 ET (09:10 GMT), Dow Jones futures were effectively unchanged, as were S&P 500 futures and Nasdaq 100 futures. All three cash indices had gained on Monday after the ISM manufacturing PMI, a key gauge of economic activity, fell to its lowest in nearly two years.

Stocks likely to be in focus later include UBS (NYSE:UBS), against the backdrop of Credit Suisse’s (NYSE:CS) last-ever annual shareholder meeting, and French skincare giant L’Or?al (EPA:OREP), which announced its biggest acquisition in years overnight with a $2.5 billion deal for Australian-based Aesop.

Also in focus will be Illumina (NASDAQ:ILMN), after the Federal Trade Commission struck down its proposed deal to buy cancer diagnostic group Grail for $7 billion

4. Australia pauses hikes; brighter news from Germany

The Australian central bank halted a policy tightening cycle that had lasted nearly a year, leaving its cash rate unchanged at 3.60%. The Aussie was the weakest of the major currencies in overnight trading as a result. But the RBA left the door open to resuming rate hikes in the future if the current bout of financial market volatility blows over.

In Europe, meanwhile, German trade data for February suggested that Europe’s traditional growth engine was getting back into gear. Exports and imports both posted solid growth of around 4% from January. Newswires also reported that Germany’s six leading economic think tanks will upgrade their estimates for gross domestic product this year to growth of 0.3%, from a contraction of 0.4% in their last report.

Elsewhere, euro zone producer prices fell 0.5% in February, more than expected, as last year’s energy spike continued to unwind.

5. Oil extends gains ahead of API update

Crude oil prices extended their gains in the wake of OPEC’s surprise decision at the weekend to cut output quotas by over 1 million barrels a day.

By 05:25 ET, U.S. crude futures were back at nearly $81 a barrel, up 0.6% on the day. Brent futures were up 0.5% at $85.36 a barrel. Market participants have been betting that the expected growth in Chinese demand over the year will more than offset a slowdown in Western demand, a bet supported by the day’s data out of Germany.

That thesis faces its next test at 16:30 ET, when the American Petroleum Institute reports weekly inventory data for last week.

(C) Reuters.

By Liz Moyer

Investing.com — U.S. stocks wobbled after reports on job openings and factory orders for February were weaker than expected.

At 10:26 ET (14:26 GMT), the Dow Jones Industrial Average was down 80 points or 0.2%, while the S&P 500 fell 0.1% and the NASDAQ Composite was down 0.2%.

The JOLTs job openings report for February said there were 9.93 million positions available, well below the 10.4 million expected. Factory orders fell 0.7% that month, below an expected decline of 0.5%.

Crude oil prices continued to climb after the surprise output cuts announced by members of the Organization of the Petroleum Exporting Countries and their allies on Sunday. Inflationary pressure is weighing on tech and growth stocks.

The move by the oil cartel is pushing bets on another quarter of a percentage point rate hike by the Fed when it meets in May. Futures traders are giving that a more than 60% chance, while they see a less than 40% chance of the Fed pausing its rate hikes.

Surging shares of energy companies helped lift blue-chip stocks on Monday. Energy companies were mixed after Monday’s gains.

Shares of the commercial satellite launch firm Virgin Orbit Holdings (NASDAQ:VORB) fell 17% after it filed for bankruptcy protection after falling short of securing funding.

Oil was mixed. Crude Oil WTI Futures was up 0.1% to $80.48 a barrel, while Brent Oil Futures fell 0.1% to $84.88 a barrel. Gold Futures rose 1.9% to $2037.

(C) Reuters.

By Yasin Ebrahim

Investing.com — The Dow closed lower Tuesday, as a slump in industrials and a wobble in banks amid fresh jitters that the banking turmoil isn’t over just weighed on investor sentiment.

The Dow Jones Industrial Average slipped 0.59% or 198 points, and the Nasdaq fell 0.5%, and the S&P 500 fell 0.6%.

Regional banks including Zions Bancorporation (NASDAQ:ZION), First Republic Bank (NYSE:FRC), and Comerica (NYSE:CMA) led the selloff in financials as JPMorgan chief executive warned that the banking crisis was far from over and the impact of the turmoil in the sector will likely reverberate for years.

The warning arrived just as data showed job openings fell more than expected last month, adding to concerns about the economy just as Federal Reserve members continue to call for higher rates.

The U.S. Labor Department’s latest Job Openings and Labor Turnover Survey, or JOLTs report, a measure of labor demand, showed job openings in February fell to about 9.9 million, missing expectations of 10.4M.

Industrials, meanwhile, was also a big drag on the broader market, paced by a decline in Caterpillar Inc. (NYSE:CAT) and United Rentals, Inc. (NYSE:URI) after Baird downgraded the stocks to underperform.

Baird said both companies will likely see a dent in building activity as the banking turmoil in regional banks, which account for about 70% of commercial real estate loans, leads to reduced lending activity.

Boeing Co. (NYSE:BA), a major Dow component, fell nearly 1% after Northcoast Research downgraded the company to sell from neutral amid worries that engine maker CFM International won’t be able to deliver enough engines to the aircraft maker, curbing its growth.

Energy, meanwhile, gave up its gains from a day earlier as oil prices as investor focus shifted to the impact of a slowing global economy on crude demand.

Marathon Oil Corporation (NYSE:MRO), Phillips 66 (NYSE:PSX), and Valero Energy Corporation (NYSE:VLO) were among the biggest losers, with the latter more than 8%.

In other news, Virgin Orbit Holdings (NASDAQ:VORB) fell 23% as the satellite launch company filed for Chapter 11 bankruptcy protection after recently announcing that it would cut the bulk of its staff as it failed to secure funding.

(C) Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 30, 2023. REUTERS/Brendan McDermid

By Noel Randewich and Ankika Biswas

(Reuters) – Wall Street closed lower on Tuesday after evidence of a cooling economy exacerbated worries that the Federal Reserve’s campaign to rein in decades-high inflation may cause a deep downturn.

All three major indexes fell as data showed U.S. job openings in February dropped to the lowest level in nearly two years, suggesting that the labor market was cooling, while factory orders fell for a second straight month.

Data on Monday had also pointed to weakening U.S. manufacturing activity.

“The number of job openings has decreased, which makes people worry that hiring is going too slow, and that will be bad for the economy. That feeds into recessionary fears,” said Sal Bruno, Chief Investment Officer at IndexIQ in New York.

Bank stocks took a hit after JPMorgan Chase & Co (NYSE:JPM) CEO Jaime Dimon warned in a letter to shareholders that the U.S. banking crisis is ongoing and that its impact will be felt for years.

Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) & Co dropped more than 2%, and the S&P 500 banks index fell 1.9%.

Of the 11 S&P 500 sector indexes, seven declined, led lower by industrials, down 2.25%, followed by a 1.72% loss in energy.

The S&P 500 declined 0.58% to end the session at 4,100.68 points, closing lower for the first time in a week.

The Nasdaq declined 0.52% to 12,126.33 points, while the Dow Jones Industrial Average declined 0.59% to 33,403.04 points.

Caterpillar Inc (NYSE:CAT), viewed as bellwether for the industrial sector, fell 5.4%.

Heavyweight chipmaker Nvidia (NASDAQ:NVDA) lost 1.8%, weighing more than any other stock on the S&P 500’s decline.

Healthcare and utilities, which many investors expect to hold up better during an economic slowdown, were among the few S&P 500 sector indexes gaining on Tuesday.

GRAPHIC: Odds point to no May rate hike https://www.reuters.com/graphics/USA-RATES/FEDWATCH/zdpxdayyrpx/chart.png

Trading in interest rate futures shows bets are now tilted toward a pause by the Fed in May, with odds of a 25-basis point rate hike at 42%, compared with nearly 60% before the data, according to CME Group’s (NASDAQ:CME) Fedwatch tool.

So far in 2023, the S&P 500 has gained nearly 7% and it remains down about 15% from its record high close in January 2022.

GRAPHIC: S&P 500’s busiest trades https://fingfx.thomsonreuters.com/gfx/mkt/xmpjkjgozvr/SPX_by_busiest_trades.png

Virgin Orbit Holdings Inc slumped 23.2% after the satellite launch company filed for Chapter 11 bankruptcy on failing to secure long-term funding.

AMC Entertainment (NYSE:AMC) Holdings Inc shares tumbled 23.5% after the movie theater chain said it agreed to settle litigation and proceed with converting its preferred stock into common shares.

Shares of Digital World Acquisition Corp fell 8% after the SPAC linked to former U.S. President Donald Trump delayed the filing of its annual financial report.

Volume on U.S. exchanges was relatively light, with 10.3 billion shares traded, compared to an average of 12.8 billion shares over the previous 20 sessions.

Across the U.S. stock market, declining stocks outnumbered rising ones by a 2.2-to-one ratio.

The S&P 500 posted 14 new highs and one new lows; the Nasdaq recorded 64 new highs and 238 new lows.