Month: February 2024

© Reuters. FILE PHOTO: Passersby walk past an electric board displaying Japan’s Nikkei share average outside a brokerage in Tokyo, Japan April 18, 2023. REUTERS/Issei Kato/File Photo

By Sinéad Carew

NEW YORK (Reuters) -A global equities index fell slightly on Wednesday while Treasury yields edged down and the dollar rose against a basket of currencies on caution the day before U.S. inflation data that could influence Federal Reserve policy.

January’s U.S. personal consumption expenditures price index (PCE), the Fed’s preferred inflation measure, is due on Thursday. Economists polled by Reuters poll expect the index to have risen 0.3% on a monthly basis after a 0.2% increase in December.

Traders have already dialed back expectations for Fed interest rate cuts after a slew of strong data, including hot consumer price index (CPI) and producer price index (PPI) readings. They expect an easing cycle to kick off in June, compared with the start of 2024 when bets were on March.

“We’re on hold until we get the PCE print. The market’s going to chop around,” said Jack Janasiewicz, portfolio manager and lead porfolio strategist at Natixis Investment Managers Solutions. “Between CPI and PPI there’s a narrative that inflation is going to be stickier than expected or even potentially having a modest re-acceleration.”

He noted that U.S. stock indexes remained not far from records reached last week, partly thanks to a better-than-expected fourth-quarter earnings season including a boost from Nvidia (NASDAQ:NVDA) on optimism about artificial intelligence.

“The market’s had every chance to sell off but it’s holding up pretty well,” he said. “It’s actually been looking past inflation to an extent because earnings has been better than expected.”

Other data this week that may shape expectations on Fed policy include a second estimate of gross domestic product, jobless claims and manufacturing activity.

MSCI’s gauge of stocks across the globe shed 0.42% while on Wall Street at 02:43 p.m. the Dow Jones Industrial Average fell 142.41 points, or 0.37%, to 38,829.53.

The S&P 500 dropped 15.39 points, or 0.30%, to 5,062.79 and the Nasdaq Composite was down 106.17 points, or 0.66%, at 15,929.12.

European stocks had dipped as lackluster corporate earnings weighed on sentiment with the pan-European STOXX 600 index closing down 0.35%.

The U.S. dollar rose as investors positioned for U.S. and European inflation data, while the Australian and New Zealand dollars tumbled after New Zealand’s central bank cut its forecast peak for interest rates and Australian consumer price inflation held at a two-year low.

The dollar index gained 0.13% at 103.97, with the euro down 0.11% at 1.0832.

Against the Japanese yen, the dollar strengthened 0.12% at 150.68.

U.S. Treasuries yields slid, with the benchmark U.S. 10-year notes yield down 3.7 basis points to 4.278% from 4.315% late on Tuesday. The 30-year bond yield fell 2.6 basis points to 4.4144% from 4.44%. The 2-year note yield, which typically moves in step with rate expectations, fell 6 basis points to 4.6519%, from 4.712% late on Tuesday.

In crypto currencies, bitcoin surged for a fifth day buoyed by flows into new U.S. spot bitcoin exchange traded products that have driven it up nearly 40% in February, which would mark its largest monthly rally since December 2020.

It was last up more than 7% at $60,939, after hitting its highest level since November 2021.

Gold prices ticked up as traders strapped in for economic data and comments from U.S. central bank officials.

Spot gold added 0.08% to $2,031.22 an ounce.

In commodities, U.S. crude oil settled down while Brent barely gained as traders worried the Fed would be slow to cut rates. Growing U.S. crude stockpiles added pressure.

U.S. crude settled down 0.42% at $78.54 per barrel while Brent finished at $83.68, up 0.04% on the day.

© Reuters. US can orchestrate soft landing through fiscal stimulus – Piper Sandler

Analysts at Piper Sandler said in a Monday note that the US could orchestrate a soft landing through fiscal stimulus measures such as student loan forgiveness, tax cuts, and more defense spending, among other things.

According to analysts, the absence of conventional growth drivers in the economy means that avoiding a recession could necessitate fiscal generosity.

“In order to have a soft landing in 2024, additional fiscal stimulus would be needed (such stimulus definitely kept the economy stronger, longer in 2023),” analysts said.

Analysts outlined several fiscal measures the government could opt for to accelerate economic growth in 2024.

These include more student loan forgiveness, distributing grants under the CHIPS Act, and the recently proposed Wyden-Smith tax cut deal.

In addition, Piper Sandler also listed Employment Retention Credit (ERC) payouts and the $95 billion defense bill which has recently passed the Senate, and now awaits House action.

If the aforementioned steps come to pass, it could translate to an additional 1.5% boost to GDP from fiscal stimulus this year, analysts said.

“If all the above come to pass, it would take our 2024 real GDP forecast from -1% to +0.5%, and keep worst case unemployment below 4.5%, saving roughly 1.5m jobs,” they wrote.

“A confirmed soft landing would be good for (nominal) earnings, and in turn stocks,” analysts added.

One potential downside of this strategy is that it could hinder the Federal Reserve’s ability to lower interest rates given the robust economic environment it would create.

© Reuters. FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

By Karen Brettell

NEW YORK (Reuters) -The dollar jumped against the euro and yen on Wednesday as investors positioned for U.S. and European inflation data due on Thursday, with month-end portfolio rebalancing also likely to sway market direction.

Bitcoin hit a more than two-year high, benefiting from strong overall market liquidity.

Brad Bechtel, global head of FX at Jefferies in New York, noted that foreign exchange volatility picked up on Wednesday, which may be “hedging in front of the inflation data,” and also because of month-end flows.

The implied volatility used by banks to price three-month options on the euro against the dollar reached 6.01 on Wednesday, the highest since Feb. 15, and was last at 5.74. Volatility in major currency pairs has been declining, with the euro/dollar measure falling to the lowest since January 2022 on Tuesday.

Traders are focused on data to give further clues on when the Federal Reserve is likely to begin cutting rates. Those expectations have been pushed to June, from May, on strong economic growth, sticky inflation and more hawkish commentary from Fed officials.

Thursday’s U.S. Personal Consumption Expenditures release is expected to show that headline prices rose 0.3% in January for an annual gain of 2.4%. The core index is forecast to rise by 0.4% for the month, and 2.8% on the year.

Consumer price data for Germany, France and Spain is also due on Thursday, ahead of euro area figures on Friday.

“There’s more chance of disinflation ongoing in the euro area, which perhaps could open the door for an earlier cut from the European Central Bank,” said Danske Bank FX and rates strategist Mohamad Al-Saraf.

“We think if inflation is stickier in the U.S. than it is in the euro area, then the dollar has to be strong.”

The dollar index was last up 0.12% at 103.96. The euro dipped 0.11% to $1.0832.

Data on Wednesday showed the U.S. economy grew at a solid clip in the fourth quarter with robust consumer spending.

New York Fed President John Williams said that even as there is still some distance to cover in achieving the U.S. central bank’s 2% inflation target, the door is opening to interest rate cuts this year depending on how the data come in.

Boston Fed President Susan Collins said the Fed will likely need to start cutting rates later this year.

The yen also weakened against the greenback, approaching the 150.88 level reached on Feb. 13, which was the weakest since Nov. 16.

Strength in the dollar against the yen is “an indicator of carry trades” and reflects “a very ‘risk on,’ high-liquidity type of environment that seems to be driving FX at the moment,” Bechtel said.

Traders will watch for any signs of intervention by the Bank of Japan and Ministry of Finance if the Japanese currency continues to weaken.

The dollar was last up 0.12% at 150.68 yen.

The kiwi dropped 1.23% to $0.6094 after reaching $0.6083, the lowest since Feb. 15.

The Reserve Bank of New Zealand held rates steady on Wednesday, which was in line with forecasts but defied some outlying market bets for a rate rise.

The RBNZ’s rate forecast track and commentary were also slightly more dovish than some traders had anticipated.

The Aussie fell 0.75% to $0.6493 after hitting $0.6488, the lowest since Feb. 15.

Australia’s consumer price inflation held at a two-year low in January despite forecasts for an uptick, reinforcing expectations that rates are unlikely to increase further.

In cryptocurrencies, bitcoin breached $60,000 for the first time since November 2021 and came close to $64,000, boosted by the launch of new U.S. spot bitcoin exchange-traded products.

Bitcoin was last up 6.5% on the day at $60,334.

© Reuters

Investing.com — U.S. stock futures tick down on Wednesday ahead of crucial economic data releases this week. Salesforce (NYSE:CRM) is expected to post record quarterly revenue, while analysts are eager to measure the success of an artificial intelligence push at the software group’s data cloud division. Elon Musk says Tesla has finished the production design of its new Roadster, adding that the electric vehicle giant hopes to start shipping the car in 2025.

1. Futures edge lower

Stock futures on Wall Street pointed lower, as investors awaited a raft of incoming U.S. economic data that could impact the timing of potential Federal Reserve interest rate cuts this year.

By 03:12 ET (08:12 GMT), the Dow futures contract had shed 60 points or 0.2%, S&P 500 futures had dipped by 7 points or 0.1%, and Nasdaq 100 futures had lost 47 points or 0.3%.

The main averages were mixed in the prior session, with attention turning in particular to the publication on Thursday of the January personal consumption expenditures price index (PCE), a key inflation gauge.

Traders have been monitoring on a stock market rally powered by soaring enthusiasm for the applications of artificial intelligence that has pushed the S&P 500 and Dow Jones Industrial Average up to record levels. But with a stream of corporate earnings ebbing, the focus is returning to economic figures and the possible path ahead for U.S. borrowing costs.

While the overall economy has remained resilient in the face of elevated interest rates, a cooldown in price pressures has showed signs of stalling — a trend that has led several Fed officials to indicate that there is no rush to cut rates down from more than two-decade highs.

2. Salesforce ahead

After a series of blockbuster reports from some of the biggest names in corporate America in recent weeks, the quarterly earnings season is gradually slowing.

Wednesday’s releases will be highlighted by software group Salesforce, who is set to unveil its latest returns after the closing bell. Revenue is expected to have jumped by 10% to $9.22 billion in the fourth quarter, helping lift the California-based company back into profit after it posted a loss due to restructuring charges in the year-ago period.

Salesforce’s data cloud unit could also be in the spotlight, with analysts keen to find out if a push to increasingly incorporate AI into its products and services has supported customer demand.

Elsewhere, low-cost department store chain TJX Companies (NYSE:TJX) and pharmaceutical group Viatris are due to report prior to the market open.

3. Next-generation Tesla Roadster to ship in 2025 – Musk

Tesla (NASDAQ:TSLA) Chief Executive Elon Musk said on Wednesday that the firm had completed production design on a long-planned update to its Roadster electric sportscar, adding that it was likely to ship starting next year. 

In a series of posts on the social media site X, which Musk also owns, he said that Tesla was aiming to unveil the Roadster by end-2024. 

Musk said that Tesla had “radically increased the design goals” for the upcoming model, which was originally due to be launched in 2020. He also said the new vehicle was being developed in collaboration with SpaceX. 

4. Country Garden faces liquidation petition

Hong Kong-listed Chinese property stocks fell on Wednesday, coming under pressure from renewed concerns over a real estate meltdown after Country Garden (HK:2007) was slapped with a liquidation petition.

The embattled developer was the worst performer among its peers, sliding 6.7% and further into penny stock territory after Ever Credit Ltd filed a liquidation petition against the firm over its non-payment of a HK$1.6 billion loan.

Other property developers also fell, with Sunac China Holdings (HK:1918), Longfor Properties Co (HK:0960) and Logan Property Holdings (HK:3380) falling between 3% and 9%. The broader Hang Seng index fell 1.4%, dragged lower largely by losses in the real estate sector.

Country Garden Services Holdings (HK:6098) — a unit of the embattled developer — was the worst performer on the Hang Seng with a 4.6% loss.

5. Oil slips

Oil prices fell slightly in European trade on Wednesday, with traders eyeing a massive weekly build in U.S. inventories and a potential ceasefire between Israel and Hamas.

Prices were sitting on strong gains from the prior session after media reports suggested that the Organization of the Petroleum Exporting Countries and its allies — a group known as OPEC+ — could maintain its current pace of supply cuts until the end of 2024, keeping global supplies limited.

But crude prices still remained within a $75 to $85 trading range established so far in 2024, as optimism over the OPEC+ reports was countered by industry data showing a massive build in U.S. oil inventories.

Brent oil futures expiring in April fell 0.5% to $83.20 a barrel, while West Texas Intermediate crude futures dropped 0.6% to $78.44 per barrel by 03:15 ET.

Crude was also pressured by strength in the dollar, as markets positioned for the PCE price index data this week.

© Reuters. Apple (AAPL) discontinues its electric car project, redirects team to focus on GenAI

(Updated – February 28, 2024 6:23 AM EST)

Apple (NASDAQ:AAPL) reportedly halted the development of its much-anticipated electric vehicle (EV), a move that comes ten years after the initiation of the project known as Project Titan, Bloomberg News reported Tuesday.

The tech giant disclosed the decision internally on Tuesday, surprising the nearly 2,000 employees involved, according to Bloomberg.

The discontinuation of the project was announced internally by COO Jeff Williams and Vice President Kevin Lynch.

Following this decision, a significant number of the project’s team, known as the Special Projects Group (SPG), will be redirected to Apple’s artificial intelligence (AI) division under executive John Giannandrea, focusing on generative AI projects.

The broader EV industry has been recently grappling with challenges such as high interest rates, which have dampened consumer interest in the typically more expensive cars. This has led to a scaling back of production and workforce reductions across the sector.

Project Titan had been a significant part of Apple’s exploration into the automotive industry, particularly focusing on autonomous driving technology.

Despite ambitious plans announced around 2020 to potentially launch a vehicle by 2024 or 2025, the project faced numerous obstacles, including disruptions from the COVID-19 pandemic and a strategic overhaul in 2019 that resulted in the layoff of 190 workers from the team.

Morgan Stanley analysts said the news, if true, “would be a positive development.”

Such move “should allow the company to repurpose assets towards more important initiatives like Gen AI,” analysts added. Moreover, the actions would also show “relative cost discipline” by Apple’s management.

© Reuters. FILE PHOTO: Physical representations of the bitcoin cryptocurrency are seen in this illustration taken October 24, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

By Amanda Cooper

LONDON (Reuters) -Bitcoin hit $60,000 on Wednesday for the first time in more than two years, as a surge of capital into new U.S. spot bitcoin exchange-traded products fuelled a rally that has reached 42% this month, on track for its largest monthly gain since December 2020.

Bitcoin was last up 8% at $61,272, its highest since November 2021, when it hit a record just below $70,000. It was also heading for its largest weekly gain in a year, up 18.5% since Feb. 21.

Traders have poured into bitcoin ahead of April’s halving event – a process designed to slow the release of the cryptocurrency. In addition, the prospect of the Federal Reserve delivering a series of rate cuts this year has fed investor appetite for higher-yielding or more volatile assets.

“Bitcoin is being driven by the support of consistent inflows into the new spot ETFs and outlook for April’s halving event and June’s Fed interest rate cuts,” said Ben Laidler, global markets strategist at retail investment platform eToro.

Coinbase (NASDAQ:COIN) Global, the largest U.S. crypto exchange, said on Wednesday it was investigating an issue causing some users to see zero balance across their accounts. Coinbase CEO Brian Armstrong said in a separate post on X that the crypto exchange was dealing with a large surge in traffic.

The value of all the bitcoin in circulation has topped $2 trillion this month for the first time in two years, according to crypto platform CoinGecko, while the price of the token itself has doubled in just four months.

The bigger bitcoin exchange-traded funds (ETFs) have seen a definite pickup in interest this week.

The three most popular, run by Grayscale, Fidelity and BlackRock (NYSE:BLK), have seen trading volumes surge.

On Monday and Tuesday, around 110 million shares in the biggest three changed hands, about 51% of the 215 million shares traded in the market’s most valuable companies – Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA), according to LSEG data.

Three weeks ago, this percentage was closer to 15%.

“Essentially, we’re seeing the ETF effect ahead of schedule … We think it’s reflective of advisors getting out there very quickly to start selling the ETFs to clients,” said Joseph Edwards, head of research at Enigma Securities.

LSEG data showed flows into the 10 largest spot bitcoin ETFs brought in $420 million on Tuesday alone, the most in almost two weeks.

“If $60,000 doesn’t whet the appetite, consider that 70% of bitcoin supply has remained unmoved for a year, and the little that’s left is being hoovered up by the likes of BlackRock and Fidelity, just as rewards for miners are about to be slashed in half,” said the cofounder of the Nexo crypto exchange, Antoni Trenchev.

Crypto investor and software firm MicroStrategy this week disclosed it had recently bought about 3,000 bitcoin for $155 million, while social media platform Reddit said it had bought small amounts of bitcoin and ether.

Meanwhile, the world’s second biggest crypto currency, ether,, which underpins the ethereum blockchain network, rose 3.2% to $3,353, having hit another two-year high earlier in the day. Its price has risen 47% in February.

Some investors are hoping U.S. regulators will approve applications for ETFs based on spot ether.

Enigma Securities’ Edwards said the rise felt reasonably well supported.

“There certainly isn’t a manic feeling to who’s buying and why – ether gaining against the field also speaks to a more measured environment – but there’s at least a little FOMO (fear of missing out) going on right now.”

© Reuters

Investing.com — The reward for mining Bitcoin could be cut in half as soon as April, analysts at VanEck have said, adding that the event may significantly impact the price of the world’s most popular cryptocurrency.

Bitcoin halving

Known as “halving,” the process could see the amount of Bitcoin received by participants in the blockchain network underpinning the token slashed to 3.125 from 6.25.

Halving limits the number of Bitcoin in circulation, possibly lowering fresh supply on the open market.

Roughly speaking, halving occurs about once every four years, or after the network has verified transactions on a total of 210,000 blocks. The first halving took place in November 2012, when the return from mining stood at 50 Bitcoin. Two more halvings happened in 2016 and 2020.

Eventually the reward is due to hit a mark of 0.00000001 Bitcoin, the lowest denomination of the token. Called a “satoshi,” this amount could theoretically be the reward until the proposed limit of 21 million Bitcoin in circulation is potentially reached in about 2140.

When could the next Bitcoin halving occur?

The next Bitcoin halving will likely take place around April 24 this year, Menno Martens, Crypto Specialist at VanEck told Investing.com.

Martens called the event “pivotal,” noting that prior halvings have resulted in rallies in the price of Bitcoin and the overall capitalization of the crypto market.

The first halving in 2012 saw the price of Bitcoin shoot up from around $12 to around $130 six months later, according to data from crypto exchange Binance. Following the second in 2016, it soared from $660 to around $900 in half a year. The third in May 2020: $8,600 to $15,700 by November that year.

“This historical pattern suggests the halving could lead to potential significant [price] appreciation before and after the halving event,” Martens said.

Bitcoin’s recent rally

On Wednesday, Bitcoin surpassed the $61,000 mark, extending a rally in the token into a fifth consecutive day.

By 11:26 ET (16:26 GMT), the price of Bitcoin had risen by 7.9% to $61,251.2, placing the cryptocurrency within touching distance of an all-time high of more than $68,000 reached in 2021. It has now soared by more than 16% in the past seven days.

Along with the anticipation surrounding the upcoming halving, Bitcoin’s stellar performance this year has been spurred on by a recent decision from U.S. authorities to give the green light to exchange-traded funds (ETFs) that directly track the price of the cryptocurrency. The approvals have drawn a slew of institutional capital into Bitcoin. 

“Overall, we continue to like the set-up for [Bitcoin]/Crypto and expect considerable upside in [calendar year 2024] with [Bitcoin] exiting the year at [around] $85K+ levels driven by ETF inflows outpacing available supply on exchanges,” analysts at Compass wrote in a note.

They added that possible Federal Reserve interest rate cuts in the second half of 2024 could encourage risk-taking among retail investors. Retail trading volumes have remained relatively muted despite the ETF approvals, in an indication that faith in the crypto industry may have been dented by a string of high-profile scandals and bankruptcies.

An announcement from MicroStrategy Incorporated (NASDAQ:MSTR), the biggest corporate holder of Bitcoin, that it had recently purchased 3,000 tokens for about $155 million has also supported the token.

Meanwhile, a report from digital asset manager Coinshares showed that crypto investment products saw a fourth straight week of capital inflows. Digital asset investment products were bolstered by inflows of $598 million in the week to Feb. 23, according to the report.

Bitcoin ETFs commanded the lion’s share of the inflows. Bitcoin products registered $570 million of inflows, with BlackRock’s iShares Bitcoin Trust notching $543.5 million of inflows. This largely offset sharp outflows from Grayscale Bitcoin Trust, as it grappled with a slew of new entrants to the Bitcoin ETF space.

Ambar Warrick contributed to this report.