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WEEKLY ROUND-UP Thru May 3rd, 2024; “Speed Bump or Wall?”

Hey folk, will the markets continue higher or hit a resistance wall and move lower. Get my take on the current market action in this Week’s Round-Up.


This past week major indexes ended higher following a volatile week featuring a raft of economic and earnings data. It was the second-busiest week of first-quarter earnings reports, and a positive reception to Apple’s earnings (110 Billion Stock buyback) release after the close of trading on Thursday seemed to help drive a rebound in overall sentiment.

The main driver of the week’s gains appeared to be Friday morning’s nonfarm payrolls report, which showed that employers added 175,000 jobs in April, less than expected and the lowest number since November. While the miss signaled a cooldown in the labor market, and thus lower inflationary pressures, investors may have been more pleased by a surprise slowdown in monthly wage increases, from 0.3% in March to 0.2% in April. The year-over-year gain fell to 3.9%, the slowest increase in almost two years. Similarly, average weekly hours worked fell back slightly, while the unemployment rate climbed slightly to 3.9%. On Friday, we also saw the ISM had fallen back into contraction territory for the first time since December 2022.

Fed Chair “Boom Boom” Powell as also viewed as more dovish in his comments as he suggested the next rate move would be lower vs higher, but he needs to see more data to support lower rates given their current restricted policies. The evidence of a cooling jobs market helped push the yield on the benchmark 10-year U.S. Treasury note to an intraday low of around 4.45% on Friday morning, its lowest level in nearly a month.
In the Eurozone GDP surprised to the upside, expanding 0.3% in Q1, after shrinking 0.1% in Q4 of 2023. That contraction registered in Q4 of 2023 was a downward revision from 0.0%, meaning that the economy fell into a technical recession in the second half of last year. Meanwhile, annual consumer price growth was steady in April at 2.4%, but core inflation—which excludes energy and food prices—slowed to 2.7% from 2.9%. The latest data strengthened confidence that inflation would return to the 2% target by next year, suggesting that the ECB should be able to start lowering borrowing costs in June.

As perceptions grew that Japanese authorities had intervened in the foreign exchange markets twice during the week to prop up the yen to 153 against the USD (from 158 at end of last week), Japanese stocks generated positive returns. And the latest earnings season saw more than two-thirds of Japan’s large public companies report higher profits helping provide further lift to the Nikki Index.

Chinese stocks rose in a holiday-shortened week on hopes that the government will ramp up support. China’s top decision-making body, the 24-member Politburo, pledged to implement prudent monetary and fiscal support to shore up demand at its April meeting last Tuesday. The official manufacturing Purchasing Managers’ Index (PMI) was a better-than-expected reading of 50.4 in April, down from March’s 50.8, marking the second straight monthly expansion. The nonmanufacturing PMI reached a below-consensus 51.2, easing from 53 in March, as new orders and services activity stalled from the prior month. While in real estate the value of new home sales by the country’s top 100 developers slumped 45% in April from the prior-year period continuing to put a very big drag on the Chinese economy.

Enjoy this week’s round-Up.

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