Morning Wrap (21.03.2024)

Wall Street indexes closed at record levels following the Fed's decision and Chairman Jerome Powell's conference. The S&P 500 gained 0.90% to 5225 points, and the Nasdaq 100 rose by 1.15% to 18225 points.

Asian and Pacific indexes also recorded a session of gains. The Korean KOSPI increased by 2.20%, the Australian S&P/ASX 200 is up by 0.40%, and Chinese indexes gained between 1.90-2.10%. The Japanese Nikkei gained over 2.00% and confirmed breaking the 40000 points level.

Futures contracts on European indexes indicate a higher opening for the cash session in Europe, with increases ranging between 0.30-0.40%.

No major changes are observed in the forex market in the first part of the day, with most currency rates fluctuating within +-0.10%. The USD is slightly weaker, while the Australian dollar (AUD) is notably stronger, gaining up to 0.50% against the rest of the G10 currencies.

The Australian dollar (AUD) continued to rise for the second session in a row on Thursday, following a positive Australian labor market report. The data showed a huge drop in unemployment and a significant increase in the number of jobs added.

Following the report, the AUD strongly gained, remaining the strongest currency in the first part of the day. Such a strong report is a good argument for the Reserve Bank of Australia to maintain higher interest rates for a longer period.

Unemployment in Australia fell to 3.7% in February, compared to expectations of 4.0% and the previous result of 4.1%. Employment change in Australia was 116.5 thousand in February compared to 15.3 thousand in January, against a consensus of 40.0 thousand.

Japanese exports increased more than expected in February, contributing to a larger-than-expected decrease in the country's trade deficit. Demand in China and the United States remains strong, supporting the data.

Exports grew by 7.8% year-on-year in February (expectations were 5.3%), albeit slower than the 11.9% growth in January.

The trade balance fell to a deficit of 379.4 billion yen, compared to an expected deficit of 810.2 billion yen and significantly lower than the 1.76 trillion yen deficit recorded in January.

The Japanese manufacturing sector contracted less than expected in March, indicating some resilience of the economy in the face of the end of nearly a decade of monetary stimulation. The Manufacturing PMI stood at 48.2 in March, compared to expectations of 47.5. This index improved from 47.2 in February.

Japanese Finance Minister Suzuki says the government is closely monitoring movements in the currency market, signaling the first steps of verbal intervention.

The Vice Governor of PBOC expects about 8% nominal economic growth in China in 2024.

In the cryptocurrency market, we observe a brief consolidation after yesterday's rebound. At the time of publication, Bitcoin is down by about 1.30% and is trading around 67000 USD. Ethereum loses slightly less, down by 0.20%, and remains above the 3500 USD level.