Market Update: Dow Jones Dips, Mortgage Rates Stabilize, and Bitcoin’s Rollercoaster Ride

In a week filled with market twists and turns, investors found themselves navigating through fluctuating indices, mortgage rate movements, and Bitcoin’s volatile ride. Here’s a breakdown of the key events and trends shaping the financial landscape as of August 31st, 2023.

Stock Markets in Review

The Dow Jones Industrial Average ended Thursday on a somewhat bearish note, closing 169 points lower. Meanwhile, the S&P 500 experienced a slight dip of 0.1%, while the Nasdaq managed to eke out a 0.1% gain, marking its fifth consecutive session of growth.

Investor attention remains keenly focused on the upcoming jobs report, eagerly anticipating insights that could illuminate the future path of monetary policy. Recent economic data suggests that the Federal Reserve may opt for a cautious approach to rate hikes. July’s core PCE price index inched up by 0.2%, offering a glimmer of hope for those concerned about disinflation.

Job cuts surged by over 200% in August compared to the previous month, echoing soft labor data released earlier in the week. All eyes are now on the Non-Farm Payrolls (NFP) report due tomorrow, Which is expected to provide further clarity on the labor market’s health.

In the corporate arena, Salesforce outperformed expectations, propelling its stock to a 2.9% gain. On the flip side, Dollar General faced a rough patch, shedding 12.2% due to a disappointing miss on its June-quarter earnings.

Mortgage Rates Stabilize

For American consumers, mortgage rates have been a topic of concern. As of August 31st, 2023, the average rate on a 30-year fixed mortgage stood at 7.18%. While this rate did see a minor 5bps dip, it remains relatively close to the 22-year high recorded in the previous week.

The hawkish outlook for the Federal Reserve continues to influence these expensive mortgage rates. In contrast, during the same period the previous year, the average rate was significantly lower at 5.66%.

Sam Khater, Chief Economist at Freddie Mac, commented, „Mortgage rates leveled off this week but remain elevated. Despite continued high rates, low inventory is keeping house prices steady.” However, the recent volatility in the market has made it challenging to predict the direction of rates. Investors anticipate more clarity in September as the Federal Reserve deliberates its next steps regarding interest rate hikes.

WTI Crude Futures Surge

WTI crude futures had an impressive run, extending gains on Thursday to surpass $83.1 per barrel. This marked the sixth consecutive session of growth, approaching levels last seen in November 2022. The driving force behind this surge is the expectation of tight supplies.

Official PMI data from China revealed the manufacturing sector’s fifth consecutive month of contraction in August. This has heightened expectations that key OPEC+ nations will opt to extend output cuts. The market speculates that Saudi Arabia might extend its voluntary 1 million bpd cut into October. With Russia potentially following suit with export restrictions.

Tight supply conditions were not confined to international markets. The Energy Information Administration (EIA) reported a substantial drop of 10.6 million barrels in U.S. crude oil stocks for the week ending August 25th, significantly exceeding market expectations.

However, this bullish trend faced a counterbalance as production from Iran surged to 3.1 million bpd in August. The highest since 2018, offsetting the voluntary cuts from Saudi Arabia and Russia.

Shipping Costs under Pressure

The Baltic Exchange’s main sea freight index, which gauges global shipping costs, experienced a second consecutive day of decline on Thursday, dropping 8 points to 1,086 points. This was primarily due to pressure on larger vessel segments.

The capesize index, tracking vessels carrying bulk cargoes like iron ore and coal, slumped by 2.6% to reach a nearly six-month low of 1,094 points. Meanwhile, the panamax index, which monitors ships typically transporting coal or grain cargoes, saw a 1.2% drop to 1,503 points. In contrast, the supramax index managed a 2.1% rise, reaching 962 points. Overall, the benchmark index experienced a 3.6% decline in the month of August.

Currency Market Insights

In the currency market, several currencies experienced notable gains and losses. The Russian Ruble emerged as the top gainer, surging by 1.32%, followed by the Japanese Yen with a 0.55% increase, and the Dollar Index rising by 0.43%. Conversely, the Mexican Peso faced the most significant decline, dropping by 1.28%, followed by the Brazilian Real with a 1.21% loss, and the Swedish Krona with a 0.90% decrease.

Bitcoin’s Rollercoaster Ride

Bitcoin’s price exhibited significant volatility on Thursday, trading at 26,292 USD, marking a 3.53% decrease compared to the previous trading session. Over the past four weeks, Bitcoin saw a notable loss of 10.00%. However, over the last 12 months, its price has still managed to rise by an impressive 30.97%.

Coinglass, a cryptocurrency tracking platform, reported that the price drop triggered liquidations amounting to $103.58 million in the past 24 hours, including a $3.12 million liquidation on Bybit. In total, this price plunge led to over 34,700 traders being liquidated, underlining the extreme volatility that characterizes the cryptocurrency market.

Signals

AUDNZD – Stop loss order up @1.0821:

ORCL – place Take profit order @118.52:

CRWD – place Stop loss order @153.57:

KO – Buy long signal @60.89: