Gold prices continued their upward surge as uncertainty in the markets — amid weak economic reports in the US and recession fears — drove investors to seek refuge in the yellow metal.
Forex
The euro continued to benefit from the weak US dollar as the EUR/USD pair finished last week at 1.0860 USD, extending its winning streak against the dollar. It was a week of volatility for the pair, but the euro gained despite wide fluctuations.
The European Central Bank’s (ECB) near-term policy outlook has been the driver for the volatility in the pair. At the World Economic Forum in Davos on Thursday, 19 January, ECB president Christine Lagarde said that the central bank will continue raising interest rates in its bid to drive down inflation to 2%.
Meanwhile, the US dollar registered its biggest daily gain against the Japanese yen in nearly 2 weeks as the Bank of Japan (BoJ) chief reiterated his “extremely accommodative” monetary policy stance in a bid to achieve its inflation target.
On the events front, a raft of market-moving releases are lined up. The fourth-quarter gross domestic product (GDP) data will be released in the US on Thursday, 26 January, while the core Personal Consumption Expenditure (PCE) data — which measures inflation — will be released on Friday, 27 January. If either release misses expectations, it will raise the volatility in the EUR/USD pair.
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Commodities
Gold prices continued their surge for a fifth straight week to end the last week at 1,926.03 USD an ounce, rising on hopes of a slower rate hike by the US Federal Reserve (Fed). The precious metal had broken the 1,900 USD barrier for the first time in 7 months in the week prior.
Weak US economic reports and hawkish remarks by the US Fed officials, which fuelled recession fears, have contributed to the gains in the yellow metal — gold prices tend to gain when investors seek refuge from the uncertainty in the markets.
Elsewhere, oil prices gained for a second consecutive week on the back of positive economic signs from China, boosting prospects of increased fuel demand by the world’s largest oil importer. The International Energy Agency (IEA) on Wednesday, 18 January, said that China’s lifting of Covid-19 curbs should lead to record high global demand for oil.
The price cap on Russian oil — which was enforced in the aftermath of the ongoing war in Ukraine — has dented global supplies and is another reason for the boost in crude prices.
Cryptocurrencies
Over the last week, cryptocurrencies faced yet another surge, with most tokens making significant gains. With their latest run, the global cryptocurrency market capitalisation went past the 1 trillion USD mark and stood at 1.05 trillion USD on Sunday, 22 January.
Ahead of the Lunar New Year holiday celebrations in Asia, Bitcoin rallied to its highest levels since August 2022, surging at the start of the weekend for a second straight week. The price of the world’s largest cryptocurrency briefly crossed 23,000 USD during the week.
The latest jump in its price brings Bitcoin up almost 39% since the start of January, although it is still nearly 67% off from its all-time high of 68,789.63 USD (reached in November 2021). The token is currently trading at 22,714.80 USD at the time of writing. Meanwhile, Ethereum — the second-largest digital currency by market capitalisation — was trading at 1,629.30 USD on Sunday, 22 January.
But it’s not all good news in the digital assets industry. US-based cryptocurrency investment firm Genesis has become the latest casualty of the crisis unleashed in the industry following the November 2022 implosion at Futures Exchange — commonly known as FTX. Genesis has filed for bankruptcy protection, listing aggregate liabilities ranging from 1.2 billion USD to 11 billion USD. The development followed the US Securities and Exchange Commission’s (SEC) announcement on Thursday, January 12, that it had charged Genesis and crypto exchange Gemini with selling unregistered securities through their interest-bearing product.
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US stock markets
| Name of the index | Friday’s close | *Net change | *Net change (%) |
| Dow Jones Industrial Avg (Wall Street 30) | 33,375.49 | -927.12 | -2.70% |
| Nasdaq (US Tech 100) | 11,619.03 | 77.55 | 0.67% |
| S&P 500 (US 500) | 3,972.61 | -26.48 | -0.66% |
Source: Bloomberg
*Net change and net change (%) are based on the weekly closing price change from Friday to Friday.
After gaining for successive weeks, US stocks experienced their first downturn of 2023. Mixed fourth-quarter earnings results, announcement of mass layoffs at major technology firms, and the prospects of an impending recession all contributed to the reverse in the markets last week.
The Dow Jones had a larger decline of 2.70%, compared to the S&P 500’s 0.66% drop. However, the Nasdaq increased by 0.67%.
Companies accounting for over 50% of the S&P 500’s market value are scheduled to announce their earnings over the next two weeks, including Microsoft (Tuesday, 24 January), Tesla (Wednesday, 25 January), and Intel (Thursday, 26 January). Next week, Apple and Alphabet (Google’s parent company) will release their numbers. Both firms are among the largest in the world by market value.
Their results will have significant market impact on the market movements as investors will be eager to see if these tech giants — renowned for their spectacular growth over the last few years — will be able to maintain their performance in the aftermath of significant downsizing that some of them have announced over the last few weeks. Microsoft announced 10,000 layoffs on Wednesday, 18 January, while Alphabet on Friday, 20 January, revealed plans to cut 12,000 jobs. Amazon and Facebook-parent Meta have also announced major redundancies in recent weeks.
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