The April ISM Manufacturing report showed a sharp drop that took everyone by surprise. Given the Fed’s impressive regional research, many expected a hard hit. Today’s blunder isn’t really terrible, but it may be a reminder that the Fed’s polls only cover a subset of the country and overlook a large chunk of the West Coast. Expectations from the US data may have turned overly optimistic, but this first look at April shows the recovery is firmly in place, albeit at a slower pace. US stocks did not know how to react to the ISM data. The slowdown in growth coupled with a sharp rise in price pressures justifies the Fed’s cautious stance to some extent, but does not necessarily make inflation transitional.
The S&P 500 is showing moderate gains, while the Nasdaq has turned negative following sharp declines in Tesla, Amazon and AMD.
The dollar fell sharply as growing pressure on factors of production, according to the ISM report, justified fears about inflation. ISM paid prices jumped from 85.6 to 89.6, the highest since 2008. The rest of the ISM report sparked a wave of growth concerns, given the notable declines in other components. The headline fell from 64.7 to 60.7, new orders fell from 68.0 to 64.3, and the employment component eased from 59.6 to 55.1.
Dax outperforms most of its European peers after impressive retail sales and manufacturing activity. Retail sales in Germany were impressive in March with growth of 7.7%, which is higher than the forecast of 3.0% and the revised upward indicator of the previous month at 2.7%. Overall, the European Manufacturing PMI data indicate that the recovery is underway, albeit slightly worse than expected.
Ethereum / Bitcoin
Ethereum rallied more than 12% for the first time and surpassed $ 3,000 amid a broad rally in the cryptocurrency market. Ethereum’s encrypted ledger can be expensive and slow, but that hasn’t stopped it from becoming the favorite cryptocurrency to use. The use-case argument justifies Ethereum’s appeal, and the current social media hype is forcing many traders to resort to $ 10,000 by the end of the year.
It used to be the other way around, but now Bitcoin is on the tail of Ethereum. Today, all cryptocurrencies are skyrocketing now that US stocks are already trading near the year-end target in financial markets, according to many analysts. Cryptocurrencies can be more volatile than stocks and bonds, but for many on Wall Street, their trajectory is clearer.
This article is for general informational purposes only. This is not investment advice or a solution to buy or sell securities. Authors’ opinions; not necessarily OANDA Corporation or its affiliates, subsidiaries, officers or directors. Trading with leverage carries a high level of risk and may not be suitable for everyone. You may lose all of your deposited funds.