Global financial markets carried a cautious yet optimistic tone across asset classes as the trading session unfolded on September 30, 2024. Stock markets, commodities, and cryptocurrencies were all aligned on themes of shifting central bank policy winds, economic data releases, and fickle investor sentiment with the year headed into its final quarter.
Stock Markets: European Rally Amid Falling Inflation
European stock markets were up strongly, buoyed by falling inflation in the Eurozone and fresh stimulus measures in China. Both helped build optimism, especially about prospects of further interest rate cuts by the European Central Bank. Germany’s DAX rose 4.03%, reflecting investor confidence in the region’s largest economy, and France’s CAC 40 was higher by 3.89%. The UK’s FTSE 100 climbed 1.10%. The wider pan-European STOXX 600 also gained 2.69% to show the extent of the broad market strength
In contrast, such optimism was dampened by more deep-seated concerns over Europe’s wider economic health. Business activity in the Eurozone continued to shrink last month, according to a September reading that saw the manufacturing sector contract at a faster pace. But investors retain their hopes that the reduced price pressure and possible ECB rate cuts will cushion the economic rebound into 2025 .
More steady, albeit more moderate, gains were posted in US markets. The S&P 500 climbed 0.62%, the Nasdaq 100 tacked on 1.10%, while the Dow Jones Industrial Average gained 0.59%. Key economic releases and continued speculation about Federal Reserve monetary policy fought for the attention of traders. Labor market reports and inflation figures over the coming weeks are expected to guide the Fed’s decision-making and shape its strategy for the rest of the year.
Commodities: Volatile but Resilient
The view was mixed across commodities. Gold prices, earlier in the week having surged to over $2,680 per troy ounce, pulled back as profit-taking set in. It remains, however, one of the favored assets for those looking to hedge against inflation and currency volatility. Similarly, silver traded 1.43% higher for the day.
That would keep gold and silver in demand as safe-haven assets in case central banks across the world turn less aggressive in rate cuts.
Prices for natural gas rose significantly by more than 19% to $2.90/MMBtu. It was driven by the fear of hurricane Helene in the Gulf of Mexico which would affect production, although it was later found that the production was not severely affected. Prices for natural gas will remain turbulent until winter sets in and demand fluctuates
Currencies: China’s Stimulus Effects
The Australian and New Zealand dollars have been among those currencies that have registered major gains against the US dollar. The rise was primarily triggered by the new stimulus measures announced by China, since this would raise demand for Australian and New Zealand exports, most of which comprise commodities. The Australian currency reached a 19-month high against the US dollar, owing to the close trade ties with China. Also supporting the currency was the decision of the Reserve Bank of Australia not to touch interest rates, which stayed at 4.35%.
Despite this, the New Zealand dollar still recorded some gains. The latter, however, were muted since many expect a rate cut by the Reserve Bank of New Zealand in October. According to the market projection, a half-percentage-point cut is likely to take place with a probability of 67%, weighing on the currency in the near term.
Cryptocurrency: Bitcoin Stable as Broader Market Continues to Fluctuate
Bitcoin proved resilient in the world of digital currencies to finish the day around $64,500. Against the headwinds from the bearish MACD and Bollinger Bands indicators, Bitcoin extended its gain for September to 8%. This is considered quite important because September is the usual month of high volatility in digital currencies, and there are divided analyses as to whether Bitcoin would further pull back or be in a bullish phase in the fourth quarter.
Market analysts are eager for any big events to happen, such as the case of the XRP tokens whose unlocking is scheduled to take place in early October of this year. This will load more liquidity into the market and with that inadvertently decrease the prices. Moreover, the general crypto market is still very cautious due to the macro factors with regards to central banks’ decisions on interest rates and regulation news
While some analysts expect Bitcoin could slide as low as $43,000 over the coming weeks, other analysts are more optimistic because they refer to the fact that the crypto market has always had a good performance during the fourth quarter, popularly known as “Uptober.” A heavier inflow into Bitcoin ETFs and a resilient mining sector might stabilize prices and trigger fresh interest in digital assets .
Outlook for Q4: Optimism with a Dose of Caution
Caution, therefore, remains the dominant sentiment in investor thinking as the final quarter of 2024 approaches, since global economic data still show a mixed picture. Within Europe, inflation may be easing, but weak business activity points to underlying fragility for the economy. The US is no different, where strong consumer spending and a robust services sector provide one ray of hope, while manufacturing struggles to regain momentum.
Volatility will continue to characterize commodity and cryptocurrency markets. Gold and silver will remain in good demand for those worried about inflation. Natural gas prices may continue their up-and-down ride dependent on weather and supply disruptions. Cryptocurrencies, particularly Bitcoin, are set for a potentially bullish close to the year, although macroeconomic headwinds could still throw that off kilter.
For investors, the takeaway would be to stay flexible. Portfolio diversification and close monitoring of central banks’ policies and economic data, besides geopolitical developments, will constitute the determining factors while negotiating the incertain terrain in the last months of 2024.