Market Review March 01, 2024

On March 1, 2024, a plethora of important economic indicators was released, encompassing manufacturing activity, consumer sentiment, construction spending, inflation expectations, and updates in energy and financial markets. These data points offer a comprehensive view of current economic conditions and potential future directions.

S&P Global US Manufacturing PMI (Feb): The index improved to 52.2 from 50.7, surpassing expectations and indicating an expansion in manufacturing activity, which suggests a strengthening in the sector.

Construction Spending (MoM) (Jan): There was a decline in construction spending by -0.20% against a forecast of a 0.20% increase, following a strong previous month. This downturn may suggest a temporary pullback in construction investment.

ISM Manufacturing Employment, PMI, and Prices (Feb): The ISM Manufacturing PMI dropped to 47.8, indicating a contraction in the sector, despite a slightly positive performance in the broader S&P PMI. Employment in manufacturing also declined, which could signal future weaknesses in the sector. Prices paid index slightly decreased, reflecting a moderation in cost pressures.

Michigan Inflation Expectations and Consumer Sentiment: Inflation expectations remained steady, aligning with forecasts. However, both consumer expectations and overall sentiment dipped, indicating growing concerns among consumers about the economic outlook.

Atlanta Fed GDPNow (Q1): A significant revision downward to 2.10% from 3.00% suggests a cooling in economic growth expectations, likely influenced by recent data and market conditions.

U.S. Baker Hughes Oil and Total Rig Count: Both counts increased, indicating ongoing investment in the oil and gas sector, which could be a response to energy demand or pricing dynamics.

CFTC Speculative Net Positions: Speculative positions in crude oil increased significantly, suggesting bullish sentiment in the oil market. Gold positions also saw a minor increase. However, there was a notable decrease in speculative positions in Nasdaq 100, and a deepening of bearish positions in S&P 500 futures, reflecting a cautious or negative outlook among traders towards these markets.



Impact on USD

• The mixed signals from manufacturing data and declining consumer sentiment might pressure the USD as they suggest potential economic softening. However, the strong speculative interest in crude oil could bolster the USD due to implications for trade balances and energy sector strength.

Impact on Gold

• Steady inflation expectations alongside declining consumer sentiment could enhance gold's appeal as a safe haven, supported by the slight increase in speculative positions.

Impact on Equity Futures

• The negative sentiment in manufacturing and consumer sectors, coupled with bearish positions in equity futures, suggest potential challenges ahead for equity markets. Investors might be bracing for slower growth or heightened risk.

The economic indicators reflect a complex scenario where manufacturing is showing mixed signals, consumer sentiment is waning, and adjustments in economic growth forecasts suggest caution. This backdrop may prompt investors and policymakers to reassess their strategies in the coming months.