Market Review March 05, 2024

On March 5, 2024, a series of economic indicators was released, providing insights into service sector activity, factory orders, employment trends, and commodity stocks. These data points help to assess the broader economic environment and sector-specific conditions.

S&P Global Composite and Services PMI (Feb): Both the Composite PMI and Services PMI showed slightly better than expected performance, indicating continued expansion in the service sector, though the pace has slightly moderated from the previous month.

Factory Orders (MoM) (Jan): There was a significant decline in factory orders, dropping by -3.60% against a forecast of -3.10%, which marks a stark deterioration from the modest decrease observed the previous month. This could signal a cooling in manufacturing demand.

ISM Non-Manufacturing Employment, PMI, and Prices (Feb):

• The Non-Manufacturing PMI stood at 52.6, slightly below the forecast and the previous month's reading, suggesting a slight slowdown but overall continued expansion in the services sector.
• Employment in the non-manufacturing sector decreased to 48, indicating contraction and potential concerns about future service sector growth.
• Prices paid by service industries declined from 64 to 58.6, reflecting easing cost pressures which could be a positive sign for inflation but also might indicate weakened demand.

API Weekly Crude Oil Stock: Crude inventories increased by 0.423M barrels, significantly less than expected, which might suggest better-than-anticipated demand or slower production increases, impacting oil market dynamics.

Impact on USD

• The decline in factory orders and non-manufacturing employment could weigh on the USD as they might lead to concerns about domestic economic health. However, the overall service sector resilience and reduced oil inventories may mitigate some of these negative pressures.

Impact on Gold

• Easing service sector prices and signs of slowing economic activity in certain areas could heighten gold's appeal as a safe haven, especially if investors become wary of potential economic downturns.

Impact on Equity Futures

• Mixed signals from the service sector, along with a significant drop in factory orders, could lead to cautious trading in equity markets. Investors might be concerned about future earnings potential in the face of slower economic growth.

Today's data presents a mixed picture of the U.S. economy with sectors like services showing resilience while manufacturing demand sharply contracts. The situation in non-manufacturing employment and easing price pressures will need careful monitoring to gauge the potential for broader economic impacts.