NAGA Weekly Recap April 15 - 2024 – April 19 - 2024

This week ends with significant and ambiguous news. On one hand, safe-haven assets like gold, which has already surpassed $2,400, are gaining traction in the markets. On the other hand, oil and Bitcoin are declining amidst rising risks. What can we expect with stocks? Learn more from our weekly recap.

Global stocks drop as Middle East tensions flare

Stock markets worldwide fell sharply, as escalating tensions in the Middle East spurred a flight to safety, pushing investors towards bonds and the U.S. dollar. The increased anxiety comes after Israel conducted a retaliatory strike on Iran, intensifying fears of a broader regional conflict.

In the wake of the strike, the 10-year U.S. Treasury yield plummeted by as much as 14 basis points, reflecting a rush to safer investments, although the drop moderated after Iranian media downplayed the severity of the conflict. The U.S. dollar index initially rose by up to 0.6% before paring most of its gains as the situation's initial shock wore off.

Stock indices painted a bleak picture: the Stoxx Europe 600 index dropped by 0.6%, marking a potential third consecutive week of losses. U.S. market futures also signaled a downturn, with S&P 500 and Nasdaq 100 futures falling 0.5% and 0.6%, respectively. In Asia, the downturn was even more pronounced, with an index of Asia-Pacific stocks tumbling by 1.8%.

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Netflix earnings beat by $0.77, revenue topped estimates

In a striking start to the year, Netflix ($NFLX) outperformed with a massive gain of over 9 million subscribers in the first quarter, more than doubling analyst expectations of 4.8 million.

This growth follows a substantial increase of 13 million in the last quarter of the previous year. Despite these impressive figures, Netflix’s guidance for the second quarter revenue of $9.49 billion fell slightly short of the anticipated $9.51 billion, causing its stock to drop by over 3% in after-hours trading.

Starting next year, the streaming giant will no longer share quarterly membership numbers or the average revenue per member (ARM).

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Oil prices pull back after initial surge on muted conflict impact

After an initial surge driven by concerns over potential conflicts in the Middle East, oil prices retreated as reports emerged downplaying the impact of recent strikes. Brent crude, which had soared above $90 a barrel, settled with just a slight increase of over 1% after Iranian media and the International Atomic Energy Agency confirmed no significant damage to critical facilities.

This price adjustment reflects the ongoing sensitivity of global oil markets to geopolitical events, particularly in regions critical for oil supply like the Middle East, which delivers about one-third of the world’s crude. Traders had braced for possible escalation following reports of an Israeli strike, which were later countered by claims from Iranian sources that major sites remained unharmed.

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EUR/USD extends its downside below 1.0650 on hawkish Fed remarks

The EUR/USD currency pair faced continued downward pressure, dropping near 1.0640 as the US Dollar strengthened following hawkish remarks from Federal Reserve officials. The decline extends the pair's downward trajectory from weekly highs around 1.0690, influenced by Federal commentary suggesting a more cautious approach to interest rate cuts.

Fed officials, including Atlanta Fed President Raphael Bostic and Fed Chair Jerome Powell, have indicated that US inflation might slow its return to the target rate, supporting a stance of keeping monetary policy restrictive for a longer period. This perspective was reinforced by robust US employment data, showing unemployment claims at 212K, below the anticipated 215K, signaling a resilient labor market.

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This concludes our weekly recap. Have a great weekend and see you next week! 👋