Weekly Market Update: It’s All Politics

Despite a good week in terms of product announcements the only thing that moved the dial was Presidential candidate Harris announcing her support for a crypto regulatory framework. Markets are weird like that. 

The other interesting bits in crypto were a proposal to make the Ethereum network 50% faster, Samsung adding crypto payments and a year long delay to Mt Gox payouts. The NZX is also looking at launching an ETF of the BlackRock ETF and Uniswap is launching its own layer 2 network. It wouldn’t be an update if we didn’t include the latest SEC action, this time against Crypto.com. 

In macro market news, Oil prices have come back. However, this is due to OPEC reducing their demand forecast due to a sluggish Chinese economy

In the US, September’s CPI came in slightly above expectations which caused the normal hand wringing. Hurricane Milton could be the tipping point for insurance in Florida. Sounds familiar to some in NZ I’m sure. 

Another quiet week in Europe; the ECB is expected to deliver its 3rd straight rate cut as inflation is below target and growth is…well negligible. 

In APAC, India took centre stage, but not in a good way. Production is down and inflation is way up! Singapore’s economy looks good based on GDP. China’s troubles rumble on and they are definitely flirting with deflation despite last week’s stimulus which appeared short lived. 

Australia’s housing market is resembling NZ’s in 2023. New building activity is falling and rents are way up. 

A big week in New Zealand. Manufacturing and Services continue to contract, the Government posted a bigger than expected deficit and the immigration tap has certainly dried up. The big news was the release of Q3 CPI data, it was predicted to fall to 2.3% from last quarter’s 3.3%, instead it came in at 2.2%. 

Market sentiment has improved significantly this week and we are now sitting in greed territory.

Highlights this week: 

• This week most assets posted respectable gains in the high single figure range. Volumes also ticked up with the change in market sentiment.
• There has been a noticeable increase in sell activity indicating some profit taking with USDT, SOL and ETH showing increased sell volume. 
• At the time of writing, BTC and SOL were both up 8% on the week, while ETH was up 6%, BNB and XRP were up 2%.
• Our newly listed coin Ethena (ENA) ripped this week, up 50%. Congratulations to those who got in on that one. 
• Maker (MKR) takes out the position of worst performer, down 4% this week. 

View all top gainers: Visit the top gainers page to find out more.

Highlights from the crypto space

ETF inflows are back for BTC. In a big way! 

Crypto.com received a Wells notice from the SEC and immediately countersued. Game on.

Samsung Pay added Alchemy Pay’s virtual card allowing crypto transactions. 

A new proposal for Ethereum that reduces slot times from 12 to 8 seconds is on the table. This will basically make the chain 50% faster according to the authors.

Other notable highlights from the crypto space:

• USDT issuer, Tether is trying to reinvigorate its image in the USA, which makes sense given the European exodus. 
• The NZX announced that it is launching a BTC ETF which as far as we can tell is an NZ issued ETF of the Blackrock ETF. Waiting to hear what the fees are. 
• Wirex announced the launch of a non-custodial payment solution called WirexPay. 
• Uniswap has launched its own layer 2 network built on Optimism.
• The deadline for Mt Gox payouts has been pushed out a year to October 2025. 
• Van Eck is raising a $30M fund for Fintech, AI and Digital assets. 
• VP Harris announced her backing for a crypto regulatory framework. Markets liked it. 

🌎 Macro news TLDR: …Uncertainty, for now.

Oil prices are down 2% as OPEC cut its forecasted global oil demand. China being the major driver.  Prices fell further after the Biden administration said that Israel won’t target Iran’s oil infrastructure. 

U.S. economic news

CPI for September fell month on month from August, however it came in above expectations for both headline and core. Headline is up 0.2% for the month and running at 2.4% for the year.

Core CPI is at 3.3%. Hurricane Milton caused an estimated $60-100bn in insured losses, however the big news is that insurance itself might be unobtainable in Florida. 

Over in Europe….

In something of a surprise, industrial production in the EU rose 1.8% in August. Services are looking particularly strong. 

Later this week the ECB is set to make a call on rates, markets are expecting the 3rd straight cut. 

And in Asia Pacific…

India’s central bank left its policy rate unchanged at 6.5%. The statement has them continuing to grow and getting close to their 4% target for CPI. 

However, industrial production was less than expected in August and CPI was a shocker, spiking from 3.7% to 5.5% in September. 

Food prices were the largest driver, which is bad for 1.4bn people. Japan’s producer prices were flat in September. Singapore’s GDP was 4.1%. 

In China, last week’s stimulus announcement caused a mini rally in assets, however it feels more like a pump and dump as the RBOC didn’t follow through with the news the market wanted. 

China’s CPI drifted backwards in September to sit at 0.4% annualised. PPI was down 0.6% in September and 2.8% annualised. 

In Australia, it’s starting to feel like NZ, only 6 months behind. Building activity fell in the June quarter. Housing availability is flowing through to rents, with prices up 7.3% for the same period. 

In NZ, the Government posted a $12.9bn deficit for the June quarter on the back of larger costs. According to the BNZ PMI survey, manufacturing remains in contraction at 46.9, but is up from 46.1. 

Services are unchanged at 45.7. The wind continues to come out of the immigration sails, with August recording a net gain of 54,000. The migrant departures hit a record of 133k including 81k citizens. Food prices ticked up to 1.2% annualised. Retail spending was flat for September, but down 5.6% year on year. 

CPI data for the September quarter is out showing that inflation has fallen even more than expected. Headline inflation fell from 3.3% in July to 2.2%, core CPI was 3.1%.

Tradable inflation is actually negative at -1.6% for the year with non-tradable (domestic) inflation at 4.9%. Rates being one of the largest drivers at 12%.

That’s a wrap for this week. 

Stay tuned for the next update.

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