North American News
It’s Labor Day in North America
- Equity and bond markets are closed
Happy Monday, especially for those of you who get the day off.
It’s Labor Day and that means that markets are closed in the United States and Canada.
CME Globex Labor Day holiday hours – open Sunday evening for Tuesday trade date
- Trading hours for many products and exchanges will change for the holiday.
The US Labor Day holiday is Monday, September 2nd.
The full trading hours schedule is here (there is a summary screenshot just below):
ICYMI – Goldman Sachs raised their Q3 US GDP estimate to 2.7% (q/q annualized), from 2.5%
- GS cranking up their economic growth tracking estimate
CNBC had the snippet on Friday on Goldman Sachs ramping up their estimate for US economic growth this quarter. The investment bank boosted its Q3 GDP tracking estimate by 0.2pp to 2.7%, q/q annualized.
GS cited an improved outlook for consumer spending. This followed a jump for incomes and expenditures.
Mexico manufacturing PMI drops to two-year low
- August Mexico manufacturing PMI data
- PMI falls to 48.5, lowest since August 2022
- New orders and production decline accelerates
- Cost inflation hits 21-month high, driven by raw material shortages and peso depreciation
- Job shedding continues for fourth straight month
- Employment decreased for the fourth month
- Export sales saw a substantial drop, particularly from US customers
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said:
“August proved to be another difficult month for Mexican manufacturers, with firms trimming output, employment and stocks due to subdued sales in both the domestic and international markets. Total order book volumes dropped to the greatest extent in two years, boding ill for near-term production prospects.
“Confidence regarding the 12-month outlook for output took a hit, as companies became increasingly concerned about intense competition from China and highway insecurity. Panellists also displayed a high degree of uncertainty regarding domestic public policy and market conditions in the US. Combined with demand weakness, subdued optimism could restrict investment.
“Another obstacle encountered by firms was a further sharp increase in purchasing costs, as peso depreciation and material shortages at suppliers meant that they paid more for items like electronic components, foodstuff, packaging and steel. Despite cost pressures climbing to their highest in nearly two years, charge inflation remained contained as several companies left their fees unchanged due to demand retrenchment.”
Commodities
What will happen to Gold prices – ABN AMRO
The outcome of the US elections could have a large impact on Gold prices. If there is a Democratic Victory (partial or full) the impact on Gold prices would be limited. In case of a universal tariff under a Trump presidency, we would likely see lower Gold prices, while over the longer-term these moves would likely be reversed, ABN AMRO’s FX strategist Georgette Boele note.
Gold prices to fall if Republicans win
“The evolution of the Gold market from merely a safe haven and jewellery market to a market where investment decisions play a more crucial role is important. Indeed, since the introduction of Gold ETFs (March 2003) Gold has developed more into a speculative asset and behaved less as a safe haven asset. As a result, developments in the US Dollar, monetary policy and real yields have become dominant drivers over time.”
“Of course, there are still investors buying physical Gold for safe haven purpose but the flows into non-physical Gold have often been dominant. What do we expect for Gold prices under the different scenarios? If there is a Democratic Victory (partial or full) we think the Gold prices could be very modestly supported because we expect a modest decline in or a neutral USD and some lower real yields. We expect Gold prices to stay around $2,500 per ounce.”
“A Republican Victory brings more complicated dynamics. In the scenario of a full tariff implementation, we expect in the first years of the of the presidential term inflation to increase, the Fed to hike and the USD to rally because monetary policy divergence and weakness elsewhere. As a result, Gold prices will suffer, and Gold prices could decline below the 200-DMA and move towards $2,000 per ounce. Afterwards we expect the USD to weaken and real rates to come down. This will give room for Gold prices to rally again and move beyond the highs set earlier in 2024.”
Libya’s NOC declares a force majeure on the El Feel oil field from September 2nd
Novak: Russia to cut production to required level under OPEC+ deal by end of August
- Comments from the deputy prime minister
OPEC+ has been on a push for compliance for the past two weeks and it looks to have achieved some success. WTI is trading flat on the day.
More here.
OPEC Crude oil production data:
United States OPEC Crude oil Production Saudi Arabia (Barrel)
- Actual: 9.00M
- Expected: 9.00M
- Previous: 9.00M
United States OPEC Crude Oil Production Nigeria (Barrel)
- Actual: 1.54M
- Expected: 1.54M
- Previous: 1.54M
United States OPEC Crude oil Production Iraq (Barrel)
- Actual: 4.12M
- Expected: 4.12M
- Previous: 4.12M
United States OPEC Crude Oil Production Libya (Barrel)
- Actual: 0.90M
- Expected: 0.90M
- Previous: 0.90M
United States OPEC Crude Oil Production Kuwait (Barrel)
- Actual: 2.41M
- Expected: 2.41M
- Previous: 2.41M
United States OPEC Crude oil Production Iran (Barrel)
- Actual: 3.18M
- Expected: 3.18M
- Previous: 3.18M
United States OPEC Crude Oil Production Algeria (Barrel)
- Actual: 0.91M
- Expected: 0.91M
- Previous: 0.91M
United States OPEC Crude Oil Production Congo (Barrel)
- Actual: 0.26M
- Expected: 0.26M
- Previous: 0.26M
United States OPEC Crude Oil Production Gabon (Barrel)
- Actual: 0.22M
- Expected: 0.22M
- Previous: 0.22M
United States OPEC Crude Oil Production Guinea (Barrel)
- Actual: 0.06M
- Expected: 0.06M
- Previous: 0.06M
EU News
European equity close: Early declines erased
- September off to a sluggish start but rebound
With the US on holiday, European traders had little incentive to get markets moving today.
- Stoxx 600 flat
- German DAX +0.1%
- Francis CAC +0.2%
- UK’s FTSE 100 -0.2%
- Spain’s IBEX flat
- Italy’s FTSE MIB -0.1%
Eurozone August final manufacturing PMI 45.8 vs 45.6 prelim
- Latest data released by HCOB – 2 September 2024
- Prior 45.8
The positive revision is just masking the troubles that are continuing to surface in the Eurozone manufacturing sector. Output continues to suffer while new order inflows fell at the quickest pace this year so far in August. Employment conditions are also starting to be impacted with business confidence sliding to a five-month low. Pain. HCOB notes that:
“Things are going downhill, and fast. The manufacturing sector has been stuck in a rut, with business conditions worsening at the same solid pace for three straight months, pushing the recession to a gruelling 26 months and counting. New orders, both domestic and international, are slowing down even more, dashing any short-term hopes for a rebound. Adding insult to injury, input prices have been creeping up again since June. There is a silver lining insofar as companies managed to pass some of these higher costs onto their customers in August.
“The deflationary phase in the goods sector might be coming to an end. For the first time since April of last year, selling prices rose, driven by France, the Netherlands, Greece and Italy. This could spell trouble for the ECB, which has been grappling with persistent inflation in services while relying on falling manufacturing prices to keep disinflation on track. Higher transport costs are partly to blame for this uptick in price pressure. Although the price increase in goods is still modest, the ECB will undoubtedly keep a close eye on this development.
“Among the eurozone countries in the PMI survey, Austria, Italy and Ireland are bucking the trend. Unlike the others, their indices are actually ticking up instead of down. Italy’s Manufacturing PMI was just below the 50 mark, hinting at near stagnation rather than outright decline. Spain isn’t far off, barely staying above the critical 50 level, while Greece is still leading the pack. But with such a broad downturn across the board, there is little sign that things will get better anytime soon.”
Germany August final manufacturing PMI 42.4 vs 42.1 prelim
- Final data released by HCOB – 2 September 2024
- Final Manufacturing PMI 42.4 vs. 42.1 expected and 43.2 prior.
Key findings:
- HCOB Germany Manufacturing PMI at 42.4 (Jul: 43.2). 5-month low.
- HCOB Germany Manufacturing PMI Output Index at 42.8 (Jul: 42.5). 2-month high.
- New orders drop at quickest rate for nine months.
Comment:
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“The recession in Germany’s manufacturing sector is dragging on way longer than anyone expected. August saw an even steeper drop in incoming orders, killing off any hope for a quick bounce back. The HCOB PMI shows that the downturn has been going on since mid-2022, which is unusually long. Normally, over the last 30 years, the industry has managed to recover within a maximum of 20 months of a recession starting.
But this time, things are different, and China seems to be the main culprit. The country is stepping up its game, competing head-to-head with German industrial companies – not just in China, but also in Germany and in other key markets, especially in the automotive and mechanical engineering sectors. Just as Germany was on the verge of reaping the benefits of a tentative global manufacturing uptick, as hinted by the global PMI, the economic cycle seems to have taken another nosedive.
In August, export orders in Germany dropped at a much faster pace than in previous months. This suggests that the export slump we’ve been seeing in recent months is probably going to stick around for a while. Order backlogs for German companies have been shrinking since the middle of 2022, as shown by the HCOB PMI data. While Eurostat data echoes this trend, it doesn’t quite capture the full picture. What often gets missed is that companies can be struggling despite having order books filled to the brim.
This happens when the prices agreed upon for those orders no longer cover rising production costs. In the worst-case scenario, these companies may face bankruptcy, but until that point, the stock of orders data can misleadingly inflate the health of business conditions. The recession is still hitting the consumer goods sector, and it is also dragging down the intermediate and capital goods industries.
The downturn has become more pronounced in the intermediate goods sector, while the reduction in production in the capital goods sector has slowed slightly compared to the previous two months. However, with new orders declining again, and at a slightly faster pace, there’s little hope that the capital goods sector will see any expansion in the coming months.”
France August final manufacturing PMI 43.9 vs 42.1 prelim
- Latest data released by HCOB – 2 September 2024
- Prior 44.0
Despite a positive revision, the figure is still a mild drop compared to the July reading. That continues to mark a poor state of affairs for French manufacturing in Q3. HCOB notes that:
“The state of the French manufacturing sector is deteriorating. What seemed like a recovery of the industrial sector at the start of 2024 turned out to be just a brief uptick. The slowdown of the manufacturing sector continued in August. Output declined for the twenty-seventh month running, as too did new orders overall.
“Suppliers’ delivery times are lengthening again, partly due to disruption at the Red Sea. In August, the index for suppliers’ delivery times dropped by over three points compared to July and over five points compared to June, therefore extending July’s downturn. “French manufacturers raised selling prices even though input price inflation cooled. In August, the corresponding index for output prices increased sharply, while input prices increased at a slower pace compared to the previous month.
“The consumer goods sector is giving the French manufacturing sector a boost. It was the only sub-sector where output increased, while investment and intermediate goods production declined. Consumer goods companies remained positive on their outlook, although new orders here dropped sharply.
“French manufacturers are bracing for tough times ahead. For the first time since the beginning of the year, the index for future output expectations dropped below the neutral threshold. The index fell further in August and was below the long-term average for the third month in a row. Surveyed manufacturers mentioned political uncertainty, both domestically and abroad as a concern.”
Spain August manufacturing PMI 50.5 vs 51.5 expected
- Latest data released by HCOB – 2 September 2024
- Manufacturing PMI 50.5 vs. 51.5 expected and 51.0 prior.
Key findings:
- Increase in new work registered.
- Output and employment both decline.
- Confidence in the outlook sinks to lowest of year so far.
Comment:
Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:
“The trends in Spain’s manufacturing sector keep showing signs of weakening. Although the sector’s index remains marginally above the critical 50-point threshold, currently positioned at 50.5, the recent three-month trajectory clearly indicates a move toward stagnation. This development is consistent with the broader global economic environment and does not come as a surprise. Industrial sentiment across Europe, which had shown signs of improvement in the first half year, has recently experienced a downturn.”
“Consequently, industrial demand within Spain, sourced from both domestic and international markets, is now limited to only marginal growth. Furthermore, production levels have declined for the first time since January, underscoring the sector’s current challenges. “Business expectations have dropped well below the historical average, reaching their lowest point of the year so far. Some surveyed companies voiced concerns that industrial momentum across Europe could worsen in the coming months.”
“Reflecting this sentiment, Spanish manufacturers have, for the first time in seven months, initiated layoffs or opted not to replace departing employees. “There’s some positive news on the pricing front. Input costs for Spain’s manufacturers saw only marginal increases in August. Where costs did rise, surveyed companies attempted to pass them on to consumers, though with only limited success. Due to weaker demand, some firms introduced discounts to prevent a significant drop in sales.”
As a result, sales inflation was only marginal. “The manufacturing sub-sectors are showing a mixed picture. While consumer and intermediate goods remain in expansion territory, the investment goods PMI has dropped sharply into contraction territory. The particularly severe impact on this sub- sector could be attributed to general uncertainty, prompting firms to respond cautiously by delaying or cancelling investments.”
Italy August manufacturing PMI 49.4 vs 48.5 expected
- Latest data released by HCOB – 2 September 2024
- Manufacturing PMI 49.4 vs. 48.5 expected and 47.4 prior.
Key findings:
- Declines in production and new orders only modest in August.
- Firms raise staffing levels for first time since April as outlook brightens.
- Charge inflation returns after nearly a year-and-a-half of reductions.
Comment:
Commenting on the PMI data, Dr Tariq Kamal Chaudhry Economist at Hamburg Commercial Bank, said:
“Italy’s industry is on the mend. Although the HCOB PMI for Italy’s manufacturing sector remains below the growth threshold at 49.4 points in August, the index has gained two points. Still, this result is good news given the downward trend elsewhere in the eurozone in recent months. However, the situation for the Italian manufacturing industry is far from ideal.
Companies surveyed reported scaling back production due to sluggish new order intakes and generally weak market conditions. Price developments continue to trouble Italy’s industrial sector. Despite a slight dip in August, the latest rise in input costs was nevertheless strong. Companies surveyed attributed the persistent price pressure to higher raw material costs. On a slightly positive note, output prices have also started to climb, allowing firms to pass on some of their increased expenses to customers.
However, the wide gap between input and output prices, particularly since the start of the second quarter, underscores the ongoing strain on profit margins. The outlook by the panellists may be overly optimistic. Businesses are looking ahead with greater confidence, reflected in increased hiring in August, following cuts in the previous three months despite the persistent labour shortage in Italy.
Future output expectations are almost euphoric when compared to the historical average, but this optimism seems more rooted in hope. A closer look at total and international order intakes reveal that, despite a noticeable jump from the previous month, orders continued to decline. We need more evidence of a sustained upward trend.”
Italy Q2 final GDP 0.2% vs 0.2% Q/Q expected
- Final data released by Istat – 2 September 2024
- Italy Final Q2 GDP Y/Y 0.2% vs. 0.9% expected and 0.6% prior.
- Italy Final Q2 GDP Q/Q 0.9% vs. 0.2% expected and 0.3% prior.
UK August final manufacturing PMI 52.5 vs. 52.5 prelim
- Final data released by S&P Global – 2 September 2024
- Final Manufacturing PMI 52.5 vs. 52.5 expected and 52.1 prior.
Key findings:
- Manufacturing PMI at 52.5 in August.
- Broad-based growth by sector.
- Domestic market drives new contract wins.
Comment:
Rob Dobson, Director at S&P Global Market Intelligence
“The UK manufacturing sector remained a positive contributor to broader economic growth in August. The headline PMI hit a 26-month high of 52.5, reflecting solid expansions in output and new orders and the strongest jobs growth for over two years. The upturn is broad- based across manufacturing, with the investment goods sector the stand-out performer.
The upturn continues to be driven by the domestic market, which is helping to compensate for lost export orders. The trend in export orders a key cause for concern, with new business from overseas having fallen continuously since early in 2022. UK manufacturers are experiencing difficulties in securing new contract wins overseas due to weaker demand from Europe, a slowdown in mainland China, freight delays, competitiveness issues, high shipping costs, global conflicts and political uncertainty.
Many of these issues are also impeding imports which, while benefiting domestic suppliers, is causing supply chain-related production constraints as witnessed by a further marked lengthening of supplier delivery times. These supply constraints and higher shipping costs continued to drive up input prices for manufacturers, which rose sharply again in August by recent standards.”
SNB total sight deposits w.e. 30 August CHF 456.7 bn vs CHF 463.6 bn prior
- Latest data released by the SNB – 2 September 2024
- Domestic sight deposits CHF 448.6 bn vs CHF 455.7 bn prior
Switzerland August manufacturing PMI 49.0 vs 43.5 expected
- Latest data released by Procure – 2 September 2024
- Prior 43.5
That’s a marked improvement as output returns to positive territory on the month. That said, it’s too early to call this a return to a sustainable recovery just yet. A stronger franc currency, something which the SNB is warning about, could come back to bite at the manufacturing sector still. Anyway, here’s the breakdown for August:
ECB’s Buch: Europe’s banking sector has shown resilience
- Comments on banking from Buch
- Preconditions for EDIS are now met, and moving forward will be important
- Legislators should resist the temptation to relax banking regulation
- Profit levels are relatively high, which provides a good opportunity for banks to invest in strengthening resilience
Politics – Germany’s far-right party AfD set to win one state election
- A strong showing in German regional polls
The far-right Alternative for Germany (AfD) party looks set to win in a regional election, according to exit polls.
AfD is projected to secure 33.5% of the vote in the Thuringia state parliamentary elections
- ahead of the conservative Christian Democrats (CDU), who are expected to get 24.5%.
In Saxony, another region holding elections, the AfD and CDU are in a too-close-to-call race.
Asia-Pacific-World News
China Caixin Manufacturing PMI August 2024: 50.4 (expected 50.0, prior 49.8)
- Much better than the official PMI
The private, Caixin S&P Global manufacturing PMI is much better, coming in at 50.4.
From the report, in summary:
- Demand picked up as total new orders resumed growth, with stronger demand for intermediate goods
- Exports declined for the first time in eight months
- Employment remained steady after an 11-month contraction
- Both input and output prices decreased
- Lower prices for raw materials such as industrial metals brought down input costs
- Output prices decreased amid sales pressure, with the corresponding indicator reaching the lowest level in four months
China with harsh words for the European Union – says be fair and objective
- China on EU remarks on the South China Sea
China’s EU Mission responding to the EU remarks about South China Sea dispute:
- European Union is not a party to the South China Sea issue and has no right to point fingers on the issue
- The European side’s repeated ‘speculation’ on the freedom of navigation issue does not do any good to the EU’s own interests and international credibility
- China is strongly dissatisfied with the European side’s accusations, firmly opposes them and will never accept them
- Urge the European side to be ‘objective and fair’, and be careful with its words and actions on the South China Sea issue
Headlines via Reuters.
PBOC sets USD/ CNY reference rate for today at 7.1027 (vs. estimate at 7.1030)
- PBOC CNY reference rate setting for the trading session ahead.
In open market operations:
- PBOC injects 3.5bn via 7-day RR, sets rate at 1.7%
China August Manufacturing PMI 49.1 (expected 49.5), Services 50.3 (expected 50.0)
- August 2024 official Chinese PMIs from the National Bureau of Statistics (NBS):
Composite is 50.1
- prior 50.2
- August Manufacturing PMI 49.1
- expected 49.5, prior 49.4
- Services 50.3
- expected 50.0, prior 50.2
The Chinese economy has been showing, and continues to show, a patchy and uneven recovery. Key trouble spots include:
- an uncertain property sector outlook, the sector is mired in debt
- subdued consumer confidence and demand
- manufacturing overcapacity in some sectors
- still below target underlying inflation (impacting this are the above points on weak domestic demand and supply overcapacity)
- on the horizon are potentially higher tariffs on Chinese exports
Australian job ads down 2.1% m/m in August (prior -2.7%)
- ANZ-Indeed Job Ads
ANZ-Indeed Job Ads fell for the 7th consecutive month in August to be down 15.3% so far in 2024.
Australia Melbourne Institute Inflation August 2024 -0.1% m/m (prior 0.4%)
- Private survey inflation measure falls m/m for the first time in half a year
Australia Melbourne Institute Inflation August 2024 -0.1% m/m (prior 0.4%), its first drop in 6 months
- and 2.5% y/y for a three-year low (prior 2.8%)
- lowest in 10 months
- and 2.2% y/y, a 32-month low of 2.2% (vs. 2.6% prior)
Trimmed mean inflation gauge flat m/m in August
Australian July Building Permits +10.4% m/m (2.5% expected)
That’s an impressive result, well above estimate. This data can be volatile though, depending on multi-unit approvals.
The 10.4% rise in July is to a 14-month high of 14,797 approvals.
- private house approvals +0.6%, a 21-month high
- apartment approvals rose 32.1% to an 8-month high
Australian data – Q2 Business Inventories +0.1% (expected -0.1%, prior +1.3%)
- Inventories will be input to the Q2 GDP data.
June quarter, 2024 data for Australia:
Inventories: +0.1%
- expected -0.1%, prior +1.3%
Company operating profit: -5.3%
- expected 0.0%, prior -2.5%
Australia August Manufacturing PMI 48.5 (prior 47.5)
- Australia Final manufacturing PMI from Judo Bank / S&P Global
Australia Final manufacturing PMI from Judo Bank / S&P Global for August 2024, comes in at the highest level in three months @ 48.5
Commentary from the report, in summary:
- not a manufacturing recession, but an extended soft landing
- capacity constraints across many parts of the Australian economy are acting as a headwind to growth for manufacturing
- above the 50.0 mark for new export orders and a jump up in the future output index to the highest level in 18 months
- new orders and output remain soft at readings below 50.0
- employment rose above 50
- conditions in the manufacturing sector are not deteriorating, although a genuine recovery remains elusive
- inflation indicators in the sector worsened, both the input price index (costs) and the output price index (final prices) rising during the month
- input prices have sustained index readings just under 60 over the past four months
- final prices rose towards a 55.0 index reading in August, which, if sustained, will lead to the highest readings in more than a year
Jibun Bank Japan manufacturing PMI @ 49.8 for August (vs. 49.1 prior)
- Japan Jibun / S&P Global Manufacturing PMI for August 2024
The final reading is 49.8, still below 50 and thus still in contraction.
From the report, in summary:
- softer and modest fall in new orders
- output returned to expansion for the second time in three months, reached the highest since May 2022
- employment growth picked up on the month
- the level of outstanding business continued to moderate sharply
- input price inflation strengthened to reach a 16-month high (higher raw material prices and exchange rate weakness)
- new export volumes declined at a rate that was the most marked since March amid evidence of low demand from key export markets including Mainland China and South Korea
Japan Q2 business capex +7.4% y/y (vs. expected +9.9%)
- Corporate capital expenditures fall short of the median estimate
Data from Japan’s finance ministry for spending on plant and equipment in April-June 2024:
- +7.4% y/y
- expected +9.9%, prior +6.8%
- for the q/q, +1.2%
Capex is an input to the GDP data for Q2 due on September 9
Other data showed sales rose 3.5% y/y, while recurring profits rose 13.2% y/y
South Korea Imports (YoY) (Aug) $KRW
- Actual: 6.0%
- Previous: 10.5%
South Korea Trade Balance (Aug) $KRW
- Actual: 3.83B
- Previous: 3.60B
South Korea Exports (YoY) (Aug) $KRW
- Actual: 11.4%
- Previous: 13.9%
Cryptocurrency News
Crypto Investment Products Face $305 Million Exodus as Economic Data Shakes Sentiment
Digital Asset Outflows Surge Amidst Diminished Rate Cut Expectations
As August draws to a close, the cryptocurrency investment market has experienced a significant shift, with digital asset products facing net outflows totaling $305 million. This marks a stark reversal from the previous week’s high inflows, reflecting growing negative sentiment driven by recent economic data.
Weekly Crypto Investment Highlights:
- Total Outflows: $305 million
- Bitcoin: Outflows of $318 million
- Ethereum: Outflows of $5.7 million
- Solana: Inflows of $7.6 million
The sharp outflows were primarily concentrated in Bitcoin ETFs, which saw $319 million in withdrawals. This reaction aligns with a decreased likelihood of a Federal Reserve rate cut by 50 basis points in September, following stronger-than-expected macroeconomic data.
The United States led the outflows with $318 million, reflecting a cautious market response to evolving economic indicators. Germany and Sweden also experienced outflows of $7.3 million and $4.3 million, respectively. Conversely, Canada and Switzerland managed to secure positive flows, with $13.2 million and $5.5 million in inflows, while other regions like Hong Kong, Australia, and Brazil saw modest inflows.
Bitcoin’s recent price drop below $59,000 contributed to its ETF outflows, with large whale wallets withdrawing significant amounts from exchanges. Lookonchain data revealed a notable withdrawal of 1,100 BTC, worth approximately $64.26 million, from Binance. Despite the overall negative sentiment, short Bitcoin ETFs recorded their highest inflows since March, totaling $4.4 million, indicating increasing bearish positions.
Ethereum ETFs also faced continued outflows, extending their streak to three consecutive weeks, while Solana investment products provided a rare bright spot with $7.6 million in inflows.
Ethereum Faces Headwinds with Weak September Returns and ETF Outflows
Historical Trends and Recent Data Raise Concerns for ETH Investors
Ethereum’s (ETH) historical performance in September, marked by weak average returns, is casting a shadow over its prospects for the month. With negative returns being a recurring theme since the ICO boom of 2017, investors are bracing for potential further declines.
Market Overview:
- Historical Performance: September average return of -6.8%, median return of -12.6%
- Recent ETF Data: $5.7 million in net outflows last week
- Key Price Action: ETH needs to break out of a key rectangular price range
Despite a 2% uptick on Monday, Ethereum’s typical September performance has investors wary, given its tendency to end the month on a negative note. August concluded with a 22% loss, reinforcing concerns that September might follow suit.
In the latest development, Ethereum ETFs experienced another week of net outflows totaling $5.7 million. This trend reflects a broader risk-averse sentiment among investors, particularly with US spot Ethereum ETFs contributing significantly to the outflows. Notably, these ETFs saw $12.4 million in net outflows from major issuers such as BlackRock’s ETHA and Grayscale’s ETHE.
Amid these challenges, some market observers are hopeful that a potential Federal Reserve rate cut could spark a rally for Ethereum. Despite the negative flows, Ethereum remains a key player in the ETF market, with three of its ETFs—BlackRock’s ETHA, Fidelity’s FETH, and Bitwise ETHW—among the top 25 ETF launches in 2024.
As Ethereum navigates these turbulent waters, its ability to move beyond a critical price rectangle will be crucial in determining its next trend.
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