25 Jul

Many important economic events will take place this week and volatility in the markets will be high

July 25, 2022

By JustForex

In the US, weekly jobless claims hit a five-month high, while existing home sales declined for the fifth straight month. These are signs of problems in the labor and housing markets. According to some analysts, the US Federal Reserve may officially announce the beginning of the recession in the United States this week. The US economy is already down 1.6% in the first quarter, and the second quarter is also negative, so, technically, this recession is possible.

At the close of the stock market on Friday, the Dow Jones index (US30) decreased by 0.43% (+1.34% for the week) and the S&P 500 Index (US500) fell by 0.93% (+2.00% for the week). The NASDAQ Technology Index (US100) lost 1.87% on Friday (+2.36% for the week).

It will be a significant week for US stock indices. Besides the important US Federal Reserve meeting on Wednesday and US GDP data on Thursday, technology giants like Amazon (AMZN), Apple (AAPL), Alphabet (GOOG), Meta (META), and Microsoft (MSFT) will report this week as well.

Stock markets in Europe were mostly up on Friday. German DAX (DE30) gained 0.05% (+2.46% for the week), French CAC 40 (FR 40) added 0.25% (+2.42% for the week), Spanish IBEX 35 (ES35) increased by 0.49% (+0.56% for the week), British FTSE 100 (UK100) gained 0.08% (+1.64% for the week).

Last week, the European Central Bank joined many other central banks in raising interest rates as its focus was on fighting inflation rather than a potential economic slowdown. On Friday, ECB chief Christine Lagarde said that the ECB would raise rates as much as needed to bring inflation back to target levels. By narrowing the interest rate differential, the euro has temporarily strengthened. But it should be noted that the US Federal Reserve will raise interest rates by 0.75-1% this week, which will widen the spread again.

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US benchmark WTI crude has fallen nearly 3% in the past week, extending its losses over the past three weeks by almost 13%. However, Brent crude jumped by 2.2%, breaking a five-day losing streak of 17%. The situation in the oil market remains very unstable. On the one hand, the White House is trying to lower the price of oil. On the other hand, sanctions against Russia and supply shortage with high demand — these factors do not allow the price to fall.

Last week, precious metal prices rose. “Gold is starting to act as a haven as weakening economic growth will force many central banks to abandon their aggressive tightening plans,” said Ed Moya, head of research US analytical company.

Russia’s war with Ukraine continues. Last week, Russia, Ukraine, Turkey, and UN officials signed an agreement to allow Ukraine to ship grain from a port in Odesa. Despite this, Russian missiles struck the port on Saturday. Russia proved once again that it is a terrorist state. President Vladimir Zelensky, as well as many European officials, condemned Saturday’s attack as “barbarism,” which showed that Moscow could not be trusted under any circumstances.

Asian markets traded lower last week. Japan’s Nikkei 225 (JP225) gained 4.41%, Hong Kong’s Hang Seng (HK50) added 0.63%, and Australia’s S&P/ASX 200 (AU200) increased by 2.81%. At the opening on Monday, the Asian indices are showing a decline. Investors should also pay attention to Inflation Data in Singapore. Analysts forecast consumer price growth to 6.2% (current 5.6%) on an annualized basis. If the data is worse than expected, it may boost the Singapore dollar but at the same time have a negative impact on Asian indices.

In the commodities market, natural gas futures (+18.37%), palladium (+11.05%), platinum (+4.00%), coffee (+2.98%), cotton (+2.75%), copper (+2.74%) and Brent oil (+2.42%) showed the biggest gains over the week. Lumber futures (-10.06%), soybeans (-9.57%), sugar (-7.17%), corn (-6.95%) and wheat (-2.74%) showed the biggest drops.

S&P 500 (F) (US500) 3,961.63 −37.32 (−0.93%)

Dow Jones (US30) 31,899.29 −137.61 (−0.43%)

DAX (DE40) 13,253.68 +7.04 (+0.053%)

FTSE 100 (UK100) 7,276.37 +5.86 (+0.081%)

USD Index 106.55 −0.37 (−0.34%)

Important events for today:
  • – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
  • – Eurozone German Ifo Business Climate (m/m) at 11:00 (GMT+3).

By JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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