09 Aug

European stock indices are rising despite declining economic indicators. Gold attracts investors again

August 9, 2022

By JustForex

The US stock indices traded mixed on Monday. By the close of trading, the Dow Jones index (US30) increased by 0.09%, while the S&P 500 (US500) decreased by 0.12%. The NASDAQ Technology Index (US100) lost 0.10% yesterday.

Tesla (TSLA) added 1%, driving consumer stocks higher as sentiment about electric vehicles was boosted by a new climate bill passed by the US Senate over the weekend. It includes nearly $400 billion over a 10-year period to fund energy-related programs and expand and improve existing tax credits for electric vehicles.

Nvidia Corporation (NVDA) fell more than 8% after the chip maker reported second-quarter revenue of $6.7 billion, well below its estimate of $8.1 billion, with the company lowering its revenue forecast for the third quarter.

In the US, consumer confidence in the housing market fell to its lowest level since 2011 as both prospective buyers and sellers became more pessimistic. According to Fannie Mae’s monthly survey, only 17% of those surveyed in July said it was a good time to buy a home, down from 20% in June.

Stock markets in Europe mostly rose on Monday. Germany’s DAX (DE30) gained 0.84%, France’s CAC 40 (FR40) added 0.80%, Spain’s IBEX 35 (ES35) jumped by 1.28%, and the British FTSE 100 (UK100) closed higher by 0.57% yesterday.

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Britain’s largest electricity distributor said that the damages of 280 million pounds sterling from the bankruptcy of energy companies would be shifted to consumers.

Yesterday, the German government spokesman said that Germany faces difficult months, but the country supports Ukraine and sanctions against Russia.

Goldman Sachs analysts said they believe the case for higher oil prices remains strong as the market faces larger shortages than they expected in recent months.

Gold prices maintained their recent gains as volatility in stock markets ahead of this week’s US inflation data boosted demand for the yellow metal. Gold and silver prices are inversely correlated with the dollar index and US government bond yields. Therefore, a decline in the dollar is usually accompanied by a rise in gold prices and vice versa. The focus now is on US consumer price data for July, which will be published on Wednesday. Analysts expect inflation to likely remain at a 40-year high in the coming months, necessitating further monetary tightening by the Fed. An unexpected rise in CPI could push up the dollar index and yields, negatively impacting gold and silver prices.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 1.26%, Hong Kong’s Hang Seng (HK50) was down by 0.77%, and Australia’s S&P/ASX 200 (AU200) added 0.07%.

Tensions between China and Taiwan eased slightly after China announced the end of military exercises around the island. At the same time, Taiwan’s defense ministry said Chinese planes and ships never entered Taiwan’s territorial waters.

The NAB Australia Business Confidence Index showed that inflationary pressures continue to rise, indicating that inflation has not yet peaked. But business activity remains strong despite global and domestic economic headwinds. Analysts believe the strong economic data will allow the RBA to raise interest rates another 0.5% at its next meeting on September 6.

S&P 500 (F) (US500) 4,140.06 −5.13 (−0.12%)

Dow Jones (US30) 32,832.54 +29.07 (+0.089%)

DAX (DE40) 13,687.69 +113.76 (+0.84%)

FTSE 100 (UK100) 7,482.37 +42.63 (+0.57%)

USD Index 106.41 −0.21 (−0.20%)

Important events for today:
  • – Australia NAB Business Confidence (m/m) at 04:30 (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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