08 May

Oil prices are rising amid rumors of increased production by OPEC countries. European indices are growing amid the “dovish” position of the ECB

May 8, 2024

By JustMarkets

The US stock indices traded mixed on Tuesday. The Dow Jones Index (US30) rose by 0.08%, while the S&P 500 Index (US500) gained 0.13%. The NASDAQ Technology Index (US100) closed negative 0.10% yesterday. Minneapolis Fed President Kashkari’s comments on Tuesday were hawkish when he said that given the latest inflation data, he doubts that Fed policy is restrictive enough to bring price growth back to the Fed’s 2% target. He added that the Fed will likely keep interest rates unchanged “for an extended period” until it is satisfied that inflation will align with the target. Investors await further comments from the central bank and Friday’s Michigan consumer sentiment index to better understand how rates will move.

First-quarter earnings results were mostly better than expected, which is favorable for the stock. First-quarter earnings are expected to be up 6.5% YoY, well above the 3.8% forecast before the reporting season.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 1.40%, France’s CAC 40 (FR40) closed 0.99% higher, Spain’s IBEX 35 (ES35) added 1.50%, and the UK’s FTSE 100 (UK100) gained 1.22%.

ECB Governing Council representative De Cos said that the ECB may cut interest rates in June if inflation persists. On the back of positive economic news from the Eurozone, European indices were supported on Tuesday. Eurozone retail sales for March rose by 0.8% m/m, which exceeded expectations of 0.7% m/m and was the largest increase in a year and a half. German factory orders for March unexpectedly fell by 0.4% m/m, weaker than expectations of 0.4% m/m. German trade news was better than expected: exports for March added 0.9% m/m, stronger than expectations of 0.3% m/m. In addition, imports for March unexpectedly rose by 0.3% m/m, stronger than expectations of 1.0% m/m.

WTI crude oil prices fell to $78 per barrel on Wednesday, back to their lowest levels in nearly two months after reports that Russian Deputy Prime Minister Alexander Novak said OPEC+ may consider increasing oil production. The group of major producers will meet on June 1 to decide on production policy for the year’s second half. The current supply agreement, which takes about 2.2 million barrels a day off the market, expires at the end of June.

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Asian markets were mostly up on Wednesday. Japan’s Nikkei 225 (JP225) closed up 1.57% yesterday, China’s FTSE China A50 (CHA50) added 0.25% for the day, Hong Kong’s Hang Seng (HK50) was down 0.53% for the day, and Australia’s ASX 200 (AU200) was positive 1.44%.

The Hang Seng (HK50) attempted to near its highest level in eight months as traders focused on Chinese President Xi Jinping’s visit to Europe this week and how trade relations will develop despite ongoing inspections of various sectors. On the fiscal front, Beijing will allocate billions of yuan to upgrade infrastructure in China’s cities over the next three years. Meanwhile, foreign exchange reserves in China fell more than expected to US$3.20 trillion in April, and Hong Kong’s fell to the lowest level in six months, US $416.4 billion.

Finance Minister Shun’ichi Suzuki repeated a warning that authorities are ready to respond to excessive currency volatility. At the same time, Bank of Japan Governor Kazuo Ueda said they will study the impact of yen movements on inflation to guide policy decisions. Analysts say the intervention will only give the authorities some time, given the sharp interest rate differential between Japan and the US.

S&P 500 (US500) 5,187.70 +6.96 (+0.13%)

Dow Jones (US30) 38,884.26 +31.99 (+0.082%)

DAX (DE40) 18,430.05 +254.84 (+1.40%)

FTSE 100 (UK100) 8,313.67 +100.18 (+1.22%)

USD Index 105.37 +0.32 (+0.32%)

Important events today:
  • – German Industrial Production (m/m) at 09:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Member Cook Speaks at 20:30 (GMT+3).

By JustMarkets

 

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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