20 May

Precious and industrial metals show strong growth. Oil grows amid the news about the death of Iran’s leader

May 20, 2024

By JustMarkets

On Friday, the Dow Jones Index (US30) gained 0.34% (+1.04% for the week), while the S&P 500 Index (US500) rose by 0.12% (+1.34% for the week). The NASDAQ Technology Index (US100) closed negative 0.07% (for the week +1.74%). The US stock indices were mixed on Friday, consolidating just below the week’s highs. Stocks received some support thanks to dovish comments from Atlanta Fed President Bostic, who said that if the outlook develops as he expects, citing a slow downshift in inflation and continued economic momentum, “then it would be appropriate for us to cut rates by the end of the year.”

Reddit (RDDT) surged over 13% after it partnered with OpenAI to bring its content to chatbot ChatGPT. According to analysts, the deal will boost Reddit’s data licensing business. Advanced Micro Devices (AMD) shares rose more than 2% on Friday after Wolfe Research added it to its alpha list, replacing Nvidia (NVDA).

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) fell by 0.18% (for the week -0.37%), France’s CAC 40 (FR40) closed down 0.26% (for the week -0.53%), Spain’s IBEX 35 (ES35) added 0.25% (for the week +2.01%), and the UK’s FTSE 100 (UK100) closed negative 0.22% (for the week -0.16%).

Comments from Fed officials suggesting a prolonged continuation of high interest rates and ECB member Schnabel’s cautious stance on rate cuts after June contributed to the prevailing caution in European markets. The FTSE 100 Index declined on Friday as global markets also showed weakness, fueled by concerns about a prolonged continuation of high interest rates. UK money markets expect a potential 60 bps cut in interest rates by the Bank of England in 2024, with the first cut expected in August.

Gold rose to a record $2,430 an ounce on Monday after recent US economic data reinforced speculation that the Federal Reserve may go for at least two rate cuts this year. Silver surpassed $30 an ounce, hitting its highest level since January 2013, thanks to higher gold prices and robust investment and industrial demand. While ETF funds have shown little interest in silver, physical buying has increased.

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WTI crude oil prices rose above $80 a barrel on Monday, extending gains from last week after Iran’s state media reported the death of a leader at the crash site of a helicopter carrying President Ebrahim Raisi, adding to political uncertainty in one of the largest oil-producing countries. The foreign minister was in the helicopter with him.

Asian markets were mostly rising last week. Japan’s Nikkei 225 (JP225) gained 1.51%, China’s FTSE China A50 (CHA50) added 1.29%, Hong Kong’s Hang Seng (HK50) gained 4.74%, and Australia’s ASX 200 (AU200) was positive 0.84%.

The People’s Bank of China (PBoC) left key lending rates unchanged during its May meeting, matching market expectations. The 1-year prime rate (LPR), the benchmark for most corporate and household loans, was kept at 3.45%. Meanwhile, the 5-year rate, the benchmark for real estate mortgages, was maintained at 3.95% after a record 25 bps decline in February. Both rates are at record lows amid Beijing’s attempts to stimulate economic recovery after mixed activity data in April, marked by solid industrial production growth, the lowest unemployment rate in five months, and weak retail sales.

The Australian dollar climbed above $0.67, hitting four-month highs. New stimulus measures in China and bets on lower interest rates in the US boosted commodity prices, boosting sentiment in Australian markets. Later last week, China announced a broad package of measures to support the struggling real estate market, including easing mortgage lending rules and urging local governments to buy unsold homes. Domestically, investors are eagerly awaiting the minutes of the Reserve Bank of Australia’s latest meeting for clues on the future path of rates.

Investors in New Zealand look forward to Wednesday’s Reserve Bank of New Zealand (RBNZ) meeting. The Central Bank is expected to leave the official money rate at 5.5% for the 7th consecutive meeting, with policymakers likely to reiterate the need to maintain restrictive policies for an extended period to bring inflation back into the 1–3% target range.

S&P 500 (US500) 5,303.27 +6.17 (+0.12%)

Dow Jones (US30) 40,003.59 +134.21 (+0.34%)

DAX (DE40) 18,704.42 −34.39 (−0.18%)

FTSE 100 (UK100) 8,420.26 −18.39 (−0.22%)

USD Index 104.50 +0.05 (+0.05%)

Important events today:
  • – China PBoC Loan Prime Rate at 04:15 (GMT+3);
  • – US FOMC Member Bostic Speaks at 15:45 (GMT+3);
  • – US FOMC Member Barr Speaks at 16:00 (GMT+3);
  • – US FOMC Member Jefferson Speaks at 17:30 (GMT+3);
  • – US FOMC Member Mester Speaks at 21:00 (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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