14 Mar

Silver prices have reached a one-year high. Oil is growing amid a decline in inventories

March 14, 2024

By JustMarkets

At Wednesday’s close of the stock market, the Dow Jones Index (US30) was up 0.09%. The S&P 500 Index (US500) decreased by 0.19%. The NASDAQ Technology Index (US100) closed negative 0.54%. The Dow Jones Industrials Index received support from companies such as 3M (MMM) with a gain of 5.42%, as well as Chevron (CVX), Caterpillar (CAT), Home Depot (HD), NIKE (NKE), Goldman Sachs (GS) and Coca Cola (KO) with gains of more than 1%.

Fed Chairman Powell said last week that the Fed is “not far” from being confident enough to cut interest rates. However, markets rate the Fed’s probability of cutting interest rates at its meeting next week as near zero, as inflation is still too far above target. Markets estimate the odds of a 25 bps rate cut at next week’s March 20 FOMC meeting at 1%, the May 1 meeting at 13%, and the June 12 meeting at 73%.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) was down 0.02%, France’s CAC 40 (FR40) added 0.62%, Spain’s IBEX 35 (ES35) index increased by 1.65%, and the UK’s FTSE 100 (UK100) closed positive 0.31%. The FTSE Index closed at 7,772 on Wednesday, the highest in ten months and marking the third consecutive session of gains. Market sentiment was driven by positive economic data that boosted hopes that the UK is recovering. UK Gross Domestic Product rose by 0.2% month-on-month in January, driven by strong retail and house-building performance.

ECB council spokesman Martins Kazaks said Wednesday that rate cuts could come within the next few meetings. His counterpart, Bank of France Governor Francois Villeroy de Galhau, said the ECB’s first rate cut is more likely in June than April.

WTI crude oil prices rose to $80 a barrel on Thursday, extending gains from the previous session, as an unexpected drop in US crude inventories signaled strong demand in the world’s top oil consumer. EIA data showed US crude inventories fell by 1.536 million barrels last week, contradicting expectations of a 1.338 million barrel increase. It was the first decline in seven weeks, confirming industry data reported Tuesday by API. In addition, the report noted a decline in inventories at the Cushing hub in Oklahoma and a decrease in gasoline inventories.

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Silver prices (XAGUSD) rose to $24.7 an ounce, the highest since early December. They followed gains in other precious metals amid growing expectations that major central banks will soon start cutting interest rates. The Fed and ECB are expected to begin easing monetary policy in June, while the Bank of England will likely make its first rate cut in August.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 0.26% on the day, China’s FTSE China A50 (CHA50) was up 0.89%, Hong Kong’s Hang Seng (HK50) lost 0.07% on Wednesday, and Australia’s ASX 200 (AU200) was positive 0.22%. The Hang Seng Index (HK50) moved further away from the 3-month highs reached earlier in the week after Wall Street fell from recent highs overnight due to losses in chipmaker stocks, and market participants were wary of new key US economic data ahead of next week’s FOMC meeting.

The US House of Representatives passed a landmark bill that gives Chinese TikTok owner ByteDance six months to sell a controlling stake or the app will be blocked in the US.

Investors remain cautious amid growing speculation that the Bank of Japan (BoJ) could adjust its monetary policy as early as next week due to rising wages, inflation, and a strong economy. The country also concluded this year’s spring wage talks on Wednesday, with several major Japanese companies agreeing to solid wage increases.

S&P 500 (US500) 5,165.31 −9.96 (−0.19%)

Dow Jones (US30) 39,043.32 +37.83 (+0.097%)

DAX (DE40) 17,961.38 −3.73 (−0.021%)

FTSE 100 (UK100) 7,772.17 +24.36 (+0.31%)

USD Index 102.80 -0.16 (-0.16%)

Important events today:
  • – Switzerland Producer Price Index (m/m) at 09:30 (GMT+2);
  • – US Producer Price Index (m/m) at 14:30 (GMT+2);
  • – US Retail Sales (m/m) at 14:30 (GMT+2);
  • – US Initial Jobless Claims (w/w) at 14:30 (GMT+2);
  • – US Natural Gas Storage (w/w) at 16:30 (GMT+2).

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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