InvestMacro

“If you believe in Gold as a consumer price inflation hedge then…”

By Elliott Wave International

Back in the days of the Roman Empire, an ounce of gold could buy a Roman a well-made toga, belt and finely crafted sandals.

In modern day Rome, lo and behold, a businessman can become sharply dressed via the value of that same ounce of gold.

So, yes, gold has maintained its store of value over the centuries.

However, in the relative short term — which can last years — gold may not be the inflation hedge that gold bugs believe it to be.

In a moment, I’ll show you how this relates to what’s going on with gold and inflation now. However, let’s first get insights from a chart and commentary from our February 2022 Global Market Perspective, which published when inflation was really getting going (The monthly Global Market Perspective is an Elliott Wave International publication which covers 50-plus global financial markets):

The chart shows the U.S. dollar price of Gold versus the annualized rate-of-change in the U.S. Consumer Price Index (CPI). If you believe in Gold as a consumer price inflation hedge then, as the CPI is accelerating, the Gold price should be advancing. The green shaded areas show that there have been five occasions since 1980 when the opposite was true, the last year being a good example. On the other side, the Gold-Inflation myth would allude to the price of Gold declining as CPI was decelerating. The grey shaded areas show five occasions since 1970 when this was not the case, 2007 to 2010 being a prime example.

Fast forward to today and we have these headlines:

• US inflation eases grip on economy, falling for a 6th month (AP News, Jan. 23)
• Inflation in U.S. could turn negative by midyear, says [this] billionaire investor … (MarketWatch, Jan. 28)

What’s happened to the price of gold? It’s steadily climbed in the face of easing inflation. Of course, this is just the opposite of what was occurring around this time last year. In both cases, the price of gold went in the opposite direction from what many would expect.

On Sept. 28, gold was trading at $1613.75 and has been in an overall uptrend since. The precious metal traded as high as $1949.46 on Jan. 26 (as of this writing on Jan. 30).

The bottom-line takeaway is that the widespread expected relationship between gold and inflation is not always there — indeed, there have been several instances in the past several decades where the opposite is the case.

Know that Elliott wave analysis, which is by no means a crystal ball, can nonetheless help you anticipate gold’s next big price move.

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By JustMarkets

On Thursday, Federal Reserve officials continued to impose their hawkish message on the market. The main message from policymakers is that further rate hikes are not far off and that the rate should remain high for an extended period. While there is nothing new in these comments, the 2-10 Treasury yield curve has flipped by 85 basis points, the deepest inversion since the early 1980s, raising new fears about economic problems. As the stock market closed Thursday, the Dow Jones Index (US30) decreased by 0.73%, and the S&P 500 Index (US500) fell by 0.88%. The NASDAQ Technology Index (US100) lost 1.02% yesterday.

Walt Disney announced a restructuring plan that will include cutting 7,000 jobs, which could result in about $5.5 billion in savings. PayPal Holdings Inc (PYPL) released a report Thursday with fourth-quarter results that beat analysts’ forecasts. Shares of PayPal Holdings Inc jumped by 7.04% after the market close. LYFT (LYFT) released a report Thursday with fourth-quarter results that disappointed analysts. The company’s stock fell more than 22% on the report.

Stock markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 0.33%, France’s CAC 40 (FR40) gained 0.96%, Spain’s IBEX 35 Index (ES35) added 0.18%, and the British FTSE 100 (UK100) closed up by 0.33% on Thursday.

According to the latest report from the National Institute of Economic and Social Research (NIESR), sluggish growth and persistent inflation will continue to hurt British households this year. NIESR expects UK GDP for the fourth quarter to show a 0.3% contraction. Bank of England Governor Andrew Bailey urged workers and employers to consider this year’s expected sharp drop in inflation when discussing wage settlements. Bailey told a parliamentary committee Thursday that the continued tightening reflects the Monetary Policy Committee’s concern about continued inflation and the need to see more evidence of easing in the labor market. The bank expects inflation to begin to decline rapidly from the middle of 2023 and, by the end of the year, will be about 4% due to sharp declines in wholesale energy prices, a sharp drop in import prices, and falling demand due to declining personal income.

On Wednesday, the US Energy and Information Administration (EIA) announced that weekly crude oil inventory levels reached their highest level since June 2021. Production reached a high last seen in April 2020. Despite the rise in inventories, oil continued to rise yesterday. The optimism about growth is due to increased demand from China after Fitch Ratings raised China’s economic growth forecast for 2023 to 5% from the previous figure of 4.1%. Fitch cited January services PMI data as well as Q4 2022 real GDP as reasons for the increase.

Asian markets were also mostly up yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.08% yesterday, China’s FTSE China A50 (CHA50) added 1.24%, Hong Kong’s Hang Seng (HK50) increased by 1.60% for the day, India’s NIFTY 50 (IND50) was up by 0.12%, and Australia’s S&P/ASX 200 (AU200) was down by 0.53% for the day.

The appointment of Haruhiko Kuroda’s successor will probably take place next week. Several representatives of the Liberal Democratic Party have said that opposition would arise within the party if the prime minister of Japan chose Yamaguchi, the former deputy governor of the Bank of Japan. Yamaguchi’s name was recently ranked third in polls of economists as a likely candidate for governor of the Bank of Japan. Yamaguchi, in comparison with other contenders for the top post, is considered more hawkish. If he is appointed, market participants expect it to cause significant market volatility and signal that the government is committed to a clear change in policy toward normalization.

Australia’s Central Bank (RBA) on Friday revised its forecasts for core inflation and wage growth upward and warned of further interest rate hikes, raising the risk of the economy sliding into recession. Given the importance of preventing a price-wage spiral, the council will continue to pay close attention to labor market data. Annual wage growth is expected to peak at 4.2% later this year, up from the previous forecast of 3.9%, and then decline to 3.8% by mid-2025. The unemployment rate will rise steadily to 4.4% by mid-2025 from the current 3.5%. The RBA also raised this year’s economic growth forecast to 1.6%, up from 1.4% previously. All of these forecasts are based on the assumption that interest rates will peak at about 3.75% in mid-2023 and then decline to about 3% by June 2025.

S&P 500 (F) (US500) 4,081.50 −36.36 (−0.88%)

Dow Jones (US30) 33,699.88 −249.13 (−0.73%)

DAX (DE40) 15,523.42 +111.37 (+0.72%)

FTSE 100 (UK100) 7,911.15 +25.98 (+0.33%)

USD Index 103.22 -0.19 (-0.18%)

• – Japan Producer Price Index (m/m) at 01:50 (GMT+2);
• – Australia RBA Monetary Policy Statement at 02:30 (GMT+2);
• – China Consumer Price Index (m/m) at 03:30 (GMT+2);
• – China Producer Price Index (m/m) at 03:30 (GMT+2);
• – UK GDP (q/q) at 09:00 (GMT+2);
• – UK Industrial Production (m/m) at 09:00 (GMT+2);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+2);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+2);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2);
• – US FOMC Member Waller Speaks at 19:30 (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.

By George Prior

Global investors should remain open to India’s enormous potential, despite the heightening crisis engulfing the Adani Group, affirms the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The observation by Nigel Green of deVere Group comes as MSCI, the global index provider, is set to change its weightings for Adani Group shares after assessing how many shares can be freely traded.

It follows earlier this week mass protests by India’s opposition parties who are demanding a probe into allegations by a U.S. short-seller against the conglomerate, which triggered the Adani Group of companies share price to plummet sharply.

Market losses have now exceeded $110 billion according to media reports since Hindenburg Research accused the corporate giant of stock manipulation and accounting fraud in a 24 January report.

Adani’s diverse businesses include port management, electric power generation and transmission, renewable energy, mining, airport operations, natural gas, food processing and infrastructure.

“The serious issues of the Adani Group of companies, headed by Gautam Adani, are causing such concern in a large part because he has been a close ally of Prime Minister Narendra Modi for many, many years,” says Nigel Green.

“With questions now mounting about this hugely influential conglomerate and issues of regulatory frameworks, nepotism, governance and debt, India’s credibility amongst global investors is now hanging in the balance.”

The debacle, according to many experts, is particularly inconvenient as some multinationals are currently looking to India as a substitute to China as an investment destination.

The questions being raised by global investors have shaken confidence in India.

“However, I would also urge them to keep an open mind on India’s incredible opportunities,” says the deVere CEO.

“The country is still set to overtake Japan and Germany to become the world’s third-largest economy, and together with China will account for more than half of global growth this year.”

He continues: “India’s economy is showing incredible resilience despite external tailwinds such as supply chain issues, the reopening of China, the war in Ukraine, and the impact of considerable economic slowdowns in developed economies.

“The robustness of the Indian economy is attributable in a large part to enormous domestic markets, a growing middle class, significant supply-side reforms, a strong financial sector, pro-business reforms, and the ongoing digitalization of public and private sectors.”

He concludes: “Investors who want to build long-term wealth should remain open to the current and future opportunities in India.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement

By JustMarkets

On Wednesday, many Federal Reserve officials stressed the need for further rate hikes because of concerns that a strong labor market could pave the way for inflation. As the stock market closed Wednesday, the Dow Jones Index (US30) decreased by 0.61%, and the S&P 500 Index (US500) lost 1.11%. The NASDAQ Technology Index (US100) fell by 1.68%.

Federal Reserve representative Christopher Waller said Wednesday that the fight to lower inflation might be long, and a longer-term interest rate hike may be needed.

Google held an event to launch its new “Bard” artificial intelligence chatbot, but the AI chatbot reportedly gave inaccurate answers just before the event. The decline in Google’s quotes pulled the entire tech sector with it. In response to the glitch, Google said it would use external feedback and its own testing to ensure that Bard’s answers met the high bar for quality, safety, and validity of real-world information.

Uber Technologies Inc (UBER) had an outstanding performance, closing up more than 5% after the company reported unexpected fourth-quarter earnings and optimistic forecasts.

Equity markets in Europe traded yesterday without a single dynamic. Germany’s DAX (DE30) gained 0.60%, France’s CAC 40 (FR40) fell by 0.18%, Spain’s IBEX 35 index (ES35) added 0.67%, Britain’s FTSE 100 (UK100) closed up by 0.26% on Wednesday.

According to Governing Council spokesman Martins Kazaks, the European Central Bank should raise interest rates to levels that would “significantly” limit the economy. The head of Lithuania’s central bank also added that investors should pay attention to comments made by President Christine Lagarde, who promised that the ECB would “stay the course” to return inflation to its medium-term target of 2%. At the same time, the politician believes there is no reason to pause or stop rate hikes after March’s 0.5% rate hike.

The FTSE 100 reached a new all-time high, boosted by optimistic reports from oil giants BP and Shell for the fourth quarter of 2022 and new optimism about the Fed’s short-term reversal. The British company Barratt developments reported a +15.9% rise in profit for the half-year, and the National Institute of Economic and Social Research (NIESR) added positive sentiment suggesting that the UK may be able to avoid a major recession.

Oil prices rose yesterday, mainly due to supply chain problems in Turkey caused by the earthquake. In addition, inventory data from the American Petroleum Institute (API) showed a deterioration of -2.18 million barrels rather than an increase of a similar amount.

Asian markets also traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.29%, China’s FTSE China A50 (CHA50) lost 0.41%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.07%, India’s NIFTY 50 (IND50) increased by 0.85%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 0.35%.

The five-year term of the head of the Bank of Japan, Mr. Kuroda, expires on April 8, and the choice of his successor will probably affect how quickly the Bank of Japan will be able to phase out the stimulus. Government nominees are due to be submitted to parliament at the end of this month. Earlier this week, it was reported that the Japanese government had approached Bank of Japan Deputy Governor Masayoshi Amamiya about the possibility of replacing current Governor Haruhiko Kuroda. Among other candidates, Hiroshi Nakaso, the former deputy governor of the Bank of Japan, who has international experience, speaks fluent English, and has close contacts with foreign central banks, is widely considered. Amamiya, like Kuroda, is a fan of soft monetary policy, while Nakaso is considered a more “hawkish” candidate who can lead the Bank of Japan down the path of policy normalization.

S&P 500 (F) (US500) 4,117.86 −46.14 (−1.11%)

Dow Jones (US30) 33,949.01 −207.68 (−0.61%)

DAX (DE40) 15,412.05 +91.17 (+0.60%)

FTSE 100 (UK100) 7,885.17 +20.46 (+0.26%)

USD Index 103.39 +0.06 (+0.06%)

• – German Consumer Price Index at 09:00 (GMT+2);
• – UK Monetary Policy Report Hearings at 11:45 (GMT+2);
• – Eurozone Economic Forecasts (m/m) at 12:00 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Natural Gas Reserves (w/w) at 17:30 (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.

By George Prior

Comments made Tuesday by the Federal Reserve’s Chair are likely to “kick start a year of important opportunities” for global investors, predicts the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The bullish prediction from deVere Group’s Nigel Green comes after Jerome Powell delivered his first remarks after Friday’s “extraordinarily strong” U.S. jobs report which, according to the central bank, shows it has more work to do to tame inflation.

Powell was speaking during a question-and-answer session with David Rubenstein of the Economic Club of Washington.

“We didn’t expect it to be this strong,” he said of the January jobs report, which found that 517,000 jobs had been added to the U.S. economy. “It kind of shows you why we think that this will be a process that takes a significant period of time.”

Of the comments, the deVere CEO says: “Of course, investors hang off every word of the Chair of the central bank of the world’s largest economy.

“So, naturally, when Jerome Powell said ‘the disinflationary process has begun’, markets jumped — despite him also adding notes of caution.

“It would have also not gone noticed by investors that when pushed a little, Powell didn’t use the opportunity to adopt a more hawkish tone.”

After the comments, all major Wall Street indices were trading up. The S&P 500 went up 0.5%, while the Nasdaq Composite gained 0.8%; meanwhile, the Dow Jones was up about 38 points, pushing back on an earlier loss of 186 points.

Nigel Green continues: “We expect that the Fed believing that ‘significant’ declines in inflation will occur this year is likely to kick start a year of important opportunities for global investors.

“2022 was an extremely challenging year for investors, many of whom were caught spectacularly off-guard by not having properly diversified portfolios, which left them open to untold financial risks.

“Looking ahead to the rest of 2023, it is likely that investment headwinds will exceed the tailwinds – thanks to considerably more favourable market conditions driven by inflation peaking and China’s reopening, amongst other factors.

“As we move into an era of peaked inflation, it’s crucial that investors ensure their portfolios are suitably diversified across asset classes, sectors, currencies and regions, so as to make the most of the considerable opportunities that will inevitably present themselves.”

Technology stocks led the gains Tuesday on Powell’s comments.

Last week, as big tech firms posted earnings reports, the deVere chief executive noted: “As market environments shifted in 2022, investors dumped growth stocks, like tech, in favour of value stocks which were deemed more suitable to the challenging landscape,” he observed.

“But what is happening now, we believe, is the beginning of a rebound. Tech stocks are back. Rotation into the right growth stocks will provide strong returns.”

He cited two key reasons why he believes the big tech reports heralded the start of The Great Rotation back to growth stocks.

First, valuations of tech and other growth stocks are currently low, having been hit by the previous rotation into value stocks. Investors are now eyeing these attractive entry points to top up their portfolios as the trend is reversing.

And second, inflation has seemingly peaked, and interest rates are set to stabilise, which takes away a major obstacle for tech stocks.

“Powell’s comments about the disinflationary process having begun will now dominate investors’ mindsets in 2023 as they seek to create and build wealth after a difficult 2022,” concludes Nigel Green.

“They will be positioning their portfolios to take advantage of improving market conditions in order not to miss out on opportunities.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement

By JustMarkets 

The stock market yesterday was tossing from one side to the other, digesting comments of the head of the US Federal Reserve, Jerome Powell. As a result, Mr. Powell did not give any new clues. The Fed still sees the need for further rate hikes in the fight against inflation, which is likely to be protracted. As the stock market closed Tuesday, the Dow Jones index (US30) increased by 0.78%, and the S&P 500 Index (US500) added 1.29%. The NASDAQ Technology Index (US100) jumped by 1.90% yesterday.

According to the Fed’s rate monitoring tool, expectations for a rate hike in March are almost entirely factored into prices, while the probability of a rate hike in May jumped from 38% to 69%. The final rate is expected to be 5.00-5.25% in May, after which the central bank will take a long pause until the end of the year.

Microsoft Corporation (MSFT) and Alphabet Inc (GOOGL) are showing strong growth. An AI arms race has begun between the two technology heavyweights. One day after Google released its chatbot Bard, based on its LaMDA artificial intelligence, Microsoft held an event detailing plans to integrate ChatGPT into its Bing search engine as well as other products.

Equity markets in Europe traded yesterday without a single dynamic. German DAX (DE30) decreased by 0.16%, French CAC 40 (FR40) lost 0.07%, Spanish IBEX 35 (ES35) added 0.06%, and British FTSE 100 (UK100) increased by 0.36% on Tuesday.

The FTSE 100 index is nearing its first test of its recently formed all-time high on BP’s optimistic results. The London-based company posted record earnings of $27.7 billion in 2022, breaking its previous record of $26.2 billion. BP also announced an additional $2.75 billion in shares buybacks and plans to pay a dividend of 6.61 cents. Similarly, Shell, the largest company in the FTSE 100 index, benefited from higher energy prices and earned a record profit of $42 billion last year.

ECB spokeswoman Isabel Schnabel said yesterday that the slowdown in inflation in Europe is not yet due to ECB policy, with core inflation (excluding food and energy prices) remaining extremely high.

Yields on two-year UST (bonds), sensitive to interest rates, are slightly below the level last seen at the end of last year. Gold is inversely correlated to US government bond yields and the dollar index. Against the backdrop of further US Federal Reserve rate hike plans, higher UST yields are expected for a longer period of time, so it will be difficult for gold to regain its recent high levels.

Natural gas futures increased for a second straight day on Tuesday, adding just over 5% thanks to forecasts of cooler temperatures in the coming weeks. But analysts believe this is a temporary bounce and a new bottom is yet to come because storage levels are 9.4% higher than a year ago, and production has reached near-record levels of about 100 billion cubic feet a day, which has significantly weakened the fundamental outlook for gas.

Asian markets also traded without a single trend yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.03% yesterday, China’s FTSE China A50 (CHA50) fell by 0.14%, Hong Kong’s Hang Seng (HK50) ended the day up by 0.36%, India’s NIFTY 50 (IND50) lost 0.24%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.46%.

The Australian dollar rose sharply after the RBA raised its interest rate target to 3.35% from 3.10%. The acceleration in the Consumer Price Index caused some concern among bank officials. The RBA’s accompanying statement said that the board expects that further interest rate increases will be needed in the coming months to ensure that inflation returns to target levels and that this period of high inflation is only temporary. The futures market is starting to lean toward another potential 25 bps hike in March.

S&P 500 (F) (US500) 4,164.00 +52.92 (+1.29%)

Dow Jones (US30) 34,156.69 +265.67 (+0.78%)

DAX (DE40) 15,320.88 −25.03  (−0.16%)

FTSE 100 (UK100) 7,864.71 +28.00 (+0.36%)

USD Index 103.39 −0.23 (−0.22%)

• – US Crude Oil Reserves (w/w) at 17:30 (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.

By JustMarkets

At Monday’s close, the Dow Jones Index (US30) decreased by 0.38%, and the S&P 500 (US500) was down by 1.04%. Technology Index NASDAQ (US100) fell by 1.00% yesterday. The stock market continues to be influenced by Friday’s news. Atlanta Federal Reserve Bank President Raphael Bostic said Monday that given the unexpectedly strong job growth data in January, the US Federal Reserve might need to raise the cost of borrowing higher. Today, investors are awaiting a speech by US Federal Reserve Chairman Jerome Powell, where they will be looking for clues as to the US Central Bank’s future actions.

The US Treasury Secretary Janet Yellen said Monday that she sees an opportunity to avoid a US recession, with inflation falling significantly and the economy remaining strong given the strength of the US labor market.

Shares of Dell Technologies Inc (DELL) fell by 4.3% yesterday after it reported cutting 6,650 jobs, or about 5% of the global workforce.

Stock markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.84%, French CAC 40 (FR40) fell by 1.34%, Spanish IBEX 35 (ES35) lost 0.72%, and British FTSE 100 (UK100) closed Monday down by 0.82%.

Yesterday ECB officials said with one voice that ECB rate hikes are far from over, despite lower inflation in the region. Policymakers explained that the risk of excessive policy tightening is negligible compared to the risk of doing too little. Analysts forecast a 0.5% rate hike from the ECB at the March meeting.

The Turkish lira has fallen to an all-time low under pressure from geopolitical risks as several major earthquakes hit the region, causing massive destruction and casualties. According to some reports, more than 4,300 people have died in Turkey and Syria, and more than 20,000 have been injured.

Oil prices rose slightly in choppy trading on Monday. Oil traders are evaluating the prospects of a recovery in demand from China. The International Energy Agency (IEA) expects China to account for half of global oil demand growth this year. However, a sharp increase in US jobs on Friday heightened expectations that the US Federal Reserve will raise rates more than previously planned, which could curb economic growth and reduce the need for fuel.

Asian markets were also down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.24%, China’s FTSE China A50 (CHA50) lost 1.74%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.65%, India’s NIFTY 50 (IND50) fell by 0.31%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.28%.

The Nikkei newspaper reported citing anonymous sources in the government and the ruling party, that deputy governor of the Bank of Japan Masayoshi Amamiya is nominated for the post of the next governor. According to Saxo strategists, Amamiya is considered the most “dovish” of the contenders, dashing hopes that a normalization of Bank of Japan policy could happen soon.

Geopolitical tensions between the US and China have escalated again. The US shot down a Chinese balloon off the coast of South Carolina that had entered US airspace. The US Department of Defense released a statement over the weekend stating that Chinese balloons had entered US airspace three times under the previous administration. This news is likely to affect sentiment as markets were hoping for a quick recovery in demand from the Chinese economy in February.

S&P 500 (F) (US500) 4,111.08 −25.40 (−0.61%)

Dow Jones (US30) 33,891.02 −34.99 (−0.10%)

DAX (DE40) 15,345.91 −130.52 (−0.84%)

FTSE 100 (UK100) 7,836.71 −65.09 (−0.82%)

USD Index 103.62 +0.70 (+0.68%)

• – Australia RBA Interest Rate Decision at 05:30 (GMT+2);
• – Australia RBA Rate Statement at 05:30 (GMT+2);
• – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+2);
• – German Industrial Production (m/m) at 09:00 (GMT+2);
• – US Trade Balance (m/m) at 15:30 (GMT+2);
• – Canada Trade Balance (m/m) at 15:30 (GMT+2);
• – US Fed Chair Powell Speaks at 19:00 (GMT+2);
• – Canada BoC Gov Macklem’s Speech at 19:30 (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.

By ForexTime 

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By JustMarkets

The US stock markets continued their rally yesterday. By Thursday’s close, the Dow Jones Index (US30) decreased by 0.11%, while the S&P 500 (US500) gained 1.48%. The NASDAQ Technology Index (US100) jumped by 3.25%.

Investors are investing in tech stocks after the Meta rally. The artificial intelligence technology boom in recent months has forced investors to pour money into technology. The market has also been helped by renewed confidence that the Federal Reserve will stop raising rates sooner than originally planned.

Tesla (TSLA) added another 3% to its recent rally after it was announced that the company would increase production at its Shanghai plant to nearly 20,000 vehicles per week. Apple’s (AAPL) results for the quarter fell short of estimates due to a drop in iPhone revenue. iPhone’s revenue fell about 8% to $65.78 billion amid a difficult macroeconomic environment and significant supply constraints. Apple stock fell by 3% after the report was released. Alphabet (GOOGL) reported lower-than-expected fourth-quarter earnings and revenue as lower spending on online advertising affected results. The company also said its first-quarter results would reflect lower spending related to job cuts. Shares of Alphabet Inc. fell more than 1% on the report. Amazon (AMZN) was also unhappy with the results.

Operating profits continued to fall in the current quarter. Faced with high inflation and a volatile economy, the company has set its sights on cutting costs across various businesses. Shares fell 5% after the market closed. Ford Motor Co (F) said Thursday that fourth-quarter profit fell from a year earlier. The automaker blamed supply chain problems and production “instability, ” leading to higher costs and lower volumes. Ford shares fell more than 6% on the report after the close of the main session.

Stock markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 2.16%, France’s CAC 40 (FR40) added 1.26%, Spain’s IBEX 35 index (ES35) jumped by 1.45%, and Britain’s FTSE 100 (UK100) closed Thursday up by 0.76%.

The ECB, as expected, raised its interest rate by 0.5% yesterday. The US Fed is ending its rate hike cycle and will soon talk about ending quantitative easing (QT), with the ECB about halfway through and planning to start QT in March. This situation is good for the euro as the spread between the euro, and the dollar will continue to narrow.

The Bank of England announced another “sharp” interest rate hike on Thursday, saying it was too early to declare victory over inflation. The bank raised its key rate from 3.5% to 4%. Nevertheless, the bank tempered expectations of further rate hikes, dismissing suggestions that it would respond “strongly” to price pressures and implying that future changes would be smaller.

Oil prices fell Thursday as US factory orders fell and the dollar strengthened, making oil more expensive for non-US buyers. This indicates a further slowdown in the economy, especially in manufacturing, which is negatively affecting oil. Investors have become less confident about the strength of the oil outlook. But analysts are still confident in a bullish scenario for the “black gold” due to the rebounding economy of China (the largest oil importer). It is also worth remembering that the ban on Russian oil will come into effect on February 5, which may strike a blow to global supplies.

The unusually warm start to the winter of 2022/23 resulted in a significant reduction in heating demand in the United States and Europe compared to the norm, leaving more gas in storage than originally anticipated. This has led to a drop in natural gas prices over the past two months. But the situation may change dramatically with the onset of cold weather, which weather forecasters predict for the second half of February.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.20%, China’s FTSE China A50 (CHA50) decreased by 0.34%, Hong Kong’s Hang Sengv(HK50) lost 0.52%, India’s NIFTY 50 (IND50) fell by 0.03%, and Australia’s S&P/ASX 200 (AU200) was up by 0.13% on the day.

The mixed economic data released reinforced concerns about China’s rapid recovery after the repeal of the zero COVID-19 policy. While the country’s services sector recovered sharply in January after a four-month slump, a private survey showed that small-scale manufacturing firms still struggle with rising COVID-19 cases and lingering supply chain problems.

Severe flooding in New Zealand’s largest city, Auckland, has increased inflationary pressures and is creating a new cost-of-living headache for Prime Minister Chris Hipkins, who is trying to win back support for his party before the election.

S&P 500 (F) (US500) 4,179.76 +60.55 (+1.47%)

Dow Jones (US30) 34,053.94 −39.02 (−0.11%)

DAX (DE40) 15,509.19 +328.45 (+2.16%)

FTSE 100 (UK100) 7,820.16 +59.05 (+0.76%)

USD Index 101.74 +0.53 (+0.53%)

• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+2);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+2);
• – US Unemployment Rate (m/m) at 15:30 (GMT+2);
• – US ISM Services PMI (m/m) at 17:00 (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.