InvestMacro

By JustMarkets

The US stock market ended Tuesday’s trading lower amid negative dynamics from the consumer services, technology, and industrial sectors. Concerns over higher interest rates were again the main cause for concern. At Tuesday’s stock market close, the Dow Jones Index (US30) decreased by 2.06%, and the S&P 500 (US500) lost 2.00%. The NASDAQ Technology Index (US100) fell by 2.50% yesterday.

According to a preliminary report from S&P Global, the US PMI rebounded for the second month, rising to 50.2 from 46.8, beating expectations. Manufacturing business activity rose from 46.9 to 47.8, while the service sector increased from 46.8 to 50.5, returning to growth territory.

Walmart (WMT), the largest US retailer, issued gloomy forecasts for 2023, but it hasn’t affected the company’s stock much. Home Depot, Inc. (HD), the home improvement retailer, also issued a lower-than-expected earnings forecast due to higher supply chain costs and weak demand. Home Depot shares fell more than 5% on the report. Investors had hoped that retail earnings would offer some clues that the Federal Reserve was close to completing an interest rate hike. But the latest economic data suggests that the Fed still has room for 1-2 rate hikes. Perhaps today’s FOMC minutes will provide more concrete clues on that point.

According to JPMorgan strategists, it is too early to talk about a recession after the Federal Reserve’s aggressive campaign, especially since the impact of monetary policy on the economy may have a lag of one to two years.

In Canada, inflationary pressures continue to decline. The latest data showed that the annualized consumer price index fell from 6.3% to 5.9% (forecast 6.1%). Core inflation, which excludes food and energy, fell to 5.0% from 5.4% (5.5% forecast). On the back of such data, the Bank of Canada is not likely to raise interest rates further so as not to create additional pressure on the economy.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) was 0.52% lower, French CAC 40 (FR40) fell by 0.37%, Spanish IBEX 35 (ES35) decreased by 0.34%, and British FTSE 100 (UK100) was 0.46% lower.

The main thesis of ECB head Christine Lagarde yesterday:

• The ECB intends to return inflation to 2%;
• How high the rates will depend on new data on inflation and the labor market;
• ECB intends to raise rates by 50 bps in March;
• There is no wage-price spiral in the Eurozone.

With strong economic data on business activity in the manufacturing sector, especially in the services sector, a 0.5% rate hike at the next meeting is almost a done deal for the ECB. That said, new rate hikes are also expected in May. With the US Fed likely to raise rates by 0.25% in March and 0.25% in May, the gap between the Fed and ECB rates will narrow, strengthening the European currency in the medium term.

Traders increased bets on a 0.25% Bank of England rate hike at the next meeting after the UK Manufacturing PMI rose to 49.2 from 47.2 last month (forecast 47.5). And in the services sector, the PMI returned to recovery territory, from 48.7 to 53.3 (forecast 49.2).

Putin’s speech yesterday indicated a further escalation of the war. The day after US President Joe Biden’s surprise trip to Kyiv, Vladimir Putin prepared a speech for his citizens. Putin’s speech did not hint at any policy change or immediate economic or political constraints on Russia’s ability to wage war. He repeated the largely familiar grievances that Russia is fighting a Western conspiracy to destroy it. It was also revealed yesterday that China would submit its proposal for peace talks between the two sides by the end of the week. But given that China is a strategic partner of Russia, Western leaders do not expect anything positive regarding Ukraine.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.21%, China’s FTSE China A50 (CHA50) gained 0.02%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.71%, India’s NIFTY 50 (IND50) lost 0.10%, and Australia’s S&P/ASX 200 (AU200) ended the day slightly negative by 0.21%.

As expected, the Reserve Bank of New Zealand (RBNZ) raised the official monetary rate by 50 basis points. The rate rose from 4.25% to 4.75%, a 14-year-high. Also, the central bank said it expects further tightening as inflation remains too high.

S&P 500 (F) (US500) 3,997.34 −81.75 (−2.00%)

Dow Jones (US30)33,129.59 −697.10 (−2.06%)

DAX (DE40) 15,397.62 −79.93 (−0.52%)

FTSE 100 (UK100) 7,977.75 −36.56 (−0.46%)

USD Index 104.22 +0.36 (+0.34%)

• – Australia Wage Price Index (m/m) at 02:30 (GMT+2);
• – New Zealand RBNZ Interest Rate Decision at 03:00 (GMT+2);
• – New Zealand RBNZ Monetary Policy Report at 03:00 (GMT+2);
• – New Zealand RBNZ Press Conference at 04:00 (GMT+2);
• – German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – German IFO Business Climate (m/m) at 11:00 (GMT+2);
• – US FOMC Meeting Minutes at 21:00 (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.

By JustMarkets

The US stock market did not trade yesterday because of the holiday. Stock index futures traded in the European session, but there were no significant movements. The price traded in a narrow price range due to low volatility.

Meta Platforms (META), the parent company of Facebook and Instagram, said over the weekend that it was launching a paid subscription service that would offer features such as account verification, a move the company said would protect content generators.

Stock markets in Europe were mostly down yesterday. Germany’s DAX (DE30) decreased by 0.03%, France’s CAC 40 (FR40) lost 0.16%, Spain’s IBEX 35 (ES35) fell by 0.55%, and the British FTSE 100 (UK100) closed up by 0.12%.

Consumer sentiment in the Eurozone rose to its highest level in a year, a sign of resilience and growing hope that the region can avoid a recession this year.

The Swiss National Bank remains ready to be active in the foreign exchange markets to achieve its goal of price stability. This means that if the Swiss franc depreciates, the SNB will sell foreign currency. If the Swiss franc strengthens rapidly, the SNB will buy foreign currency in the right amount. This is necessary to keep the inflation rate. The rise in the value of the Swiss franc has helped reduce inflation caused by more expensive imports, while Switzerland’s hydroelectric power and nuclear power have helped reduce the impact of soaring energy prices.

US President Joe Biden made a surprise visit to Ukraine’s capital, Kyiv, on Monday, on the eve of the anniversary of Russia’s invasion of Ukraine. Biden said his visit should “reaffirm Ukraine’s unwavering commitment to democracy, sovereignty, and territorial integrity.” Over the weekend, US Secretary of State Antony Blinken said that China was considering providing Russia with military assistance and warned that any such action would “create a serious problem for us and in our relationship.” While Biden was in Kyiv, the State Department announced $460 million in additional US aid to Ukraine, including artillery ammunition, anti-tank systems, air defense radars, and $10 million for energy infrastructure. European Union High Representative for Foreign Affairs Josep Borrell said the bloc would approve additional sanctions before the anniversary of the conflict.

Crude oil prices rose yesterday after reports of delays in lifting US sanctions against Iran. The UN observers found a build-up of uranium enrichment that is only 6% below the level needed to make a nuclear bomb and well above the level needed to make fuel for reactors. This will complicate any attempt to lift US sanctions on Iranian oil exports. Saudi Energy Minister Prince Abdulaziz revealed yesterday that the OPEC+ group of oil exporters remains flexible on its production policy, despite last week’s announcement that existing production quotas would be frozen until the end of the year.

Gold prices recovered some of their losses late last week. But the fundamentals are still on the side of the bears. Much of gold’s decline was driven by US factors, particularly the Federal Reserve’s more aggressive behavior after stronger-than-expected economic data on the labor market and PPI inflation.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 0.07%, China’s FTSE China A50 (CHA50) jumped by 2.31% yesterday, Hong Kong’s Hang Seng (HK50) ended the day up by 0.81%, India’s NIFTY 50 (IND50) decreased by 0.56%, and Australia’s S&P/ASX 200 (AU200) ended the day slightly positive by 0.06%.

New Zealand’s Central Bank is ready to cut the pace of interest rate hikes to half a percentage point Wednesday in response to signs that inflation has peaked in the wake of the devastating Cyclone Gabriel. 19 of 23 economists believe the Reserve Bank will raise the official interest rate from 4.25% to 4.75% at its Wednesday meeting.

The latest RBA meeting minutes showed that Australia’s central bank is considering further interest rate hikes of 25 or 50 basis points. Unlike the December minutes, there was no consideration of pausing the tightening cycle here. The RBA pointed to the “great breadth and resilience” of inflation and the “very large” amount of household savings to emphasize the need for higher borrowing costs.

S&P 500 (F) (US500) 4,079.09 0 (0%)

Dow Jones (US30)33,826.69 0 (0%)

DAX (DE40) 15,477.55 −4.45 (−0.03%)

FTSE 100 (UK100) 8,014.31 +9.95 (+0.12%)

USD Index 103.88 0 (0%)

• – Australia Manufacturing PMI (m/m) at 00:00 (GMT+2);
• – Australia Services PMI (m/m) at 00:00 (GMT+2);
• – Australia RBA Monetary Policy Meeting Minutes at 02:30 (GMT+2);
• – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
• – Japan Services PMI (m/m) at 02:30 (GMT+2);
• – French Manufacturing PMI (m/m) at 10:15 (GMT+2);
• – French Services PMI (m/m) at 10:15 (GMT+2);
• – German Manufacturing PMI (m/m) at 10:30 (GMT+2);
• – German Services PMI (m/m) at 10:30 (GMT+2);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – Germany ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
• – Canada Retail Sales (m/m) at 15:30 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2);
• – US Services PMI (m/m) at 16:45 (GMT+2);
• – US Existing Home Sales (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.

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

Since the release of PPI inflation data on Thursday, fears of the US Federal Reserve returning to a more aggressive pace of rate hikes have returned to financial markets, especially given the strong labor market and GDP growth. All of this was fueled by relevant comments from Fed officials. Cleveland Fed Chair Loretta Mester said Thursday that US interest rates would have to rise above 5% and stay there for a long time to keep inflation down significantly. St. Louis Fed President James Bullard, often considered the most hawkish official at the central bank, also said Thursday that he supports further rate hikes. Bullard added that he would support a 50 basis point increase at the next Fed meeting on March 22. As a result, the US stock market came under pressure late last week. At the close of the stock market on Friday, the Dow Jones index (US30) increased by 0.39% (-0.18% week-to-date), while the S&P 500 Index (US500) fell by 0.28% (-0.43% week-to-date). NASDAQ Technology Index (US100) lost 0.58% on Friday (+0.24% for the week).

The Fed will release the minutes of its January meeting on Wednesday. The minutes may give investors some indication of the appetite for a bigger hike at the Fed’s upcoming March meeting after recent comments from some policymakers indicating support for such a move.

The disappointing fourth-quarter reporting season is coming to an end. The results from the major retailers will provide insight into the strength of consumer spending amid a surge in prices, which is an important topic for investors. Walmart (WMT), the world’s largest retailer by sales, along with home improvement giant Home Depot (HD), are due to report Tuesday. The retailers’ extraordinarily high earnings could raise fears of a tougher Fed response.

Stock markets in Europe were mostly down on Friday. German DAX (DE30) decreased by 0.33% (+1.04% for the week), French CAC 40 (FR40) lost 0.25% (+2.80% for the week), Spanish IBEX 35 (ES35) added 0.06% (+2.17% for the week), British FTSE 100 (UK100) closed Friday down by 0.10% (+1.55% for the week).

The war in Ukraine will cost Germany’s economy about 160 billion euros ($171 billion), or about 4% of its gross domestic product, the German Chamber chief said. An Allianz Trade study says the German industry will pay about 40% more for energy in 2023 than it did in 2022, before the crisis caused by Russia’s February 24 invasion of Ukraine. Germany, which has relied on relatively cheap Russian pipeline gas for decades, now has particularly high energy prices compared to the United States, which has its own natural gas reserves, while France has abundant nuclear energy.

New concerns about inflation and rising rates have forced oil traders to close their long positions, especially after they became wary of an oversupply forming as a result of inventory accumulation. Analysts believe that the data on Chinese imports, which should support the oil rally, is likely to appear no earlier than two weeks.

Gold prices fell for the third week in a row after Fed officials expressed fears of further rate hikes. Gold and silver are inversely correlated to the dollar index and government bond yields. Rising rates tend to raise bond yields, so gold prices are always under pressure during a tightening cycle.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) decreased by 0.14% for the week, China’s FTSE China A50 (CHA50) fell by 1.56% for the week, Hong Kong’s Hang Seng (HK50) ended the week down by 0.91%, India’s NIFTY 50 (IND50) gained 0.62%, and Australia’s S&P/ASX 200 (AU200) ended the week 1.17% negative.

In China, personnel changes in government agencies and major financial regulators are approaching. The question of who will lead the People’s Bank of China is back in the spotlight. The new governor will have to lead the central bank in turbulent times, helping the economy get back on its feet after the disorderly reopening of the economy and dealing with the worst real estate slump in history to maintain financial stability. Another key task for the new leader will be to advocate the central bank’s views to the government since the PBoC is not an independent institution but is accountable to the State Council.

The Reserve Bank of New Zealand (RBNZ) will announce its interest rate decision on February 22. Some economists speculate that this will raise the cost of borrowing by 50 basis points to 4.75%.

In the commodities market, futures on cocoa (+6.6%), coffee (+6.47%), and copper (+2.75%) showed the biggest gains last week. Futures on natural gas (-9.98%), lumber (-8.58%), sugar (-8.11%), orange juice (-7.5%), cotton (-4.55%), WTI oil (-3.96%), gasoline (-3.9%), Brent oil (-3.75%) and platinum (-3.26%) showed the biggest drop.

S&P 500 (F) (US500) 4,079.09 −11.32 (−0.28%)

Dow Jones (US30)33,826.69 +129.84 (+0.39%)

DAX (DE40) 15,482.00 −51.64 (−0.33%)

FTSE 100 (UK100) 8,004.36 −8.17 (−0.10%)

USD Index 103.88 +0.03 (+0.02%)

• – China PBoC Prime Rate (m/m) at 03:15 (GMT+2).
• – Eurozone Consumer Confidence (m/m) at 17:00 (GMT+2);
• – New Zealand Producer Price Index (q/q) at 23:45 (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

In the US, the Producer Price Index (PPI), which shows the rate of inflation between factories and plants, rose by 0.7% over the past month. Meanwhile, initial jobless claims fell again, indicating a strong and resilient labor market. Fed officials are once again scaring investors into returning to more rate hikes as demand does not decline. St. Louis Federal Reserve Bank President James Bullard said yesterday that the prospect of the Fed returning to more rate hikes is not out of the table. Bullard’s comments echoed those of Cleveland Fed President Loretta Mester, who said she saw a compelling case for a 0.5% rate hike at the last Fed meeting. Treasury yields jumped on these statements, which led to a decline in rising sectors of the market, including consumer and technology. As the stock market closed, the Dow Jones Index (US30) decreased by 1.26%, and the S&P 500 Index (US500) fell by 1.38%. The NASDAQ Technology Index (US100) lost 1.78%.

Tesla (TSLA) recalled 362,000 electric cars equipped with its “Full Self Driving” software, which can cause cars to “act unsafely at intersections.” The company’s stock was down by 5%. Roku (ROKU) reported outstanding quarterly results. The streaming device maker reported an optimistic outlook. The company’s stock jumped by 11% on the report. Cisco Systems Inc (CSCO) reported better-than-expected quarterly results. The company’s stock rose by 5% after the report was released.

The Congressional Budget Office (CBO) in the US issued a warning yesterday regarding the debt ceiling, which continues to be a contentious issue. The CBO stated that Congress has 5-8 months (depending on IRS revenues) to prevent a default, which could have widespread consequences for the United States.

Stock markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 0.18%, France’s CAC 40 (FR40) added 0.89%, Spain’s IBEX 35 (ES35) increased by 0.35%, and the British FTSE 100 (UK100) closed up by 0.18% on Thursday.

European Central Bank President Christine Lagarde said that they would raise rates by 50 basis points at the next meeting. And this is despite a slowdown in inflation over the past few months.

Huw Pill, a chief economist at the Bank of England, made it clear that policymakers are prepared to slow the pace of interest rate hikes, saying there is a risk of “over-tightening.” The Bank of England may approve a quarter-point hike at its March meeting — or even suspend the hike cycle itself. Officials expect the UK to slide into recession with no sustainable growth until 2025.

Gold prices continued to fall as stronger-than-expected US inflation data, and hawkish comments from Federal Reserve officials raised fears of further interest rate hikes, while optimism about China’s economic recovery boosted demand for copper. The prospect of higher US interest rates is not good for the precious metals as it increases their opportunity cost. Rising rates also lead investors to prefer the dollar as a safe-haven asset, given that it offers higher yields.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 0.71%, China’s FTSE China A50 (CHA50) decreased by 0.20% yesterday, Hong Kong’s Hang Seng (HK50) added 0.84%, India’s NIFTY 50 (IND50) gained 0.11%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 0.79%.

RBA head Philip Lowe said today that an interest rate cut could come next year if inflation declines steadily. Whether the RBA will raise rates at its next meeting depends on another labor market report. Strong labor market data will encourage further rate hikes and vice versa.

S&P 500 (F) (US500) 4,090.41 −57.19 (−1.38%)

Dow Jones (US30)33,696.85 −431.20 (−1.26%)

DAX (DE40) 15,533.64 +27.30 (+0.18%)

FTSE 100 (UK100) 8,012.53 +14.70 (+0.18%)

USD Index 104.05 +0.12 (+0.12%)

• – Australia RBA Governor Lowe Speaks at 00:30 (GMT+2);
• – US FOMC Member Mester Speaks at 01:00 (GMT+2);
• – UK Retail Sales (m/m) at 09:00 (GMT+2);
• – German Producer Price Index (m/m) at 09:00 (GMT+2);
• – French Consumer Price Index (m/m) at 09:45 (GMT+2);
• – Canada Producer Price Index (m/m) at 15:30 (GMT+2);
• – US FOMC Member Barkin Speaks at 15:30 (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

The US dollar continued rising after strong retail sales data, which, together with CPI data, opened the door to further rate hikes by the US Central Bank. But stock indices rose along with the dollar yesterday, which is rare since, most of the time, these instruments are inversely correlated. As the stock market closed, the Dow Jones Index (US30) increased by 0.11, and the S&P 500 Index (US500) added 0.28%. The Technology Index NASDAQ (US100) gained 0.92%.

According to the US Commerce Department, retail sales rose by 3% in January from the previous month, the largest increase in nearly two years. This is a clear sign that household spending remains strong despite the central bank’s tough tightening campaign to slow demand. With a strong labor market, increased wage pressures, and solid consumer spending, the stars may align for further FOMC hikes and higher interest rates over the longer term. This scenario could worsen sentiment and create headwinds for stocks, especially in the technology sector. Nevertheless, the probability of a soft landing on the economy remains high.

Shares of Analog Devices (ADI) jumped by 7% to a 52-week high yesterday after posting quarterly results that beat Wall Street estimates. Roblox (RBLX) rose by 26% as it reported better-than-expected fourth-quarter results, helped by a jump in video game orders. Airbnb (ABNB) also provided an upbeat outlook after the company’s quarterly results beat analysts’ estimates.

Equity markets in Europe were mostly up on Tuesday. German DAX (DE30) gained 0.82%, French CAC 40 (FR40) jumped by 1.21%, Spanish IBEX 35 (ES35) added 0.42%, and British FTSE 100 (UK100) closed up by 0.55% on Wednesday.

The US crude oil inventories increased by 16.3 million barrels last week to 471.4 million barrels, well above the estimates of 1.2 million barrels. Despite the increase in inventories, black gold prices still rose yesterday as the International Energy Agency (IEA) raised its forecast for oil demand in 2023 by 500,000 BPD to nearly 102 million BPD. The IEA also warned that an alliance of OPEC+ producers might try to cut production to support oil prices.

It was originally intended that gold would exceed $2,000 per ounce in the first quarter of this year, repeating the rally seen in April 2022. But this did not happen, as a strong US labor market and GDP growth have increased the likelihood of a longer tightening cycle, fueling the dollar and government bonds. Gold and silver are inversely correlated to the dollar and government bond yields, so “precious metals” are now under pressure.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) declined by 0.37%, China’s FTSE China A50 (CHA50) fell by 0.77%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.43%, India’s NIFTY 50 (IND50) added 0.48%, while Australia’s S&P/ASX 200 (AU200) ended the day down by 1.06%.

Japan’s trade deficit widened to a record high in January amid a global slowdown. Export growth slowed sharply to 3.5%, with equipment for the production of microchips being one of the largest breaks, signaling weakening global demand in the technology sector. Imports continued to show double-digit growth, rising to 17.8% from a year earlier, as expensive energy supplies continued to drive up import costs. China’s change in virus policies has also hit Japan’s exports, as the number of Covid cases rose sharply after the Covid-Zero policy was canceled, causing disruptions across the country. Shipments to China and other Asian countries account for more than 50% of Japan’s total exports.

The Reserve Bank of New Zealand is forecast to raise interest rates another 0.5% to 4.75% next week. While still a significant increase, it is less than the 75 basis point increase the RBNZ had planned in its November monetary policy statement. The main reason for the rate hike is ongoing inflationary pressures. The rate is expected to peak at 5.25%, and rate cuts will not begin until 2024.

Australian labor market data has disappointed economists. The unemployment rate rose from 3.5% to 3.7%, while the number of jobs decreased by 11.5K. Australia’s economic data raise the question of how long the RBA will be able to remain hawkish.

S&P 500 (F) (US500) 4,147.60 +11.47 (+0.28%)

Dow Jones (US30)34,128.05 +38.78 (+0.11%)

DAX (DE40) 15,506.34 +125.78 (+0.82%)

FTSE 100 (UK100) 7,997.83 +43.98 (+0.55%)

USD Index 103.84 +0.61 (+0.59%)

• – Australia Unemployment Rate (m/m) at 02:30 (GMT+2);
• – US Building Permits (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Producer Price Index (m/m) at 15:30 (GMT+2);
• – US FOMC Member Mester Speaks at 15:45 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – US FOMC Member Bullard Speaks at 20:30 (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 indices traded yesterday without a single dynamic. By the close of the stock market, Dow Jones (US30) Index decreased by 0.46%, S&P 500 (US500) lost 0.03%. The NASDAQ Technology Index (US100) added 0.57%. The latest consumer price data showed that the US inflation rate fell from 6.5% to 6.4% (forecast 6.2%) annually, with core inflation, which excludes food and energy prices, also falling from 5.7% to 5.6% (forecast 5.5%). Inflationary pressures are declining, but not as quickly as the US Fed would like. Because of this, expectations for the Fed’s final interest rate may rise slightly, which would create a favorable environment for the US dollar and government bonds and an unfavorable situation for stock indices. The prospect of higher interest rates also increases the likelihood of a US recession this year, as rising short-term yields reflect investor fears of slower economic growth.

NVIDIA (NVDA) shares closed up more than 5% after Bank of America said Nvidia is in a winning position to lead the “AI arms race.” Palantir Technologies (PLTR) was also a source of optimism for tech companies, as the data analytics company’s share price rose by 21% after it reported its first quarterly earnings. Shares of some Asian tech companies came under pressure from Warren Buffett’s Berkshire Hathaway (BRKa), which dumped most of its Taiwan Semiconductor Manufacturing Corp (TSMC) shares and increased its stake in Apple Inc (AAPL).

Stock markets in Europe were mostly up Tuesday. Germany’s DAX (DE30) decreased by 0.11%, France’s CAC 40 (FR40) increased by 0.07%, Spain’s IBEX 35 (ES35) added 0.70%, and Britain’s FTSE 100 (UK100) closed Tuesday up by 0.08%.

Eurozone GDP rose by +0.1% in the fourth quarter of 2022 on a seasonally adjusted basis. The European Commission’s winter economic forecast, released yesterday, said the EU economy is set to avoid a recession, but “headwinds persist.” In additional positive news, the inflation forecast has been revised downward. Overall inflation is projected to fall from 9.2% in 2022 to 6.4% in 2023 and to 2.8% in 2024 in the EU. In the euro area, it is projected to decline from 8.4% in 2022 to 5.6% in 2023 and to 2.5% in 2024.

The UK Consumer Price Index fell from 10.5% to 10.1% (forecast 10.3%) in annual terms. Core inflation fell even more sharply, from 6.3% to 5.8% (forecast 6.2%). Such data on the back of a strong labor market may provide the Bank of England with at least one more 0.25% rate hike at its next meeting.

Oil prices decreased by 1% on Tuesday as traders worried about supply growth as data from the American Petroleum Institute showed a large increase in crude inventories. Another inventory report from the US Department of Energy will be released today, which is considered more significant. Rising inventories, in most cases, are a factor in lower oil prices. But sometimes, it does not work due to a more complicated oil price formation mechanism.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.64%, China’s FTSE China A50 (CHA50) lost 0.09%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.24%, India’s NIFTY 50 (IND50) gained 0.89%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 0.18%.

The Japanese government on Tuesday introduced Kazuo Ueda to parliament as a candidate for the next governor of the Bank of Japan, suggesting the academic and former Bank of Japan policymaker will replace Haruhiko Kuroda. The Bank of Japan, the most dovish central bank among the G7 countries, is facing market pressure to adjust its policies. Ueda’s comments in parliament will be scrutinized for any signs of a shift away from the current adaptive monetary policy. Kuroda’s second five-year term ends April 8 after a decade marked by strong monetary easing, and his current deputies, Masayoshi Amamiya, and Masazumi Wakatabe will leave their posts on March 19.

Shares of Australia’s four biggest banks (Commonwealth Bank Of Australia, Westpac Banking Corp, National Australia Bank Ltd, and ANZ Group Holdings Ltd) fell Wednesday after Commonwealth Bank, the largest of them, noted a potential worsening of credit conditions due to pressure on consumers from high-interest rates and overheated inflation.

S&P 500 (F) (US500) 4,136.13 −1.16 (−0.028%)

Dow Jones (US30)34,089.27 −156.66 (−0.46%)

DAX (DE40) 15,380.56 −16.78 (−0.11%)

FTSE 100 (UK100) 7,953.85 +6.25 (+0.079%)

USD Index 103.25 −0.10 (−0.09%)

• – Australia RBA Governor Lowe Speaks at 02:15 (GMT+2);
• – UK Consumer Price Index (m/m) at 09:00 (GMT+2);
• – UK Producer Price Index (m/m) at 09:00 (GMT+2);
• – Spanish Consumer Price Index (m/m) at 10:00 (GMT+2);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – Canada Manufacturing Sales (m/m) at 15:30 (GMT+2);
• – US Retail Sales (m/m) at 15:30 (GMT+2);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 16:00 (GMT+2);
• – US Industrial Production (m/m) at 16:15 (GMT+2);
• – 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.