InvestMacro

By George Prior 

– Half the world is now facing droughts, floods and filthy water – and the problem urgently requires huge amounts of private finance, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The warning from deVere Group’s Nigel Green comes as Italy declares a state of emergency amid the worst drought in 70 years.

Elsewhere, Lake Mead, the largest reservoir in the United States, which provides water for tens of millions of people and countless acres of farmland in the southwest, is now just one-quarter full.

Meanwhile, once again Sydney is flooded as the impact of the climate crisis becomes the new normal for Australia’s most populous state.

Nigel Green says: “There’s no doubt that all around the world the fallout of the growing climate crisis is accelerating.

“The UN’s Intergovernmental Panel on Climate Change has warned in a report that more than half the world’s population faces water scarcity for at least one month every year, others will be hit by regular severe floods, previously only seen once-in-a-generation, while others have access to only dirty water.

“This is now being played out in real-time every time you look at the news.”

He continues: “A failure to get a grip on this emergency is going to produce catastrophic, irreversible consequences later.

“The response will require political and social determination on a global scale.

“But, critically, it will also require tens of trillions of dollars. As governments alone cannot afford this now, especially with slowing economic growth amongst other headwinds, the solutions demand private financing.”

As such, notes the deVere Group CEO, the financial sector needs now needs to become more proactive to “unleash and mobilize” the funds required.

He is calling for never-before-seen levels of cooperation between financial advisories, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks, and auditors in the fight against climate change.

“Governments around the world have proven themselves to be slow – at best – at responding to the urgent ‘code red’ situation’ we’re facing.

“Therefore, the financial industry must step-up. If we don’t, the level of funding will not be available, nor at the pace necessary, to mitigate human-created global warming.”

Nigel Green concludes: “Climate change is the greatest risk multiplier to our planet, to our communities, and to our way of life.

“It will take huge amounts of private financing to halt its impact.

“The onus now falls on the financial sector to help mobilize and unlock the necessary funds through education and robust, impactful investment solutions.”

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 JustForex

Yesterday the US had a bank holiday due to Independence Day, and the stock market did not trade.

Stock markets in Europe traded without a single dynamic on Monday. Yesterday, German DAX (DE30) decreased by 0.31%, French CAC 40 (FR40) added 0.40%, Spanish IBEX 35 (ES35) lost 0.17%, British FTSE 100 (UK100) was up to 0.89%.

Annual inflation in Turkey soared to nearly 79%, reaching its highest level in 24 years. Consumer prices skyrocketed due to the Russian-Ukrainian war, high energy, and food prices, and a sharply devalued lira, the national currency. Turkey had experienced rapid growth in previous years. Still, President Recep Tayyip Erdoğan has refused to raise rates substantially in the past few years to reduce inflation, calling interest rates the “mother of all evils”. The result has been a sharp decline in the Turkish lira and much lower buying power. Erdogan has instructed the country’s Central Bank, which analysts say is independent of him, to cut borrowing rates repeatedly in 2020 and 2021, even as inflation continued to rise. Central Bank governors who disagreed with this course of action were fired. Turkey’s Central Bank had replaced four governors in two years.

Brent oil prices rose yesterday as a strike in Norway threatened to disrupt oil and gas production. The strike is expected to cut oil and gas production by 89,000 barrels per day, of which gas production will be 27,500 barrels per day. Overall, the demand outlook is also worrisome for investors amid tightening global financial conditions as the US Federal Reserve fights high inflation with rapid rate hikes.

Asian markets also traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.84%, Hong Kong’s Hang Seng (HK50) decreased by 0.13%, and Australia’s S&P/ASX 200 (AU200) added 1.11% on Monday.

Analysts think Asian stocks may get a boost on the back of positive economic data and hints of easing Sino-US tensions. The White House will announce some Chinese tariff cuts later this week to dampen rising inflation and help restore optimism to the markets. Service sector activity in China reached its fastest pace in nearly a year, which also lifted investor sentiment.

Analysts at Nomura Bank believe the EU, Britain, Japan, South Korea, Australia, Canada, and the United States are likely to fall into recession over the next 12 months as central banks try to regain control of inflation by tightening policy too much.

The Reserve Bank of Australia raised its interest rate from 0.5% to 1.35%. In his speech, RBA Governor Phillip Lowe said the war in Ukraine and the strong demand for manufacturing capacity are putting upward pressure on prices. Inflation in Australia is high but slightly lower compared to other leading economies. The RBA predicts inflation will peak at the end of this year and fall back into the 2-3% range next year.

S&P 500 (F) (US500) 3,825.33 0 (0%)

Dow Jones (US30) 31,097.26 0 (0%)

DAX (DE40) 12,773.38 −39.65 (−0.31%)

FTSE 100 (UK100) 7,232.65 +64.00 (+0.89%)

USD Index 105.19 +0.06 (+0.05%)

• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – China Caixin Services PMI (m/m) at 04:45 (GMT+3);
• – Australia RBA Interest Rate Decision (m/m) at 07:30 (GMT+3);
• – Eurozone German Services PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – UK BoE Financial Stability Report (m/m) at 12:30 (GMT+3);
• – UK BoE Gov Bailey Speaks at 13:00 (GMT+3).

By JustForex

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 Stanislav Budnitsky, Indiana University 

Since the start of Russia’s war on Ukraine in late February 2022, Russian internet users have experienced what has been dubbed the descent of a “digital iron curtain.”

Russian authorities blocked access to all major opposition news sites, as well as Facebook, Instagram and Twitter. Under the new draconian laws purporting to combat fake news about the Russian-Ukrainian war, internet users have faced administrative and criminal charges for allegedly spreading online disinformation about Russia’s actions in Ukraine. Most Western technology companies, from Airbnb to Apple, have stopped or limited their Russian operations as part of the broader corporate exodus from the country.

Many Russians downloaded virtual private network software to try to access blocked sites and services in the first weeks of the war. By late April, 23% of Russian internet users reported using VPNs with varying regularity. The state media watchdog, Roskomnadzor, has been blocking VPNs to prevent people from bypassing government censorship and stepped up its efforts in June 2022.

Although the speed and scale of the wartime internet crackdown are unprecedented, its legal, technical and rhetorical foundations were put in place during the preceding decade under the banner of digital sovereignty.

Digital sovereignty for nations is the exercise of state power within national borders over digital processes like the flow of online data and content, surveillance and privacy, and the production of digital technologies. Under authoritarian regimes like today’s Russia, digital sovereignty often serves as a veil for stymieing domestic dissent.

Digital sovereignty pioneer

Russia has advocated upholding state sovereignty over information and telecommunications since the early 1990s. In the aftermath of the Cold War, a weakened Russia could no longer compete with the U.S. economically, technologically or militarily. Instead, Russian leaders sought to curtail the emergent U.S. global dominance and hold on to Russia’s great power status.

They did so by promoting the preeminence of state sovereignty as a foundational principle of international order. In the 2000s, seeking to project its great power resurgence, Moscow joined forces with Beijing to spearhead the global movement for internet sovereignty.

Despite its decades-long advocacy of digital sovereignty on the world stage, the Kremlin didn’t begin enforcing state power over its domestic cyberspace until the early 2010s. From late 2011 to mid-2012, Russia saw the largest series of anti-government rallies in its post-Soviet history to protest Vladimir Putin’s third presidential run and fraudulent parliamentary elections. As in the anti-authoritarian uprisings in the Middle East known as the Arab Spring, the internet served as a critical instrument in organizing and coordinating the Russian protests.

Following Putin’s return to the presidency in March 2012, the Kremlin turned its attention to controlling Russian cyberspace. The so-called Blacklist Law established a framework for blocking websites under the guise of fighting child pornography, suicide, extremism and other widely acknowledged societal ills.

However, the law has been regularly used to ban sites of opposition activists and media. The law widely known as the Blogger’s Law then subjected all websites and social media accounts with over 3,000 daily users to traditional media regulations by requiring them to register with the state.

The next pivotal moment in Moscow’s embrace of authoritarian digital sovereignty came after Russia’s invasion of eastern Ukraine in the Spring of 2014. Over the following five years, as Russia’s relations with the West worsened, the Russian government undertook a barrage of initiatives meant to tighten its control over the country’s increasingly networked public.

The data localization law, for example, required foreign technology companies to keep Russian citizens’ data on servers located within the country and thus easily accessible to the authorities. Under the pretext of fighting terrorism, another law required telecom and internet companies to retain users’ communications for six months and their metadata for three years and hand them over to authorities upon request without a court order.

The Kremlin has used these and other legal innovations to open criminal cases against thousands of internet users and jail hundreds for “liking” and sharing social media content critical of the government.

The Sovereign Internet Law

In April 2019, Russian authorities took their aspirations for digital sovereignty to another level with the so-called Sovereign Internet Law. The law opened the door for abuse of individual users and isolation of the internet community as a whole.

The law requires all internet service providers to install state-mandated devices “for counteracting threats to stability, security, and the functional integrity of the internet” within Russian borders. The Russian government has interpreted threats broadly, including social media content.

For example, the authorities have repeatedly used this law to throttle the performance of Twitter on mobile devices when Twitter has failed to comply with government requests to remove “illegal” content.

Further, the law establishes protocols for rerouting all internet traffic through Russian territory and for a single command center to manage that traffic. Ironically, the Moscow-based center that now controls traffic and fights foreign circumvention tools, such as the Tor browser, requires Chinese and U.S. hardware and software to function in the absence of their Russian equivalents.

Lastly, the law promises to establish a Russian national Domain Name System. DNS is the global internet’s core database that translates between web names such as theconversation.com and their internet addresses, in this case 151.101.2.133. DNS is operated by a California-based nonprofit, the Internet Corporation for Assigned Names and Numbers.

At the time of the law’s passing, Putin justified the national DNS by arguing that it would allow the Russian internet segment to function even if ICANN disconnected Russia from the global internet in an act of hostility. In practice, when, days into Russia’s invasion in February 2022, Ukrainian authorities asked ICANN to disconnect Russia from the DNS, ICANN declined the request. ICANN officials said they wanted to avoid setting the precedent of disconnecting entire countries for political reasons.

Splitting the global internet

The Russian-Ukrainian war has undermined the integrity of the global internet, both by Russia’s actions and the actions of technology companies in the West. In an unprecedented move, social media platforms have blocked access to Russian state media.

The internet is a global network of networks. Interoperability among these networks is the internet’s foundational principle. The ideal of a single internet, of course, has always run up against the reality of the world’s cultural and linguistic diversity: Unsurprisingly, most users don’t clamor for content from faraway lands in unintelligible languages. Yet, politically motivated restrictions threaten to fragment the internet into increasingly disjointed networks.

Though it may not be fought over on the battlefield, global interconnectivity has become one of the values at stake in the Russian-Ukrainian war. And as Russia has solidified its control over sections of eastern Ukraine, it has moved the digital Iron Curtain to those frontiers.

About the Author:

Stanislav Budnitsky, Postdoctoral Fellow in Global and International Studies, Indiana University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By JustForex

The inflation rate, which the Federal Reserve closely monitors, was 6.3% in May, unchanged from April’s level. Personal spending increased by 0.2% in May, missing forecasts of a 0.4% increase, and April’s rate was revised down to 0.6% from 0.9%. Recession fears are growing after the Federal Reserve raised rates to combat rising inflation. Chronically high inflation has become a major threat to the economy and a political danger to President Joe Biden and the Democrats. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.82%, and the S&P 500 Index (US500) lost 0.88%. The NASDAQ Technology Index (US100) fell by 1.33% yesterday.

Wells Fargo CEO Charles Scharf said on Wednesday that the Federal Reserve would continue to raise rates more. Scharf praised the Fed for being very clear about the future moves, but the bank CEO still thinks the economy will be unpleasantly surprised by the consequences.

Biden said the US intends to announce an additional $800 million in arms aid to Ukraine.

Stock markets in Europe traded lower yesterday. German DAX (DE30) decreased by 1.69%, French CAC 40 (FR40) lost 1.80%, Spanish IBEX 35 (ES35) fell by 1.09%, British FTSE 100 (UK100) closed on Thursday down by 1.96%.

Fresh economic data showed that the seasonally adjusted unemployment rate in the Eurozone was 6.6%, down from 6.7% in April 2022. Inflation in France climbed to a record high of 6.5% in June, with consumer price growth of 0.7% last month. Today, Europe will release a preliminary overall inflation figure for the Eurozone, and analysts are leaning that consumer prices will rise from 8.1% to 8.5% year-over-year.

The outlook for the Swiss economy in the coming months remains subdued. The KOF economic barometer fell again in June and now stands at 96.9 points. It is below its long-term average for the second time in a row. The barometer’s downward movement is mainly due to a combination of external demand and production indicators.

The value of precious metals fell more than 8% in the second quarter. The fall is due to a tightening of central bank monetary policy. Precious metal prices are inversely correlated with the dollar index and US government bond yields. During monetary tightening, the dollar index strengthens, and government bond yields rise, which leads to a decrease in gold and silver prices.

OPEC+ countries said they would stick to their previously announced production plan, resisting calls to accelerate production. At the same time, oil prices fell another 3%. Analysts believe the drop in oil prices is due to US traders closing positions ahead of a three-day Independence Day weekend in the US on July 4. But fundamentally, such a situation usually leads to higher prices in an environment where production is lower than demand. In Norway, 74 offshore oil workers on the Equinor Gudrun, Oseberg South, and Oseberg East platforms will go on strike starting July 5, the Lederne union said Thursday, which will likely halt about 4% of Norway’s oil production.

Asian markets traded lower on Wednesday. Japan’s Nikkei 225 (JP225) decreased by 1.54% yesterday, Hong Kong’s Hang Seng (HK50) ended the day down by 0.62%, and Australia’s S&P/ASX 200 (AU200) closed by 1.97% lower. Japan’s main Purchasing Managers’ Index (PMI) declined from 53.3 in May to 52.7 in June. According to the PMI report, Japanese companies noted that rising costs and persistent material shortages contributed to the slowdown in production, and new orders increased only fractionally. Continued supply chain disruptions and delays led to further rapid cost increases, leading to a sharp rise in factory prices, the fastest in the survey’s history. That said, companies are increasingly confident that these problems will dissipate next year as business confidence rose to its highest level since March.

Tokyo’s consumer price level increased from 1.9% to 2.1% annually. Inflation is thus slowly consolidating above the Bank of Japan’s 2% target.

S&P 500 (F) (US500) 3,785.39 −33.44 (−0.88%)

Dow Jones (US30) 30,775.43 −253.88 (−0.82%%)

DAX (DE40) 12,783.77 −219.58 (−1.69%)

FTSE 100 (UK100) 7,169.28 −143.04 (−1.96%)

USD Index 104.73 −0.38 (−0.36%)

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3);
• – Japan Large Manufacturers Index (m/m) at 02:50 (GMT+3);
• – Japan Large Non-Manufacturers Index (m/m) at 02:50 (GMT+3);
• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – China Caixin Manufacturing PMI (m/m) at 04:45 (GMT+3);
• – Eurozone Spanish Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – Switzerland Manufacturing PMI (m/m) at 10:35 (GMT+3);
• – Eurozone Italian Manufacturing PMI (m/m) at 10:45 (GMT+3);
• – Eurozone French Manufacturing PMI (m/m) at 10:50 (GMT+3);
• – Eurozone German Manufacturing PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3).

By JustForex

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 JustForex

Federal Reserve Chairman Jerome Powell reiterated the Central Bank’s commitment to tighten monetary policy further to reduce inflation as GDP data showed a faster-than-expected decline in quarterly economic growth. Real gross domestic product (GDP) fell by 1.6% year-over-year in the first quarter of 2022. This situation led to a rise in the US Dollar Index and a decline in the major indices. As the stock market closed yesterday, the Dow Jones Index (US30) added 0.26%, while the S&P 500 Index (US500) decreased by 0.08%. The NASDAQ Technology Index (US100) fell by 0.03%.

The US Personal Consumption Expenditures Price Index, part of the Fed’s inflation tracking indicators, will be released today. Analysts expect the PCE to rise another 0.4%. In other words, experts do not expect inflation to slow down.

Equity markets in Europe traded lower yesterday. German DAX (DE30) decreased by 1.73%, French CAC 40 (FR40) fell by 0.90%, Spanish IBEX 35 (ES35) lost 1.56%, British FTSE 100 (UK100) closed on Wednesday down by 0.15%.

European Central Bank President Christine Lagarde said that the era of ultra-low inflation that preceded the pandemic is unlikely to return. Speaking at an ECB forum in Sintra, Portugal, along with US Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey, Lagarde added that central banks need to adjust to higher price growth expectations.

This week, a series of data on inflation rates in European countries will be released. Germany’s preliminary consumer price level was 7.6% year-over-year, down from 7.9% in May. But in Spain, the inflation rate jumped from 8.7% to 10.2% annually.

Morgan Stanley now expects the Eurozone to fall into a moderate recession in the fourth quarter of this year and show GDP contracting for the next two quarters before resuming growth in the second quarter of next year, driven by increased investment.

Predictions that the Eurozone will likely slip into recession because of energy security problems caused by the war in Ukraine prompted investors to buy the Swiss franc. The Swiss franc rose on Wednesday to its highest level against the euro in four months as growing fears of a recession in the Eurozone led investors to seek safe-haven assets.

Palladium increased by 6.2% yesterday, while nickel gained 9.2% amid UK sanctions against Russian billionaire and co-owner of Nornickel Vladimir Potanin.

Fears of a global slowdown continue to weigh on copper and the Australian dollar. Copper has long been known as a barometer for assessing the global economy’s health, and the Australian dollar has a high positive correlation with copper. If this week’s PMI data is worse than expected, copper could continue to fall.

The Energy Information Administration (EIA) did release new crude oil inventory data yesterday. Last week’s report was not published due to server problems. The US crude oil inventories have declined over the past two weeks, falling by 2.8 million barrels. But despite the decline in inventories amid strong demand, oil quotes were down by 2% yesterday as disappointing US GDP data counterbalanced the negative price sentiment. OPEC+ is meeting today, so volatility in oil prices will remain high.

Asian markets were trading lower on Wednesday. Japan’s Nikkei 225 (JP225) decreased by 0.91% yesterday, Hong Kong’s Hang Seng (HK50) ended the day down 1.88%, and Australian S&P/ASX 200 (AU200) lost 0.94%.

Industrial production in Japan fell by 7.2% in May from the previous month. Of the 15 industries surveyed, production declined in 13. The auto industry was hit the hardest due to parts shortages resulting from the COVID-19 blockage in Shanghai. Auto production fell 8.0% from the previous month, including a 33.2% drop in truck production.

China’s official PMI returned above the 50 levels. It suggests that China’s economy improved in June compared to May, but there are signs in the sub-indices that a full recovery will take some time. The headwinds remain, including a still depressed real estate market, low consumer spending, and fear of any recurring waves of infections.

S&P 500 (F) (US500) 3,818.70 −2.85 (−0.075%)

Dow Jones (US30) 31,027.92 +80.93 (+0.26%)

DAX (DE40) 13,003.35 −228.47 (−1.73%)

FTSE 100 (UK100) 7,312.32 −11.09 (−0.15%)

USD Index 105.12 +0.61 (+0.59%)

• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – China Manufacturing PMI (m/m) at 04:30 (GMT+3);
• – China Non-Manufacturing PMI (m/m) at 04:30 (GMT+3);
• – UK GDP (q/q) at 09:00 (GMT+3);
• – Eurozone German Retail Sales (m/m) at 09:00 (GMT+3);
• – Switzerland Retail Sales (m/m) at 09:30 (GMT+3);
• – Eurozone French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Eurozone German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
• – OPEC+ meeting (m/m) at 12:00 (GMT+3);
• – US PCE Price index (m/m) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – Canada GDP (q/q) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustForex

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

Volatility will define financial markets in the second half of 2022, but there are major reasons for investor optimism, affirms the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

This is the upbeat assessment from deVere Group’s Nigel Green at the midpoint of the year as investors take stock of the past six months and look ahead to the last half of 2022.

He notes: “The first half of 2022 has been challenging, to say the least, for investors seeking both capital growth and capital protection.

“With soaring inflation, interest rate rises, slowing growth, the pandemic still not over, and geopolitical tensions including a tragic war in Europe, uncertainty has been heightened which has unleashed huge waves of volatility in financial markets.

“For many investors, it has been the perfect storm with both stocks and fixed income hit with simultaneous bouts of weakness, making proper portfolio diversification more difficult to achieve.”

He continues: “However, despite turbulence still being the defining characteristic of the second half of 2022, there are four key reasons why investors should be optimistic for the next six months.

“First, our latest thinking is that inflation could be peaking soon, and we expect it to decelerate through the rest of this year. History shows that the markets typically fall just before the peak in inflation, just as we have experienced in recent months. This will be bullish for stocks.

“Second, as markets continue to be unsteady in the near-term, investors will be using the downturn to their financial advantage by topping-up their portfolios with quality stocks at lower prices.

“The panic-selling has created some important long-term opportunities with high upside potential and low risk possibilities for those who buy judiciously.

“Third, China is beginning to loosen its strict Covid restrictions which will help ease global supply chain disruption, which is positive for companies and consumers.

“And fourth, financial markets have already priced-in much of the bad news from geopolitical issues, meaning there should be less wild swings in the months ahead.”

In this environment, the deVere CEO says investors wanting to safeguard and grow their wealth should be proactive. “You should be fully and sensibly invested in a properly diversified portfolio.

“Whilst you may be tempted to stash cash during periods of volatility, experience demonstrates that such attempts to ‘time the market’ almost always fail.

“You should resist complacency, be active, revise and adjust with an adviser to build a resilient and dynamic portfolio, perhaps with some less-traditional, return-enhancing assets.”

He concludes: “After a difficult start to the year, the rest of 2022 will remain volatile – but there’s much to be done to grow your wealth.

“This is the time to remain fully and cleverly invested.”

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 JustForex

The mood of investors and analysts changes almost every day. Yesterday, US stock indexes saw a new massive sell-off as gloomy consumer confidence data once again dampened investor optimism and heightened fears that the Federal Reserve’s aggressive fight against inflation will lead to a recession in the economy. The Conference Board’s Consumer Confidence Index fell to its lowest level since February 2021, and short-term expectations reached their most pessimistic level in nearly a decade.

As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 1.56%, and the S&P 500 Index (US500) lost 2.01%. The Technology Index NASDAQ (US100) fell by 2.98%. At the end of the day, all three indices were down.

Federal Reserve Bank of New York President John Williams told CNBC on Tuesday that interest rates should “definitely” be between 3% and 3.5% by the end of the year, but he does not expect a recession in the United States.

Stock markets in Europe traded higher yesterday. Germany’s DAX (DE30) increased by 0.35%, France’s CAC 40 (FR40) jumped by 0.64%, Spain’s IBEX 35 (ES35) added 0.91%, and the British FTSE 100 (UK100) closed Tuesday in plus 0.90%.

The ECB is expected to follow its colleagues from the Fed and raise interest rates in July to try to curb skyrocketing inflation. However, economists disagree on the extent of any rate hike. For now, a 0.25% move is being considered, but if Friday’s Eurozone inflation data show a new acceleration in inflation, policymakers may reconsider their decision to 0.5%.

Today at the monetary policy forum in Portugal, there will be the final speech of the heads of the central banks of the US, the ECB, and the UK. Investors and traders should pay attention to this performance.

Crude oil prices jumped another 2% on Tuesday as Saudi Arabia and the United Arab Emirates indicated they are near maximum production levels.

On the other hand, the leaders of the G7 countries reached an agreement to impose a price cap on Russian oil.

Lithuania has officially banned imports of Russian gas. The Seimas of the republic has adopted the appropriate amendments to the law on natural gas.

Gold futures fell in price yesterday. Gold and silver are inversely correlated to the dollar index and government bond yields. When the dollar rises, gold and silver tend to fall. And while the US Federal Reserve tightens monetary policy, there is no fundamental reason for increasing precious metal prices.

Asian markets were trading higher on Tuesday. Japan’s Nikkei 225 (JP225) gained 0.66% yesterday, Hong Kong’s Hang Seng (HK50) added 0.85% on the day, while Australia’s S&P/ASX 200 (AU200) was up 0.86%.

The head of the Bank of Japan said today that the Japanese economy had not suffered much from the global inflation trend so monetary policy will remain soft.

The Chinese yuan rose after China eased the quarantine related to the COVID-19 pandemic for international travelers. It also became known that China will cut retail prices on gasoline and diesel starting on Wednesday.

S&P 500 (F) (US500) 3,821.55 −78.56 (−2.01%)

Dow Jones (US30) 30,946.99 −491.27 (−1.56%)

DAX (DE40) 13,231.82 +45.75 (+0.35%)

FTSE 100 (UK100) 7,323.41 +65.09 (+0.90%)

USD Index 104.48 +0.54 (+0.52%)

• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – Eurozone Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – US FOMC Member Mester Speaks (m/m) at 13:30 (GMT+3);
• – Eurozone German Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Fed Chair Powell Speaks (m/m) at 16:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks (m/m) at 16:00 (GMT+3);
• – UK BoE Gov Bailey Speaks (m/m) at 16:00 (GMT+3);
• – US FOMC Bullard Speaks (m/m) at 20:05 (GMT+3).

By JustForex

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 JustForex

On Monday, the US dollar fell slightly from a 20-year high hit earlier this month. It followed positive US economic data that eased expectations of an aggressive rate hike by the Federal Reserve. At the same time, stock indices also showed weakness, but usually, when the dollar index declines, indices rise.

At the close of trading on Monday, the Dow Jones index (US30) decreased by 0.20% and the S&P 500 index (US500) lost 0.30%. The technology index NASDAQ (US100) fell by 0.72% yesterday. At the end of the day, all three indices were down.

Goldman Sachs says the US rate market is underestimating the risk of recession. While market expectations for the Fed Funds rate have declined in recent weeks to levels with “limited downside potential for early 2023, federal funds pricing for 2024 likely underestimates recession risk,” strategists said. According to expectations implied by interest rate swaps, the Fed policy rate will peak at 3.60% by March 2023, up 2% from current levels.

Equity markets in Europe traded flat yesterday. German DAX (DE30) gained by 0.52%, French CAC 40 (FR 40) fell by 0.43%, Spanish IBEX 35 (ES35) lost 0.02%, British FTSE 100 (UK100) closed on Monday in plus 0.69%.

On Monday, Prime Minister Boris Johnson said that Britain may introduce unilateral changes to Northern Ireland’s trade rules after Brexit this year. The EU calls the move illegal.

Russia’s first major international default in more than a century became a fact on Monday. It was followed by months of coordinated Western sanctions that left Moscow with cash but denied access to an international financial network.

Oil jumped by 2% yesterday on rumors that a G7 decision against Russia would lead to further supply cuts. The Saudi-led OPEC+ alliance also cut its projected 2022 oil market surplus to 1 million barrels per day from a previous estimate of 1.4 million. Some oil investors are hesitant to open large positions after the US Energy Information Administration said the weekly inventory report would be delayed for the second week in a row because of server problems. The EIA weekly oil report was not released on June 24 and will likely not be released on June 29.

G7 leaders warned that Russian President Vladimir Putin would be held accountable for committing the heinous and deadly attack on a crowded shopping mall in Ukraine. According to President Vladimir Zelenski, at least 1,000 shoppers were in the mall when a Russian missile hit it, making it “one of the most devastating terrorist attacks in European history.” At least 18 people were killed and more than 40 injured. The number of casualties is difficult to determine as rescuers continue to search among the rubble. With a high probability, Russia will be declared a sponsor of terrorism in the near future.

Asian markets were trading higher on Monday. Japan’s Nikkei 225 (JP225) gained 1.43%, Hong Kong’s Hang Seng (HK50) added 2.35% for the day, and Australia’s S&P/ASX 200 (AU200) jumped by 1.94%.

Earlier this month, the Bank of Japan may have suffered a 600 billion yen ($4.4 billion) unrealized loss on Japanese government bonds as the widening gap between domestic and foreign monetary policy led to rising yields and prices. Despite this, the Bank of Japan continues to keep its monetary policy soft as policymakers attribute rising inflation to rising energy and commodity prices. More and more analysts are starting to think that at some point, the Bank of Japan will make currency intervention, as the yen’s weakness is taking a heavy toll on the Japanese economy. Both BOJ Governor Kuroda and Prime Minister of Japan Kishida acknowledge this point.

S&P 500 (F) (US500) 3,900.11 −11.63 (−0.30%)

Dow Jones (US30) 31,438.26 −62.42 (−0.20%)

DAX (DE40) 13,186.07 +67.94 (+0.52%)

FTSE 100 (UK100) 7,258.32 +49.51 (+0.69%)

USD Index 103.98 -0.21 (-0.20%)

• – US FOMC Member Williams Speaks (m/m) at 01:30 (GMT+3);
• – ECB President Lagarde Speaks at 11:00 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3).

By JustForex

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