Archive for Economics & Fundamentals – Page 56

16 Aug

International students will offer a big boost to the US economy this back-to-school season

By Barnet Sherman, Boston University 

Of the millions of young adults heading off to college this fall, many will be international students. If trends continue, about 1 million students from around the world will come to the U.S. to pursue higher education this year.

These young scholars make a big economic impact. Altogether, they pump more than US$40 billion into the U.S. economy and support over 368,000 jobs. That’s not just paying professors and buying textbooks – it includes everything from renting apartments to late-night DoorDash and Grubhub deliveries. And it’s near a record high.

In fact, higher education is the 10th-leading export of the United States, according to the U.S. Bureau of Economic Analysis – except the export is really an import, of students from around the world.

Think of it this way: If you went to Paris to see the Olympics this year, the Olympics was the export that brought you – the tourist, or, in economic terms, the import – to France. In the complex world of economic balance of trade accounting, international students are the tourists visiting U.S. campuses.

Only economists could think that studying and taking exams is somehow a vacation.

While China, India and South Korea send the most students to the U.S., young people come from around the globe to pursue degrees here. Last year, they represented some 221 nations and territories, including three students from the independent island nation of Tuvalu.

A boon to local economies

In any of the 50 largest American cities, you’ll find at least one college or university with international students on campus. For these communities, global learners offer a most welcome financial aid package.

Consider Boston. With its pantheon of venerable institutions – including Boston University, where I teach multinational finance and trade – the region boasts over 50 colleges and universities. Boston’s economic gains from the more than 60,000 international students at these schools are huge: some $2.7 billion.

Or look at Greater Philadelphia. The region’s higher education institutions rank fifth nationwide in attracting students from around the world. From the perennially top-drawing University of Pennsylvania — itself ranked in the top 25 for international students — or the more specialized Curtis Institute of Music, together they can expect to host nearly 17,000 international students in fall 2024.

Prestigious private schools are a draw, but hands down the biggest pull for international students are state universities and colleges. Of the nation’s top schools enrolling these students last year, 32 were state colleges and universities, attracting over 240,000 students in total.

In the top three of those public institutions alone — Arizona State University, the University of Illinois Urbana-Champaign and the University of California, Berkeley — international students contributed nearly $1.6 billion, supporting close to 16,900 jobs. Expand that to the top 10 — the University of California system takes four of those spots — and the numbers pop up to $4.5 billion and 47,900 jobs.

Bringing the world to Mankato

But it’s not just the geographically sprawling University of California and other large state systems. Mankato, Minnesota, hosts a Minnesota State University campus; in the 2022 academic year, some 1,700 international students called this small city, 80 miles from Minneapolis, their home away from home.

Those students brought an infusion of $44.9 million into that community, supporting around 190 jobs. There are dozens of similar campuses in cities and towns like Mankato across the country. It adds up quickly.

In addition to private and public universities, community colleges also attract thousands of international students. Although their international enrollment has fallen off in recent years, community colleges still attracted just shy of 53,600 international students in 2023, with China, Vietnam and Japan leading the list.

Generating some $1.5 billion and supporting 6,620 jobs, they have a major economic impact – particularly in Texas, California and Florida, where the majority of these students come to learn.

One thing’s for sure: Whether they’re attending small-town community colleges or Ivies in big cities, international students have a “high degree” of economic impact.The Conversation

About the Author:

Barnet Sherman, Professor, Multinational Finance and Trade, Boston University

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

Economics & Fundamentals Opinions
16 Aug

What is mpox? A microbiologist explains what’s known about this smallpox cousin

By Rodney E. Rohde, Texas State University 

On Aug. 14, 2024, the World Health Organization declared mpox a public health emergency of international concern. There have been over 15,600 cases and over 530 deaths reported in the Democratic Republic of the Congo and neighboring countries in Africa. The disease had previously caused a global outbreak from 2022 to 2023.

Mpox – previously called monkeypox – isn’t a new disease. The first confirmed human case was in 1970, when the virus was isolated from a child suspected of having smallpox in the Democratic Republic of Congo (DRC). Though usually mild, mpox can still potentially cause severe illness. Health officials are concerned that more cases will arise with increased travel.

I’m a researcher who has worked in public health and medical laboratories for over three decades, especially in the realm of diseases with animal origins. What exactly is happening in the current outbreak, and what does history tell us about mpox?

A cousin of smallpox

Mpox is caused by the monkeypox virus, which belongs to a subset of the Poxviridae family of viruses called Orthopoxvirus. This subset includes the smallpox, vaccinia and cowpox viruses. While an animal reservoir for monkeypox virus is unknown, African rodents are suspected to play a part in transmission. The monkeypox virus has only been isolated twice from an animal in nature. Diagnostic testing for mpox is currently only available at Laboratory Response Network labs in the U.S. and globally.

The name “monkeypox” comes from the first documented cases of the illness in animals in 1958, when two outbreaks occurred in monkeys kept for research. However, the virus did not jump from monkeys to humans, nor are monkeys major carriers of the disease.

Electron microscope view of monkeypox virus, showing oval-shaped, mature virus particles and spherical, immature virions
The virus that causes mpox belongs to the Poxviridae family of viruses, which includes smallpox.
CDC/ Cynthia S. Goldsmith

Epidemiology

Since the first reported human case, mpox has been found in several other central and western African countries, with the majority of infections in the DRC. Cases outside of Africa have been linked to international travel or imported animals, including in the U.S. and elsewhere.

The first reported cases of mpox in the U.S. was in 2003, from an outbreak in Texas linked to a shipment of animals from Ghana. There were also travel-associated cases in July and November 2021 in Maryland. The outbreak of mpox that began May 2022 is ongoing.

Because mpox is closely related to smallpox, the smallpox vaccine can provide protection against infection from both viruses. Since smallpox was officially eradicated, however, routine smallpox vaccinations for the U.S. general population were stopped in 1972. Because of this, mpox has been appearing increasingly in unvaccinated people.

Transmission

The virus can be transmitted through contact with an infected person or animal or contaminated surfaces. Typically, the virus enters the body through broken skin, inhalation or the mucous membranes in the eyes, nose or mouth. Researchers believe that human-to-human transmission is mostly through inhalation of large respiratory droplets rather than direct contact with bodily fluids or indirect contact through clothes.

Health officials are worried that the virus may currently be spreading undetected through community transmission, possibly through a new mechanism or route. Where and how infections are occurring are still under investigation.

Signs and symptoms

After the virus enters the body, it starts to replicate and spread through the body via the bloodstream. Symptoms usually don’t appear until one to two weeks after infection.

Mpox produces smallpox-like skin lesions, but symptoms are usually milder than those of smallpox. Flu-like symptoms are common initially, ranging from fever and headache to shortness of breath. One to 10 days later, a rash can appear on the extremities, head or torso that eventually turns into blisters filled with pus. Overall, symptoms usually last two to four weeks, while skin lesions usually scab over in 14 to 21 days.

While mpox is rare and usually nonfatal, one version of the disease kills around 10% of infected people. The form of the virus currently circulating is thought to be milder, with a fatality rate of less than 1%.

Vaccines and treatments

Treatment for mpox is primarily focused on relieving symptoms. According to the Centers for Disease Control and Prevention, no treatments are available to cure mpox infection.

Because smallpox is closely related to mpox, the smallpox vaccine can protect against both diseases.

Evidence suggests that the smallpox vaccine can help prevent mpox infections and decrease the severity of the symptoms. One vaccine known as Imvamune or Imvanex is licensed in the U.S. to prevent mpox and smallpox.

Vaccination after exposure to the virus may also help decrease chances of severe illness. The CDC currently recommends smallpox vaccination only in people who have been or are likely to be exposed to mpox. Immunocompromised people are at high risk.

This is an updated version of an article originally published on May 20, 2022.The Conversation

About the Author:

Rodney E. Rohde, Regents’ Professor & Chair, Medical Laboratory Science, Texas State University

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

Economics & Fundamentals Financial News
16 Aug

The German DAX Index has risen for 8 consecutive sessions. Malaysia’s GDP shows strong growth

By JustMarkets

On Thursday, the Dow Jones (US30) Index gained 1.61%, while the S&P 500 (US500) Index closed 1.39% higher. The NASDAQ Technology Index (US100) closed yesterday positive 2.34%. Signs of a strengthening US economy are driving stocks higher today after July retail sales posted the largest increase in a year, and weekly initial jobless claims unexpectedly fell to a 5-week low. The strong reports bolstered the projection for a soft economic landing.

The US weekly initial jobless claims unexpectedly fell by 7,000 to a 5-week low of 227,000, indicating a strengthening labor market versus expectations of a rise to 235,000. US retail sales for July rose 1.0% m/m, exceeding expectations of 0.4% m/m and the largest increase in a year and a half. Atlanta Fed President Bostic said he is “open” to an interest rate cut in September. The Fed cannot “afford to be late” in easing monetary policy amid signs of cooling in the labor market. St. Louis Fed President Musalem said that from his perspective, “the risk to both sides of the Fed’s mandate seems more balanced. Accordingly, the time is approaching when an adjustment to the moderately restrictive policy may be appropriate ahead of future meetings.” Markets rate the odds of a 25 bps rate cut at the September 17–18 FOMC meeting at 100% and a -50 bps rate cut at this meeting at 28%.

Walmart (WMT) is up more than 6% after reporting a second-quarter revenue of $169.34 billion, which is better than the consensus estimate of $168.46 billion, and it is raising its net sales prognosis. Cisco Systems (CSCO) rose more than 8%, leading gains in the Dow Jones Industrials and Nasdaq 100 stocks after the company reported fourth-quarter revenue of $13.64 billion, better than the consensus of $13.53 billion, and projection of above-average earnings.

Equity markets in Europe were mostly up on Thursday. Germany’s DAX (DE40) rose by 1.66%, France’s CAC 40 (FR40) closed 1.23% higher, Spain’s IBEX 35 (ES35) added 1.23%, and the UK’s FTSE 100 (UK100) closed up 0.80%.

Germany’s DAX (DE40) Index has risen for 8 consecutive sessions, and it has nearly reversed losses from the global equity sell-off that ended last week. Financial stocks took center stage, with Deutsche Bank and Commerzbank adding between 2.9% and 3.3%. Finally, Mercedes, Porsche, BMW, and Volkswagen continued yesterday’s gains, although Siemens and Airbus were in slightly negative territory. Meanwhile, the UK economy slowed slightly in Q2 and stalled in June, which was in line with prognoses, but business investment unexpectedly contracted.

WTI crude oil prices rose 1.5% to $78.16 a barrel on Thursday, rebounding from two days of losses as recession fears eased. There were also fears of possible Iranian retaliation against Israel following reports that Hamas is unlikely to take part in new ceasefire talks in Gaza. However, gains were halted by lingering demand concerns, with EIA data showing an unexpected rise in US crude inventories, which increased by 1.357 million barrels last week, ending a six-week decline and contrary to expectations of a 2 million barrel drop.

The US natural gas (XNG/USD) prices hit a one-month high of $2.28 per MMBtu in August as declining domestic supply coincided with expectations of strong cooling demand. The latest EIA data showed that US utilities withdrew 6 billion cubic feet of natural gas in the week ended August 9, despite a seasonal upward trend, marking the first August decline since 2006 and contrasting with market expectations of a 43 billion cubic feet increase. Lower production is expected to support prices, making them more sensitive to any supply disruptions or additional warming.

Asian markets also had the advantage of rising yesterday. Japan’s Nikkei 225 (JP225) rose by 0.78%, China’s FTSE China A50 (CHA50) added 1.10% Hong Kong’s Hang Seng (HK50) was down 0.02%, while Australia’s ASX 200 (AU200) was positive 0.19%.

The Bank of Japan (BoJ) will take a more cautious approach to raising interest rates after the recent turmoil in global markets to avoid a rapid appreciation of the yen, BMI said in a recent note. BMI strategists said the Bank of Japan will take a more cautious approach and will only raise rates by 25 bps to 0.50% this year, down from our previous estimate of 50 bps.

Malaysia’s economy grew by 5.9% y/y in Q2 2024, compared to preliminary growth of 5.8% and 4.2% growth in Q1. This was the highest GDP growth since Q4 2022 on the back of strong output across all sectors. Activity in services accelerated (5.9% vs. 4.8% in Q1), helped by wholesale and retail trade. Production in the manufacturing industry also increased (4.7% vs. 1.9%) due to non-metallic minerals, basic metals, and products thereof, as well as petroleum, chemical, rubber, and plastics industries.

S&P 500 (US500) 5,543.23 +88.02 (+1.61%)

Dow Jones (US30) 40,563.58 +555.19 (+1.39%)

DAX (DE40) 18,183.24 +297.64 (+1.66%)

FTSE 100 (UK100) 8,347.35 +66.30 (+0.80%)

USD index 103.00 +0.44 (+0.43%)

Important events for today:
  • – New Zealand Producer Price Index (q/q) at 01:45 (GMT+3);
  • – Australia RBA Gov Bullock Speaks at 02:30 (GMT+3);
  • – New Zealand RBNZ Gov Orr Speaks at 05:30 (GMT+3);
  • – UK Retail Sales (m/m) at 09:00 (GMT+3);
  • – Eurozone Trade Balance (m/m) at 12:00 (GMT+3);
  • – US Building Permits (m/m) at 15:30 (GMT+3);
  • – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
15 Aug

Philly schools are in disrepair − the municipal bond market is 1 big reason

By David I. Backer, West Chester University of Pennsylvania 

Graphic reading '43 cents is the share of every dollar loaned to repair Philly schools that is actually spent'
The Conversation, CC BY

Many of Philadelphia’s schools are in terrible shape. The average public school building in the city is over 70 years old, and some are over 120 years old. The state of disrepair, including a lack of air conditioning and incidents of untreated asbestos, mold, crumbling ceilings and flooded hallways, is well documented.

I am a scholar of school finance, with an emphasis on infrastructure. My colleague Camika Royal, who’s an expert on urban education and Philadelphia schools, and I wanted to figure out why the city’s school buildings are like this.

We found that one key figure explains the dire state of the city’s school buildings: Only 43 cents of every dollar loaned to the School District of Philadelphia in recent decades to maintain and repair its buildings was actually spent.

In other words, a majority of the money – the other 57 cents per dollar – meant for building and maintaining Philly schools during the nearly 30-year period we studied, from 1993 to 2021, never actually reached Philly schools.

This is not due to money going missing. Rather, it is an indicator of the overall inefficiency of how maintenance and repairs to Philly’s public school facilities are financed.

Our analysis was published in the June 2024 edition of the peer-reviewed Journal of Educational Administration and History.

Reliance on Wall Street

Pennsylvania, unlike states such as Massachusetts and Wyoming that have robust policies for financing school infrastructure, does not have a statewide program that provides sufficient revenue for school facilities.

The commonwealth’s PlanCon program, for instance, which had reimbursed districts for building costs, was defunded in the wake of the 2008 financial crisis. It hasn’t been fully restored.

While Gov. Josh Shapiro signed the Public School Facility Improvement Grant Program into law in 2024 to provide grants for school buildings statewide, the program – funded with US$100 million – is pitifully small. Philly’s school buildings alone need at least $7 billion for repairs and upgrades, according to Superintendent Tony Watlington.

To get the money it needs for its buildings and infrastructure, the School District of Philadelphia has to sell itself as an investment product on Wall Street. This is done through municipal bonds.

Municipal bonds are basically big loans for local governments’ capital projects.

Investors purchase these municipal bonds because they can make tax-free income when the school district pays them back with interest.

Financial consultants, credit raters, bond lawyers and private banks all benefit from this system as well, since they charge fees for the services helping investors front their money to school districts.

Market mayhem

The municipal bond market is subject to the erratic, competitive and unstable tendencies of Wall Street finance.

Imagine a rusty, outdated plumbing system that’s supposed to get water from a reservoir to a community. While the reservoir might have a lot of water in it, if the pipes are poorly designed and leaking, or the reservoir itself is badly maintained, much less water can get to the community than might be available. It could be that for every 100 gallons of water available, the community gets only 43 gallons.

Looking at the financial history of the school district’s relationship to the municipal bond market from 1993 to 2021, we found two main reasons for the failure of this funding model.

The first is the chaos in credit markets from 1993 to 2001.

In 1986, the Tax Reform Act regulated private banks, making it harder for them to buy and sell private activity bonds, and also taxed interest on certain bonds. This prompted many banks to pull out of that market, reducing their share of municipal debt by 15%. Credit supply went down, demand went up, and so did prices – making it more expensive for municipalities like Philadelphia to borrow.

Then, in 1987, the savings and loan crisis caused state budgets to contract nationally by 5%. This reduced Philadelphia School District revenue, making it more difficult to repay previous bonds while also necessitating further lending.

The second key reason relates to predatory investing strategies that lawmakers and the financial industry use to secure money for the district’s buildings.

After deregulating the kinds of bonds that local governments could sell in 2003, Pennsylvania took control of the Philadelphia School District’s finances. Under the leadership of former Superintendent Paul Vallas, the district used risky and predatory market instruments that ultimately led to a $330 million loss in the wake of the 2008 financial crisis.

Green New Deal for schools

An efficient policy for financing school infrastructure would yield a number closer to a dollar spent for every dollar received in loans. We conclude our paper with recommendations for policies we believe would be more efficient and just.

These include setting up a National Infrastructure Bank at the federal level that would provide appropriate loan financing for collective goods such as school infrastructure. Also, U.S. Rep. Jamaal Bowman of New York has proposed a Green New Deal for Schools that would provide more than $1 trillion in grants for social and physical infrastructure.The Conversation

About the Author:

David I. Backer, Associate Professor of Education Policy, West Chester University of Pennsylvania

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

Economics & Fundamentals Opinions
15 Aug

Indices rise amid lower inflation in the US. Oil returned to decline due to reduced tension in the Middle East

By JustMarkets

At the end of Wednesday, the Dow Jones (US30) Index gained 0.61%, and the S&P 500 (US500) Index closed with an increase of 10.38%. The NASDAQ Technology Index (US100) closed yesterday positive 0.03%. Stocks found support on Wednesday after the US CPI report for July came in slightly weaker than expected, reinforcing the likelihood that the Fed will cut interest rates next month.

Wednesday’s US CPI report for July eased speculation that the Fed will cut rates by 50 bps next month instead of 25 bps. US CPI for July fell to 2.9% y/y from 3.0% y/y, slightly better than expectations of no change at 3.0% y/y and the lowest annualized growth in over three years. The July core CPI excluding food and energy, fell to 3.2% y/y from 3.3% y/y in June, matching expectations and the smallest annualized gain in over 3 years.

According to data compiled by Bloomberg, most of the companies that reported beat consensus on earnings, but only 43% beat revenue expectations, the lowest in five years.

Alphabet (GOOG) shares fell by 2.3% yesterday following a report that the US Department of Justice is considering options, including a possible company separation.

The Canadian dollar strengthened to 1.37 per US dollar, hitting a near one-month high, while the US dollar weakened to one-year lows after softer-than-expected inflation data. Meanwhile, Canada’s unemployment rate was unchanged at 6.4% in July, the highest in two and a half years, indicating a weakening labor market.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 0.41%, France’s CAC 40 (FR40) closed higher by 0.79%, Spain’s IBEX 35 (ES35) added 0.27%, and the UK’s FTSE 100 (UK100) closed up 0.56%.

The FTSE 100 (UK100) Index rose 0.79% on Wednesday as UK Consumer Price Inflation for July rose less than expected, reinforcing expectations of a Bank of England rate cut. All sectors rose except for mining, which fell nearly 1% as sentiment weakened due to a larger-than-expected credit contraction in China.

WTI crude oil prices fell by 1.7%, marking a second straight day of losses following President Biden’s comments that Iran may not attack Israel if a ceasefire in Gaza is reached. A new round of ceasefire talks is due to begin Thursday in Qatar, but Hamas said the group does not intend to participate in the talks. Also, the EIA reported an unexpected rise in US crude inventories, with a 1.357 million barrel increase last week, ending a six-week decline and defeating expectations of a 2 million barrel drop.

The US natural gas prices (XNGUSD) rose more than 5% to $2.27/MMBtu on Wednesday, the highest in about a month, thanks to lower production and prognoses of hotter weather in late August. The hotter weather is expected to increase the use of air conditioners, boosting gas demand.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up 0.58%, China’s FTSE China A50 (CHA50) was down 0.50%, Hong Kong’s Hang Seng (HK50) decreased by 0.35%, and Australia’s ASX 200 (AU200) was positive 0.31%.

The offshore yuan weakened to 7.16 per dollar, retreating from a one-week high, as traders reacted to mixed economic data from China. In the real estate sector, new home prices in 70 major cities fell 4.9 percent from a year earlier in July 2024, the sharpest decline since June 2015 and underscoring the deepening real estate crisis despite Beijing’s efforts to stabilize the sector. Industrial production also showed signs of weakness, with growth slowing to 5.1% in July from 5.3% in the previous month, the weakest since March. In addition, the unemployment rate rose to 5.2% in July after remaining at 5% for the previous three months. On a more positive note, retail sales rose, which increased at a 2.7% annualized rate in July, up from 2% in June, marking the 18th consecutive month of retail sales growth. Overall, the latest data paints a complex picture of China’s economic trajectory, heightening concerns and calling into question the strength of the country’s economic recovery.

The Australian dollar climbed above $0.66, resuming its recent rally as investors reacted to mixed reports on the country’s economy. A private survey showed that expectations for consumer inflation in Australia rose to 4.5% in August from 4.3% in July, the highest since April. Meanwhile, the country’s unemployment rate unexpectedly rose to 4.2% in July, the highest in two and a half years.

S&P 500 (US500) 5,455.21 +20.78 (+0.38%)

Dow Jones (US30) 40,008.39 +242.75 (+0.61%)

DAX (DE40) 17,885.60 +73.55 (+0.41%)

FTSE 100 (UK100) 8,281.05 +45.82 (+0.56%)

USD index 102.59 +0.03 (+0.03%)

Important events for today:
  • – Japan GDP (m/m) at 02:50 (GMT+3);
  • – Australia Unemployment Rate (m/m) at 04:30 (GMT+3);
  • – China Industrial Production (m/m) at 05:00 (GMT+3);
  • – China Unemployment Rate (m/m) at 05:00 (GMT+3);
  • – China Retail Sales (m/m) at 05:00 (GMT+3);
  • – Japan Industrial Production (m/m) at 07:30 (GMT+3);
  • – UK GDP (q/q) at 09:00 (GMT+3);
  • – UK Industrial Production (m/m) at 09:00 (GMT+3);
  • – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
  • – UK Trade Balance (m/m) at 09:00 (GMT+3);
  • – Switzerland Producer Price Index (m/m) at 09:30 (GMT+3);
  • – Norwegian Norges Interest Rate Decision at 11:00 (GMT+3);
  • – Eurozone Account of Monetary Policy Meeting (m/m) at 14:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US Retail Sales (m/m) at 15:30 (GMT+3);
  • – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
  • – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+3);
  • – US Industrial Production (m/m) at 16:15 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
  • – US FOMC Member Harker Speaks at 20:10 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
14 Aug

RBNZ unexpectedly decreased the rate by 0.25%. Today the focus of investors is directed to the data on the inflation of the US and the UK

By JustMarkets

On Tuesday, the Dow Jones (US30) Index gained 1.04%, while the S&P 500 (US500) Index closed 1.68% higher. The NASDAQ Technology Index (US100) closed yesterday at a positive 2.43%. Stocks found support on Tuesday thanks to lower bond yields after US producer prices for July rose less than expected, reinforcing expectations that the Federal Reserve will begin cutting interest rates next month. Strengthening in semiconductor stocks and technology mega majors on Tuesday also supported gains in the overall market. In addition, Starbucks closed higher by more than 24% following the appointment of a new CEO.

The July US FMCG price index declined to 2.2% y/y from 2.7% y/y in June, less than expectations of 2.3% y/y. Additionally, the July food and energy price index declined to 2.4% y/y from 3.0% y/y in June, better than expectations of 2.6% y/y.

On Tuesday, Atlanta Fed President Bostic made dovish comments that supported stocks, stating that he would likely be willing to support a Fed rate cut. Markets are awaiting the release of Wednesday’s consumer price report, which should also help clarify the likely timing and size of any Fed interest rate cut. The July CPI is expected to be unchanged from June at 3.0% y/y, while the core July CPI, excluding food and energy, is expected to decline to 3.2% y/y from 3.3% y/y in June. Indicators that show only a slight cooling could reinforce fears that the Fed has derailed the economy by leaving rates at high levels for too long. This would increase recession fears, which could cause new volatility in the market and trigger more stock index sell-offs. The strong upward surprise would be worse for the market, as the Fed could not quickly reduce the rate even though the economy lost growth.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 0.48%, France’s CAC 40 (FR40) closed higher by 0.35%, Spain’s IBEX 35 (ES35) added 0.73%, and the UK’s FTSE 100 (UK100) closed up 0.30%.

Frankfurt’s DAX (DE40) index marked its sixth consecutive session in the green on Tuesday with strong support from technology and industrial giants. In spite of this, the indicator of economic confidence ZEW fell stronger than expected, as in the Eurozone and Germany, strengthening the danger of the economy’s growth.

WTI crude futures fell below $79 a barrel on Tuesday, breaking a five-day winning streak. Traders weighed the potential glut amid escalating tensions in the Middle East. A monthly report from the International Energy Agency showed inventory drawdowns would weaken in the final quarter, and OPEC cut demand forecasts for this year and next. Due to weak demand in China, OPEC cut its 2023 demand growth forecast by 135,000 barrels a day and lowered its 2025 growth forecast to 1.78 million barrels a day.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 3.45%, China’s FTSE China A50 (CHA50) closed at its opening level, Hong Kong’s Hang Seng (HK50) gained 0.36% over yesterday and Australia’s ASX 200 (AU200) was positive 0.17%.

The New Zealand dollar fell by 1.1% to around $0.60 on Wednesday after the Reserve Bank of New Zealand unexpectedly cut interest rates. The RBNZ cut the official money rate by 25 basis points to 5.25%, the first cut since March 2020. The central bank said price pressures are easing and expects annual inflation to return to a target range of 1% to 3% in the third quarter. The bank cautioned that policy should remain restrictive for some time but still forecasts the money rate at 4.92% by the end of the year and 3.85% by the end of 2025.

The Australian dollar is at three-week highs as it weakened on lower-than-expected US producer inflation data, which boosted bets on more aggressive interest rate cuts by the Federal Reserve. The Aussie also rose against the Kiwi after the Reserve Bank of New Zealand surprised markets by cutting its money rate.

S&P 500 (US500) 5,434.43 +90.04 (+1.68%)

Dow Jones (US30) 39,765.64 +408.63 (+1.04%)

DAX (DE40) 17,812.05 +85.58 (+0.48%)

FTSE 100 (UK100) 8,235.23 +24.98 (+0.30%)

USD index 102.62 −0.52 (−0.50%)

Important events for today:
  • – New Zealand RBNZ Interest Rate Decision (m/m) at 05:00 (GMT+3);
  • – New Zealand RBNZ Monetary Policy Statement (m/m) at 05:00 (GMT+3);
  • – New Zealand RBNZ Press Conference at 06:00 (GMT+3);
  • – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
  • – UK Producer Price Index (m/m) at 09:00 (GMT+3);
  • – Eurozone GDP (q/q) at 12:00 (GMT+3);
  • – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
  • – US Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – New Zealand RBNZ Gov Orr Speaks at 21:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
13 Aug

WTI crude oil prices rise for the 5th day in a row. Australian dollar rises amid strong economic data

By JustMarkets

At Monday’s close, the Dow Jones (US30) Index was down 0.36%, while the S&P 500 (US500) Index closed at its opening level. The NASDAQ Technology Index (US100) closed positively, 0.21%. Strengthening chip stocks supported the overall market, led by Nvidia’s (NVDA) 4% gain. Additionally, energy stocks rose, with the price of WTI crude oil up more than +%.

This week, markets await US producer and consumer price reports, which should help clarify the likely timing and size of any Fed interest rate cut. On Tuesday, July’s PPI is expected to decline to 2.3% y/y from 2.6% y/y in June, while July’s core PPI, excluding food and energy, is expected to decline to 2.7% y/y from 3.0% y/y in June. On Wednesday, July’s CPI is expected to remain unchanged at 3.0% y/y from June, while July’s core CPI, excluding food and energy, is expected to decline to 3.2% y/y from 3.3% y/y in June. Markets rate the odds of a 25bp rate cut at the September 18 FOMC meeting at 100% and a 50bp rate cut at 57%.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.02%, France’s CAC 40 (FR40) closed down 0.26%, Spain’s IBEX 35 (ES35) added 0.07%, and the UK’s FTSE 100 (UK100) closed up 0.52%.

WTI crude futures rose by 4.2% to close at $80.06 a barrel on Monday, rising for a fifth straight day amid an escalating conflict in the Middle East that threatens to cut global oil supplies. The Pentagon is beefing up its military presence in the region, with Defense Secretary Lloyd Austin ordering the deployment of an aircraft carrier strike group and additional forces in response to potential Iranian aggression against Israel. OPEC cut its forecast for global oil demand growth in 2024 to 2.11 million bpd from 2.25 million, citing weak data and weaker demand in China. OPEC+ extended production cuts through September with a phase-out in October.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.56%, China’s FTSE China A50 (CHA50) climbed 0.05%, Hong Kong’s Hang Seng (HK50) gained 0.13%, and Australia’s ASX 200 (AU200) was positive 0.46%.

India’s annualized consumer inflation rate fell sharply to 3.54% in July 2024 from 5.08% in the previous month, well below market expectations of 3.65%, marking the softest rise in consumer prices since August 2019. Inflation fell below the RBI’s target range of 4% for the first time in nearly five years, although the sharp decline was largely due to a large base effect in food prices, and the Central Bank does not expect price growth to remain as low for the rest of the year.

The Australian dollar rose to $0.66, near its highest level in three weeks, as risk sentiment continued to improve and investors digested mostly positive reports on the domestic economy. Data showed that consumer confidence in Australia rose sharply in August as tax cuts lifted sentiment, although concerns about the Reserve Bank of Australia’s (RBA) hawkish stance dampened sentiment. Business confidence also rose in July, while wages rose less than expected in the second quarter.

The Reserve Bank of New Zealand (RBNZ) will hold a monetary policy meeting as early as tomorrow. Economists do not expect any changes, but there is a growing consensus among economists that the RBNZ will announce a 25bp cut in the cash rate. 12 of 21 economists surveyed by Bloomberg expect the Reserve Bank to keep the official money rate at 5.5%, but nine predict it will start the easing cycle. Further supporting the case for policy easing was the RBNZ’s survey of inflation expectations, which showed the lowest level of expectations in more than three years. A rate cut would result in a weaker New Zealand dollar. If policymakers decide not to cut rates, they are expected to open the door for a move to the two remaining 2024 decisions. However, it will give the New Zealand dollar an advantage over other currencies, where central banks have already started a downward cycle (EUR, GBP, CAD).

S&P 500 (US500) 5,344.39 +0.23 (+0.0043%)

Dow Jones (US30) 39,357.01 −140.53 (−0.36%)

DAX (DE40) 17,726.47 +3.59 (+0.02%)

FTSE 100 (UK100) 8,210.25 +42.15 (+0.52%)

USD Index 103.13 −0.01 (−0.01%)

Important events for today:
  • – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
  • – Australia Wage Price Index (q/q) at 04:30 (GMT+3);
  • – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
  • – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
  • – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
  • – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
  • – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
  • – US Producer Price Index (m/m) at 15:30 (GMT+3);
  • – US FOMC Member Bostic Speaks at 20:15 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
12 Aug

European gas prices jump to an 8-month high. Canada’s labor market is cooling down

By JustMarkets

On Friday, the Dow Jones (US30) was up 0.13% (for the week+1.17%), while the S&P 500 (US500) was up 0.47% (for the week+3.75%). The NASDAQ Technology Index (US100) closed positive 0.51% (for the week+6.57%). That day, all sectors ended trading in positive territory except for commodities. Notable highlights included Expedia, whose shares rose by 10.2% after the company reported second-quarter results that beat expectations.

Canada’s unemployment rate remained unchanged at 6.4%, the highest in two and a half years. While the data came in slightly below market expectations, it did indicate a weakening labor market. The cooling labor market, as well as the continued contraction of the manufacturing sector and sluggish economic growth, further fueled expectations of further rate cuts by the Bank of Canada (BoC).

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) rose by 0.24% (for the week +1.13%), France’s CAC 40 (FR40) closed 0.31% higher (for the week +2.40%), Spain’s IBEX 35 (ES35) added 0.76% (for the week +2.26%), and the UK’s FTSE 100 (UK100) closed 0.28% higher (for the week -0.08%).

Norway’s annualized consumer inflation rate rose to 2.8% in July 2024 from a three-and-a-half-year low of 2.6% in June, which is in line with market expectations. This increases the likelihood that Norway’s Central Bank (Norges Bank) will leave rates unchanged at this week’s meeting.

European natural gas futures are trading near an 8-month high of €40/MWh. They are on track for a 9% weekly gain, driven by concerns over the stability of gas supplies after Ukrainian troops took control of the Suja gas transportation station in Russia’s Kursk region. Despite ongoing conflicts around this key transit point, Russian gas continues to flow through Ukraine. As the gas transit agreement expires at the end of the year, any early disruption could have a significant impact on Central European countries that depend on these supplies.

Oil prices rose last week as comments from Fed officials about the possibility of a rate cut as early as September eased demand concerns, while fears of widening conflict in the Middle East continue to increase supply risks. For the week, Brent crude rose more than 3.5% and WTI crude rose more than 4%. Concerns about the prospect of recession have subsided, boosting the demand outlook.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 0.64%, China’s FTSE China A50 (CHA50) declined by 0.18%, Hong Kong’s Hang Seng (HK50) gained 2.48% over 5 trading days, and Australia’s ASX 200 (AU200) was negative 2.08%.

In New Zealand, investors await the RBNZ’s decision on Wednesday. The Central Bank is expected to keep its monetary rate unchanged at 5.5% for the ninth consecutive time, although concerns about the economy’s strength remain. The latest data showed New Zealand’s unemployment rate rose less than estimated in the second quarter. However, inflation expectations fell to three-year lows in the third quarter, bolstering the case for a rate cut.

The offshore yuan weakened to 7.18 per dollar as traders await the release of key economic data from China. Traders are eagerly awaiting data on outstanding loan growth, new yuan loans and M2 money supply for the year to be released today. Industrial production, retail sales, and unemployment rate data are also expected later in the week. This expectation follows last week’s reports that showed an unexpected acceleration in China’s annual inflation rate, which beat market expectations and reached the highest level since February.

S&P 500 (US500) 5,344.16 +24.85 (+0.47%)

Dow Jones (US30) 39,497.54 +51.05 (+0.13%)

DAX (DE40) 17,722.88 +42.48 (+0.24%)

FTSE 100 (UK100) 8,168.10 +23.13 (+0.28%)

USD index 103.15 −0.06 (−0.05%)

There are no Important events today.

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.

Economics & Fundamentals Financial News
09 Aug

The Bank of Mexico unexpectedly cut its interest rate. China’s consumer inflation is on the rise

By JustMarkets

At Thursday’s close, the Dow Jones Industrial Average (US30) was up 1.76%, while the S&P 500 Index (US500) added 2.30%. The NASDAQ Technology Index (US100) closed positive 2.87% on Thursday. Stocks rose on Thursday after the weekly number of US initial jobless claims fell more than expected, indicating the strength of the labor market and easing economic concerns following last Friday’s weaker-than-expected July payrolls report. In addition, chip stocks recovered some of Wednesday’s losses and rallied sharply on Thursday, boosting the overall market.

Bitcoin rose more than 10% and surpassed the $61,000 mark, hitting a one-week high. Earlier this week, bitcoin fell to nearly $49,000 as fears of a US recession and the unwinding of yen deals triggered a global sell-off in risky assets. Cryptocurrencies and other risk assets are gradually returning, as analysts say the sell-off was an overreaction. Bitcoin exchange-traded funds have also seen massive inflows in recent sessions after Morgan Stanley allowed financial advisers to recommend Bitcoin ETFs to clients.

On Thursday, analysts expressed shock over the Mexican central bank’s decision to cut interest rates on the same day that official data showed a sharp rise in domestic inflation. The Bank of Mexico cut its benchmark interest rate by 0.25% to 10.75% in August 2024, defying market expectations amid ongoing economic concerns. Global economic growth is expected to slow, and inflation in advanced economies is generally expected to decline. There was significant market volatility in Mexico, driven by the depreciation of the peso (USD/MXN) and rising government bond yields. Meanwhile, annual core inflation rose from 5.10% in June to 5.57% in July, mainly due to non-core inflation, while core inflation declined from 4.05% to 4.00%.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) rose by 0.37%, France’s CAC 40 (FR40) closed down 0.26%, Spain’s IBEX 35 (ES35) lost 0.39%, and the UK’s FTSE 100 (UK100) closed negative 0.27% on Thursday.

The US natural gas (XNG/USD) prices eased losses and are trading near $2.1/MMBtu after the EIA reported a smaller-than-expected increase in storage inventories. The US utilities added 21 billion cubic feet of gas to storage last week, slightly below the market forecast of 22 billion cubic feet. According to the report, gas in storage is 14.9% above the 5-year average, down from 39% in March and 19% in June. Meanwhile, major US natural gas producers are planning further production cuts in the second half of 2024

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.74%, China’s FTSE China A50 (CHA50) added 0.36%, Hong Kong’s Hang Seng (HK50) ended Thursday up 0.08%, and Australia’s ASX 200 (AU200) was negative 0.23%. Hong Kong stocks soared nearly 2% in early trading on Friday, rising for a third day as investors reacted to fresh data from China. Consumer prices in the country rose to 0.5% y/y in July, beating forecasts of 0.3% amid Beijing’s efforts to stimulate consumption. Meanwhile, producer prices fell by 0.8%, below the forecast of a 0.9% drop. In addition, there were signs that some global investors viewed China’s markets as a safe haven after Monday’s sell-off.

The Australian dollar rose to $0.66, hitting a two-week high, as easing fears of a US recession spurred gains in risk assets. The Australian dollar received support from hawkish central bank statements. Reserve Bank of Australia (RBA) Governor Michelle Bullock said they would not hesitate to raise interest rates again to fight inflation. She warned that Australia’s economic outlook remains highly uncertain and that the Board should remain vigilant against upside risks to inflation.

A summary of views from the Bank of Japan’s July policy meeting showed that some members favored raising rates further, with one saying they should eventually be brought to at least 1 percent.

S&P 500 (US500) 5,199.50 −40.53 (−0.77%)

Dow Jones (US30) 38,763.45 −234.21 (−0.60%)

DAX (DE40) 17,615.15 +260.83 (+1.50%)

FTSE 100 (UK100) 8,166.88 +140.19 (+1.75%)

USD Index 103.20 +0.24 (+0.23%)

Important events today:
  • – China Consumer Price Index (m/m) at 04:30 (GMT+3);
  • – China Producer Price Index (m/m) at 04:30 (GMT+3);
  • – German Consumer Price Index (m/m) at 09:00 (GMT+3);
  • – Canada Unemployment Rate (m/m) at 15:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
09 Aug

Week Ahead: US30 index still sensitive to US recession fears

By ForexTime 

  • Markets still obsessed with deciphering US recession risks
  • Home Depot, Walmart earnings offer pulse on US economy
  • Latest US inflation data also holds clues about Fed’s next moves
  • Economically-sensitive US30 stock index ready to punch above 50-day SMA resistance

 

Markets are still obsessed about the risks of a US recession.

Traders and investors worldwide are still licking their wounds from the recent plunge across global financial markets, following last Friday’s unexpected rise in the US unemployment rate (4.3% in July).

Against such a backdrop, next week’s US economic data and US earnings releases could shift market expectations surrounding a US recession, and whether the Fed will be forced to cut rates aggressively.

 

Tuesday, August 13

  • JPY: Japan July PPI
  • AUD: Australia August consumer and business confidence
  • GBP: UK June unemployment, July jobless claims
  • GER40 index: Germany August ZEW survey expectations
  • ZAR: South Africa 2Q unemployment
  • USD index: US July PPI; speech by Atlanta Fed President Raphael Bostic
  • US30 index: Home Depot earnings

Wednesday, August 14

  • NZD: RBNZ rate decision
  • UK100 index: UK July CPI
  • EU50 index: Eurozone 2Q GDP, June industrial production
  • ZAR: South Africa June retail sales
  • US500 index: US July CPI

Thursday, August 15

  • JP225 index: Japan 2Q GDP
  • AU2000 index: Australia July unemployment
  • CNH: China July home prices, industrial production, retail sales, jobless rate
  • GBP: UK 2Q GDP; June industrial production, trade balance
  • NOK: Norway rate decision
  • RUS2000 index: US weekly initial jobless claims; July retail sales and industrial production
  • US30 index: Walmart earnings; speeches by St. Louis Fed President Alberto Musalem, Philadelphia Fed President Patrick Harker
  • CHINAH index: Earnings from Alibaba, JD.com

Friday, August 16

  • SG20 index: Singapore July exports
  • GBP: UK July retail sales
  • TWN index: Taiwan 2Q GDP
  • US400 index: US August consumer sentiment; speech by Chicago Fed President Austan Goolsbee

 

For the coming week, we focus on the US30 stock index.

After all, the share prices of the 30 companies contained within this stock index are deemed to be more reflective of real economic conditions (as opposed to say growth/tech/AI stocks).

Hence, the imminent earnings releases by these major companies, along with the incoming top-tier economic data, could contribute to outsized trading opportunities for this stock index next week.

The events highlighted below may well determine if the US30 index can conquer its 50-day simple moving average (SMA) resistance that it’s battled with all week long.

US30 index battles 50-day SMA resistance

 

 

1) Tuesday, August 13th: Home Depot earnings (before US markets open)

The Home Depot is the world’s largest home improvement specialty retailer, operating over 2,300 stores across North America (including Canada and Mexico).

In other words …

Home Depot’s earnings are reflective of the strength of consumer spending.

Markets are set to interpret this retail giant’s earnings for signs if consumer spending is still resilient, or whether households are already reeling from high interest rates, persistent inflation, and recession fears.

Depending on the earnings release, markets forecast this stock could move by 5.5%, either up or down, once US markets reopen on Tuesday, just hours after the company’s earnings are released.

Home Depot accounts for 5.8% of the US30 index, making it the 4th biggest stock on the Dow Jones Industrial Average index / Dow / FXTM’s US30 index.

That means the market’s reaction to Home Depot’s earnings could sway the broader US30 index in tandem.

Note that Tuesday also features the release of the US producer price index (PPI) and a speech by Atlanta Fed President Raphael Bostic, either of which could also sway the US30 index, in addition to Home Depot’s earnings.

 

 

2) Wednesday, August 14th: US July consumer price index (CPI)

The CPI is a widely followed measure of inflation.

And we know that red-hot inflation has been the bane of the Federal Reserve in recent years, though the US central bank has since made substantial progress in quelling it.

However, has it been enough? Or will the Fed be forced to maintain its benchmark rates at its current 23-year high of 5.5%?

Economists predict a soft and manageable uplift to the incoming CPI figures:

  • CPI month-on-month (July 2024 vs. June 2024): 0.2%
    (if so, that would be a return to positive territory from June’s -0.1% month-on-month figure)
  • CPI core (excluding food and energy prices) month-on-month: 0.2%
    (if so, that would be slightly higher from June’s 0.1% month-on-month figure)
  • CPI year-on-year (July 2024 vs. July 2023): 3%
    (if so, that would match June’s 3% year-on-year figure)
  • CPI core year-on-year: 3.2%
    (if so, that would be slightly lower than June’s 3.3% core year-on-year figure)

This incoming inflation data would be read as they pertain to the likelihood of Fed rate cuts, given that the US central bank now has to juggle between subduing inflation and not causing too much damage to the US jobs market, now more so in light of the recent surprise jump in US unemployment.

 

POTENTIAL SCENARIOS

  • If the CPI comes in higher than expected, that may force the Fed to hold interest rates higher still while risking more damage to the US labour market.

    Should markets then perceive greater odds for a US recession, that could send the US30 index plummeting back below its 100-day SMA and towards its 200-day SMA.

 

  • If the CPI comes in lower than expected, that should allow the Fed to lower interest rates in September to shore up support for the US labour market.

    If markets then believe that US recession risks are subsiding, that could see the US30 index rejoicing as it punches past its 50-day SMA and perhaps reaching the 40,000 mark.

 

 

3) Thursday, August 15th: Walmart earnings (before US markets open)

Walmart is a retail behemoth that serves about 255 million customers per week across some 10,500 stores, drawing over 80% of its revenue from its US customers.

Depending on what Walmart announces, markets forecast this stock could move by 5%, either up or down, once US markets reopen on Thursday, just hours after the company’s earnings are released.

Despite its sheer presence in the physical world, Walmart “merely” accounts for 1.1% of the US30 index.

Still, given how its earnings are reflective of US consumer spending habits, the market may well interpret Walmart’s earnings as an indicator of the US economic outlook.

The shifting odds of a US recession, via Walmart’s earnings, are bound to impact the US30 index’s performance as well.

Note that Thursday also features the release of the weekly US initial jobless claims, as well as July’s retail sales and industrial production data, all of which could sway the US30 index as well, on top of Walmart’s earnings.

Forex-Time-LogoArticle by ForexTime

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

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