InvestMacro

By JustMarkets

At Wednesday’s close of the stock exchange, the Dow Jones Index (US30) rose by 0.40%. The S&P 500 Index (US500) was up 0.96%. The NASDAQ Technology Index (US100) closed positively at 1.30%.

Chicago Fed Chairman Goolsbee stated yesterday that even if inflation is slightly higher for a few months, it would still be consistent with a path back to target. He added that the Fed’s current policy is pretty restrictive and said that he doesn’t support the idea of waiting until inflation hits 2% in 12 months to start cutting interest rates. That raised the odds that the Fed could begin cutting rates this spring. Markets estimate the odds of a 25 bps rate cut at 14% for the March 19-20 FOMC meeting and 46% for the April 30-May 1 meeting.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 0.38%, France’s CAC 40 (FR40) gained 0.68% yesterday, Spain’s IBEX 35 (ES35) declined 0.09%, and the UK’s FTSE 100 (UK100) closed positive 0.75%.

Eurozone industrial production for December unexpectedly rose by 2.6% m/m, beating expectations of 0.2% m/m and the most significant increase in 16 months.

ECB Vice President Guindos said yesterday that it would take some time before the ECB has the necessary information to confirm that inflation is steadily returning to our 2% target. His colleague, ECB Governing Council representative Makhlouf, added that the short-term outlook for the Eurozone economy points to stagnation amid tightening financing conditions, weak business and consumer confidence, and weak foreign demand. Swaps put the odds of an ECB rate cut at 25 bps at 8% at the March 7 meeting and 55% at the April 11 meeting.

Silver gained support on Wednesday after Eurozone industrial production unexpectedly rose rapidly in 16 months, a positive for industrial metals demand. Gold also gained support as an inflation hedge after the US 10-year breakeven inflation rate rose to a 3-week high on Wednesday.

WTI crude futures fell as low as $76 a barrel on Thursday, extending losses from the previous session as official data showed that US oil inventories rose by about 12 million barrels last week, the highest in three months. The latest figure also exceeded market expectations for a 2.56 million barrel rise in inventories and raised demand concerns in the world’s largest oil consumer. Meanwhile, OPEC’s latest report forecasts global oil demand growth in 2024 and 2025, contrasting with more conservative estimates from other sources.

Asian markets traded mixed on Wednesday. Japan’s Nikkei 225 (JP225) was down 0.69% for the day, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to Chinese New Year celebrations, Hong Kong’s Hang Seng (HK50) was up 0.84%, and Australia’s ASX 200 (AU200) ended the day negative 0.74%.

Japan’s economy unexpectedly contracted 0.4% year-on-year in the fourth quarter of 2023, falling short of market forecasts that expected 1.4% growth. It was the first decline in five years amid high inflation and an uncertain global economic outlook.

Traders are looking to add new positions on Chinese indices after Chinese authorities said the country’s holiday season could witness a record 9 billion domestic passenger trips this week. Meanwhile, Beijing has taken a dozen steps since January to cushion the rout in China’s stock market while supporting weak demand in the real estate market amid the lingering real estate crisis.

The Australian dollar held below $0.65 in a weak market reaction as weak employment data reinforced a dovish view of the country’s monetary policy. Australia’s unemployment rate rose to a two-year high of 4.1% in January, and employment increased by just 500, while analysts had expected 30,000 new jobs. The Reserve Bank of Australia is expected to cut interest rates by a total of about 40 basis points this year, with the first move coming in August. Earlier this week, RBA Governor Michele Bullock said inflation didn’t need to slow to 2.5% before the central bank would consider cutting the money rate. However, she emphasized that the central bank remains open to the possibility of a further rate hike in the face of persistent inflation. Expectations for Australian consumer inflation in February 2024 stood at 4.5%, unchanged for the third consecutive month and at its lowest level since January 2022.

S&P 500 (US500) 5,000.62 +47.45 (+0.96%)

Dow Jones (US30) 38,424.27 +151.52 (+0.40%)

DAX (DE40) 16,945.48 +64.65 (+0.38%)

FTSE 100 (UK100) 7,568.40 +56.12 +0.75%)

USD Index 104.71 -0.25 (-0.23%)

• – Japan GDP (q/q) at 01:50 (GMT+2);
• – Australia Unemployment Rate (m/m) at 02:30 (GMT+2);
• – Japan Industrial Production (m/m) at 06:30 (GMT+2);
• – UK GDP (q/q) at 09:00 (GMT+2);
• – UK Industrial Production (m/m) at 09:00 (GMT+2);
• – UK Trade Balance (m/m) at 09:00 (GMT+2);
• – Switzerland Producer Price Index (m/m) at 09:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 10:00 (GMT+2);
• – Eurozone Trade Balance at 12:00 (GMT+2);
• – US Retail Sales (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Industrial Production (m/m) at 16:15 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – New Zealand RBNZ Gov Orr Speaks at 20:40 (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

US stocks fell sharply on Tuesday after releasing a sharper-than-expected inflation report. At Tuesday’s stock market close, the Dow Jones Index (US30) was down 1.35%. The S&P 500 index (US500) was down 1.37%. The NASDAQ Technology Index (US100) closed negative at 1.80%. In the United States, the annual inflation rate eased to 3.1%, beating expectations of 2.9%, while core inflation came in at 3.9% compared to the forecast of 3.7%. Consumer prices rose by 0.3% from the previous month, and core inflation rose by 0.4%, exceeding expectations. The strong inflation report forced investors to revise their expectations for rate cuts by the Federal Reserve in March and May. All key sectors were down, with real estate and technology leading the way as shares of major technology companies such as Microsoft (2.1%), Amazon (2.1%), and Alphabet (1.6%) fell.

Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) fell by 0.92%, France’s CAC 40 (FR40) decreased by 0.84% yesterday, Spain’s IBEX 35 (ES35) lost 0.59% on Tuesday, and the UK’s FTSE 100 (UK100) closed negative 0.81%.

The ZEW Economic Sentiment Indicator for Germany rose for the seventh consecutive month to 19.9 in February 2024, reaching its highest level in a year and beating market expectations of 17.5 amid hopes that major central banks will start cutting interest rates this year. In addition, German investor morale improved to a one-year high in February, while the assessment of current economic conditions fell to its lowest level since mid-2020. More than two-thirds of respondents expect the ECB to cut interest rates in the next six months due to lower inflation, while nearly three-quarters of respondents predict the US central bank will cut interest rates soon. Swaps put the odds of a 25 bps ECB rate cut at 7% at the next meeting on March 7 and 52% at the April 11 meeting.

The UK unemployment rate for the fourth quarter of 2023 fell to 3.8% from 4.0%. The UK wages rose more than expected in the year’s final quarter, leading investors to cut bets on a rate cut by the Bank of England this year.

The Swiss franc fell to 0.88 per US dollar in February, its lowest in two months, after lower-than-expected inflation data strengthened the case for doves at the Swiss National Bank (SNB). Swiss consumer prices rose 1.3% year-on-year in January, well below market expectations of 1.7% and the lowest in two years, remaining below the SNB’s upper 2% target for the seventh consecutive month. Inflation fell despite repeated calls for stubbornly higher rates as the country scraped electricity subsidies and revised the value-added tax. In turn, this result has raised bets that the SNB may start to cut its benchmark discount rate in the first half of the year, including the possibility of a March cut. The franc was also pressured because the SNB increased its foreign exchange reserves for the second month in a row.

WTI crude oil prices rose to 78 dollars per barrel on Tuesday, hitting a two-week high, as tensions in the Middle East continued to support oil prices. Meanwhile, OPEC maintained its forecasts for sustained growth in global oil demand in 2024 and 2025 and raised its economic growth forecasts for those years, pointing to additional growth potential. In addition, the report noted a 350,000 bpd reduction in OPEC oil production in January following the implementation of a new round of voluntary production cuts by the OPEC+ alliance in the first quarter.

The US natural gas prices fell more than 5.5% to below $1.7/MMBtu, hitting their lowest since July 2020 due to rising production and weak demand. Gas wells pushed production to near-record levels after a sharp cold snap in mid-January.

Asian markets were mostly up on Tuesday. Japan’s Nikkei 225 (JP225) was up 2.89% for the day, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to Chinese New Year celebrations, Hong Kong’s Hang Seng (HK50) was also not trading yesterday, and Australia’s ASX 200 (AU200) ended the day negative 0.15% on the day.

The sharp fall in the Japanese yen yesterday prompted Japan’s Finance Minister Shun’ichi Suzuki to warn that authorities were closely monitoring the market without confirming whether they would intervene again. Deputy Finance Minister for International Affairs Masato Kanda also said that Japan would take appropriate action in the foreign exchange market if necessary, as the sharp fall of the yen is not suitable for the economy. The country intervened in the foreign exchange market three times in 2022 when the yen fell to a 32-year low of 152 per dollar but has taken no further action since then.

S&P 500 (US500) 4,953.17 −68.67 (−1.37%)

Dow Jones (US30) 38,272.75 −524.63 (−1.35%)

DAX (DE40) 16,880.83 −156.52 (−0.92%)

FTSE 100 (UK100) 7,512.28 −61.41 (−0.81%)

USD Index 104.85 +0.68 (+0.65%)

• – UK Consumer Price Index (m/m) at 09:00 (GMT+2);
• – UK Producer Price Index (m/m) at 09:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – UK BoE Gov Bailey Speaks at 17:00 (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.

By JustMarkets 

At Monday’s stock market close, the Dow Jones (US30) index was up 0.33% and set a new all-time high. The S&P 500 index (US500) was down 0.10%. The NASDAQ Technology Index (US100) closed negative 0.30%. Ahead of the monthly US consumer price report, equities were pressured by long-position liquidation.

Fed Chair Bowman’s hawkish comments on Tuesday also weighed on stocks when she stated that current interest rates are in a good place to maintain downward pressure on inflation and that she does not believe a Fed rate cut is appropriate in the near term.

Today, the US will release its consumer inflation (CPI) report. On an annualized basis, overall inflation is expected to fall from 3.4% to 3.1%. Core inflation (which excludes food and energy prices) is forecast to fall from 3.9% to 3.7% y/y. If progress with inflation continues, this will put pressure on the dollar index but will also have a favorable impact on stock indices and the precious metals market (gold and silver). Suppose progress in the fight against inflation stalls or develops less favorably than expected. In that case, the US Treasury yields will likely jump as traders abandon bets on the sharp rate cuts scheduled for this year and push back the expected start date of the Fed’s easing cycle. Such an outcome would have to be favorable for the US dollar soon and hurt risk assets (euro, British pound, stock indices, and gold).

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose 0.65%, France’s CAC 40 (FR 40) gained 0.55% yesterday, Spain’s IBEX 35 (ES35) jumped 0.89% on Monday, and the UK’s FTSE 100 (UK100) closed positive 0.02%.

The European Central Bank does not need to weaken the eurozone economy further to bring inflation under control as demand is still weak, ECB board spokesman Piero Cipollone said on Monday. These comments contrast with other more hawkish remarks from ECB officials. Currently, swaps are priced at a 25 bps chance of an ECB rate cut of 11% at the next meeting on March 7 and 60% at the April 11 meeting.

WTI crude futures hit around $77 a barrel on Tuesday, near their highest levels in two weeks, as heightened geopolitical tensions in the Middle East continue to support oil prices. On Monday, Israel launched airstrikes on the southern Gaza city of Rafah after Israeli Prime Minister Benjamin Netanyahu rejected a ceasefire offer from Hamas. However, diplomatic talks in Beirut indicate possible progress in reducing tensions between Israel and Hamas. Meanwhile, uncertainty on the demand side could limit oil price gains as inflation risks could delay interest rate cuts by the Federal Reserve.

Most markets in the Asia-Pacific region, including China, Hong Kong, Japan, South Korea, and Singapore, were closed for holidays. Australia’s ASX 200 (AU200) ended the day positively, 0.06%.

Inflation expectations in New Zealand reached the lowest level in 2 years at 2.5% in the first quarter of 2024. But overall sentiment remained unfavorable after RBNZ Governor Adrian Orr told a parliamentary committee on Monday that the current inflation rate of 4.7% is still too high and money rates should stay at restrictive levels. The statement came amid the central bank’s preparations for its first policy meeting of the year in late February.

The NAB Australia Business Confidence Index rose to 1 in January 2024 from an upwardly revised zero in the previous month but remained below its long-term average. The improvement in the index was mainly in manufacturing and construction, while sentiment in wholesale and retail trade declined. The Westpac-Melbourne Institute of Australia’s consumer sentiment index jumped 6.2% to 86 in February 2024 from 81 in January, the highest in 20 months, amid lower inflation and optimism that the Reserve Bank of Australia has ended its tightening campaign.

S&P 500 (US500) 5,021.84 −4.77 (−0.10%)

Dow Jones (US30) 38,797.38 +125.69 (+0.33%)

DAX (DE40)  17,037.35 +110.85 (+0.65%)

FTSE 100 (UK100) 7,573.69 +1.11 (+0.02%)

USD Index  104.13 +0.05 (+0.05%)

• – Japan Producer Price Index (m/m) at 01:50 (GMT+2);
• – New Zealand Inflation Expectations (m/m) at 04:00 (GMT+2);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+2);
• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+2);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – US Consumer Price Index (m/m) 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 

As of Friday’s stock market close, the Dow Jones Index (US30) was down 0.14% (0.32% for the week). The S&P 500 Index (US500) decreased by 0.57% (1.40% weekly). The NASDAQ Technology Index (US100) closed positively at 1.25% (2.41% for the week). Economic optimism rallied shares of chip, cybersecurity, and software makers, leading higher technology stocks. According to Bloomberg Intelligence, about 80% of S&P 500 companies reporting results this cycle beat forecasts well above the 10-year average of 74%.

The US Bureau of Labor Statistics left the core US Consumer Price Index for Q4 unchanged at an annualized rate of 3.3%. Fed comments on Friday were a bit hawkish and supported the dollar at the end of the trading day. Dallas Fed President Logan said she sees no need for additional interest rate adjustments at this time and is confident that the progress being made in inflation will be sustainable over the medium term. Atlanta FRB President Bostic also said that the Fed must “stay the course” to ensure inflation returns to the 2% target. Markets rate the odds of a 25 bps rate cut at 19% for the March 19-20 FOMC meeting and 73% for the next meeting on April 30-May 1.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 0.22% (0.00% change for the week), France’s CAC 40 (FR 40) fell by 0.24% on Friday (down 0.73% week-on-week), Spain’s IBEX 35 (ES35) lost 0.09% on Friday (down 1.50% week-on-week), and the UK’s FTSE 100 (UK100) closed negative 0.30% (down 0.56% week-on-week).

On Friday, ECB Governing Council spokesman Kazaks said that there are now expectations that the ECB may cut interest rates in the spring at its March or April meetings, but that one should not be overly optimistic. Croatian central bank governor Boris Vujcic said there was no rush to cut record-high borrowing costs and that it was better to wait and see if inflation was decisively beaten. Many more ECB chiefs will be in front of the microphone in the coming days. The euro can probably count on additional support if they repeat this statement. Swaps currently estimate the odds of a 25 bps ECB rate cut at 9% at the next meeting on March 7 and 53% at the next meeting on April 11.

Oil prices will remain volatile in the coming days after rising on Friday, up 6% for the week. Bullish for oil prices were comments by Israeli Prime Minister Netanyahu on Thursday when he said Israel could achieve total victory over Hamas within months and rejected any ceasefire talks. A continuation of the war threatens to escalate and widen the conflict across the Middle East, a region that accounts for about a third of global oil production. In addition, Friday’s rally in the S&P 500 Index to a record high showed confidence in the economic outlook, which positively impacted energy demand and crude oil prices.

Asian markets traded mostly higher last week. Japan’s Nikkei 225 (JP225) gained 1.31% for the week, China’s FTSE China A50 (CHA50) jumped by 4.47%, Hong Kong’s Hang Seng (HK50) ended the week up 2.67%, and Australia’s ASX 200 (AU200) ended the week negative 0.71%.

Financial conditions in Japan will remain easy for now even after the Bank of Japan ends its negative rate regime, Bank Governor Kazuo Ueda said late last week. Ueda’s comments were the latest statement from Bank officials, who assured market participants that any end to negative rates would not herald a change in the Bank’s core policy. The International Monetary Fund has supported the BoJ’s cautious approach, recommending gradual rate hikes once inflation becomes sustainable. These dovish statements suggest that the BoJ’s exit from its ultra-low stance is unlikely to result in multiple rate hikes, as has been seen recently in other key economies, but rather limited to a few scattered increases. In theory, this could limit the yen’s recovery potential in the coming months, making it less attractive in yield differentials than its major peers.

The New Zealand dollar continues to rise as currency markets assess further interest rate hikes by the Reserve Bank of New Zealand following last week’s strong labor market data. According to money market pricing, investors now believe there is a 90% chance of a further 25 basis point interest rate hike by May. Markets have postponed the first RBNZ rate cut until November. The RBNZ will, therefore, be one of the last major central banks to cut rates, which will support the New Zealand dollar.

S&P 500 (US500) 5,026.61 +28.70 (+0.57%)

Dow Jones (US30) 38,671.69 −54.64 (-0.14%)

DAX (DE40)  16,926.50 −37.33 (-0.22%)

FTSE 100 (UK100) 7,572.58 −22.90 (-0.30%)

USD Index  104.08 −0.09 (-0.08%)

• – New Zealand RBNZ Gov Orr Speaks at 02:30 (GMT+2);
• – Indian Consumer Price Index (m/m) at 14:00 (GMT+2);
• – US FOMC Member Bowman Speaks at 16:20 (GMT+2);
• – US FOMC Member Kashkari Speaks at 20:00 (GMT+2);
• – UK BoE Gov Bailey Speaks at 20:00 (GMT+2).

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 Dow Jones Index (US30) was up 0.13% at yesterday’s stock market close. The S&P 500 index (US500) added 0.06%. The NASDAQ Technology Index (US100) closed positively by 0.24%. On Thursday, stock indices rose slightly due to strong corporate earnings results and gains in chip stocks.

On the positive side, Walt Disney (DIS) shares rose more than 11% after the company reported first-quarter adjusted earnings per share that beat expectations and projected full-year adjusted earnings per share above consensus. Additionally, Ralph Lauren (RL) is up more than 16% after reporting total comparable sales for Q3, excluding forex, well above consensus. Wynn Resorts (WYNN) closed up more than 6% after reporting Q4 operating revenue of $1.84 billion, exceeding the consensus forecast of $1.74 billion. On the negative side, PayPal Holdings closed down more than 11% after reporting a lower-than-expected number of active customer accounts in Q4 and forecasting full-year adjusted EPS below consensus.

The US weekly initial jobless claims fell by 9,000 to 218,000, indicating a more robust labor market and hawkish Fed policy. Weekly jobless claims fell by 23,000 to 1.871 million, indicating a stronger labor market than expected at 1.875 million.

FRB President Richmond Barkin’s comments on Thursday were somewhat hawkish and lent support to the dollar late in the day when he said the Fed doesn’t need to rush to cut interest rates and would like to see disinflation for a few more months before cutting rates. Markets rate the odds of a 25 bps rate cut at the March 19-20 FOMC meeting at 21% and 74% for the April 30-May 1 meeting.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.25%, France’s CAC 40 (FR40) gained 0.71%, Spain’s IBEX 35 (ES35)vincreased by 0.17% on Thursday, and the UK’s FTSE 100 (UK100) closed negative 0.44%.

ECB chief economist Lane said yesterday that the ECB needs more confidence that inflation is returning to target before policymakers can cut interest rates. His counterpart, ECB Governing Council spokesman Wunsch, said he preferred to wait for more data before deciding whether to cut interest rates because Eurozone wage growth is at a level that falls short of the ECB’s 2% inflation target.

Consumer price inflation in Germany was confirmed at 2.9% annualized in January 2024, the lowest since June 2021, thanks to a sharp slowdown in goods inflation (2.3% vs. 4.1% in December). In Norway, the annualized consumer inflation rate fell to 4.7% in January 2024 from 4.8% in the previous month, slightly below market expectations of 4.6%. This was the lowest rate since October 2023.

Crude oil and gasoline prices rose to 1-week highs on Thursday and closed sharply higher. Israeli Prime Minister Netanyahu’s comments pushed crude prices higher on Thursday as he said Israel could achieve total victory over Hamas within months and rejected any cease-fire talks. A continuation of the war threatens to escalate and expand across the Middle East, which accounts for about a third of global oil production.

Natural gas prices fell to their closest low in 3 years on Thursday as an unusually mild winter reduced demand for gas for heating and kept US inventories high. The EIA’s weekly natural gas inventories data on Thursday matched expectations at 75 billion cubic feet. However, inventories remain high, with natural gas inventories 10.6% above the five-year average as of February 2.

Asian markets were mostly up on Thursday. Japan’s Nikkei 225 (JP225) was up 2.10% for the day, China’s FTSE China A50 (CHA50) was down 0.94%, Hong Kong’s Hang Seng (HK50) lost 1.71% by Wednesday’s close, and Australia’s ASX 200 (AU200) was positive 0.39% for the day.

Reserve Bank of Australia (RBA) Governor Michele Bullock said inflation doesn’t need to slow to 2.5% before the central bank moves to cut the money rate. However, she said the RBA would not rule out further interest rate hikes. The central bank acknowledged that inflation fell more than expected in the fourth quarter but was undecided on when inflation would return to its 2-3% target.

The New Zealand dollar surpassed $0.612, hitting its highest level in a week amid speculation of a possible further interest rate hike amid high inflation and a robust labor market. Analysts at ANZ now forecast a quarter-point rate hike by the Reserve Bank of New Zealand (RBNZ) in February and April, taking the rate to 6%. There is now about a 40% chance that the RBNZ will raise the rate on February 28, whereas a week ago, there was virtually no chance of that happening.

Malaysia’s unemployment rate fell to 3.3% in December 2023 from 3.6% in the same month of the previous year. The number of unemployed fell 5.3% from a year earlier to 567.8k, while employment rose 2.0% to a new high of 16.46m.

S&P 500 (US500) 4,997.91 +2.85 (+0.057%)

Dow Jones (US30) 38,726.33 +48.97 (+0.13%)

DAX (DE40)  16,963.83 +41.87 (+0.25%)

FTSE 100 (UK100) 7,595.48 −33.27 (−0.44%)

USD Index  104.19 +0.06 (+0.06%)

• – Australia RBA Gov Bullock Speak at 00:30 (GMT+2);
• – German Consumer Price Index at 09:00 (GMT+2);
• – Canada Unemployment Rate (m/m) 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 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 

At yesterday’s stock market close, the Dow Jones Index (US30) was up 0.37%. The S&P 500 index (US500) added 0.23% yesterday. The NASDAQ Technology Index (US100) closed positively by 0.07%. The broad market posted moderate gains on Tuesday on the back of lower T bond yields. However, indices gains were limited due to weak corporate earnings from some large companies and hawkish comments from the Federal Reserve.

On Tuesday, Federal Reserve President Cleveland Mester made somewhat hawkish comments and supported the dollar, saying she was in no rush to cut interest rates and that policymakers would likely gain confidence to cut rates “later this year” if the economy performs as expected. Markets rate the odds of a 25 bps rate cut at 23% for the March 19-20 FOMC meeting and 82% for the April 30-May meeting.

Bank of Canada Governor Tiff Macklem said Tuesday that monetary policy needs more time to ease price pressures and warned that the biggest driver of rising prices – housing costs – cannot be tamed by borrowing costs. Canada’s severe housing shortage has driven up the cost of buying or renting real estate in the country. Macklem said housing costs are now the most significant contributor to above target inflation.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose 0.76%, France’s CAC 40 (FR40) gained 0.65%, Spain’s IBEX 35 (ES35) added 0.62% on Tuesday, and the UK’s FTSE 100 (UK100) closed positive 0.90%.

Eurozone retail sales for December fell 1.1% m/m, weaker than expectations of 1.0% m/m and the most significant decline in a year. ECB 1-year inflation expectations fell to 3.2% in December from 3.5% in November, the slowest rate of increase in 2 years. Three-year inflation expectations for December rose to 2.5% from 2.4% in November. Swaps estimate the odds of a 25 bps ECB rate cut at the next meeting on March 7 at 19% and at the next meeting on April 11 at 74%. Investors will evaluate German industrial production, French trade balance, and Italian retail sales data in today’s European session.

Switzerland’s January 2024 unemployment rate rose to a seasonally adjusted 2.5% from a more than one-year low of 2.3% in the previous month. It was the highest unemployment rate since February 2022.

WTI crude futures climbed above $73.5 a barrel on Wednesday and rose for the third straight session as investors continue to assess the risk of supply disruptions in the Middle East. Analysts say that as long as tensions remain in the region, markets will factor in supply concerns. Nevertheless, oil prices have fallen about 7% since late January amid reports of progress in ceasefire talks between Israel and Hamas. Fading expectations of an immediate interest rate cut by the US Federal Reserve and lingering concerns about China’s economic recovery also weighed on the outlook for global demand.

Asian markets were mostly up on Tuesday. Japan’s Nikkei 225 (JP225) was down 1.12% for the day, China’s FTSE China A50 (CHA50) jumped 3.81%, Hong Kong’s Hang Seng (HK50) was up 4.31% at Tuesday’s close, and Australia’s ASX 200 (AU200) was positive 0.52% for the day. Chinese and Hong Kong indices rose yesterday on signs that China is stepping up efforts to combat the stock market slump, including a pledge by a state fund to increase stock purchases. Over the weekend, China’s securities regulator also vowed to prevent abnormal market swings and crack down on “vicious” short selling before adding that it would take strong measures to avoid risks of margin.

S&P 500 (US500) 4,954.23 +11.42 (+0.23%)

Dow Jones (US30) 38,521.36 +141.24 (+0.37%)

DAX (DE40) 17,033.24 +129.18 +0.76%)

FTSE 100 (UK100) 7,681.01 +68.15 (+0.90%)

USD Index 104.14 -0.08 (-0.08%)

• – Switzerland Unemployment Rate (q/q) at 09:00 (GMT+2);
• – German Industrial Production (m/m) at 09:00 (GMT+2);
• – Canada Trade Balance (m/m) at 15:30 (GMT+2);
• – US Trade Balance (m/m) at 15:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – US FOMC Member Bowman Speaks 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

At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 0.71%. The S&P 500 Index (US500) was down by 0.32%. The NASDAQ Technology Index (US100) closed negative by 0.20%. Stocks came under pressure on Monday as bond yields rose amid hawkish comments from the Federal Reserve and stronger-than-expected economic news.

Economic news out of the US on Monday was hawkish for Fed policy and bullish for the dollar. The January ISM services index rose by 2.9 to a 4-month high of 53.4, exceeding expectations of 52.0. In addition, the January ISM services price sub-index unexpectedly rose by 7.3 to an 11-month high of 64.0, stronger than expectations of a decline to 56.7. Chicago Fed President Goolsbee said yesterday that he needs to see more data showing inflation progress before the Fed starts cutting interest rates.

Minneapolis Fed President Kashkari said the neutral rate will probably rise. That would give the FOMC time to assess upcoming economic data before it starts cutting the federal funds rate, with less risk that too tight a policy would derail the economic recovery.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) decreased by 0.08%, France’s CAC 40 (FR40) fell by 0.03%, Spain’s IBEX 35 (ES35) lost 0.20% on Monday, and the UK’s FTSE 100 (UK100) closed negative by 0.04%.

The PPI report (shows the rate of inflation between factories and plants) in the Eurozone proved to be a dovish factor for ECB policy. ECB Governing Council spokesman Vujcic said that the ECB now needs to be patient before embarking on an easing cycle to make sure that labor costs do not turn into sustained wage pressures.

The Eurozone Producer Price Index for December fell by 10.6% y/y, weaker than expectations of 10.5% y/y. The Sentix Eurozone Investor Confidence Index for February rose by 2.9 to a 10-month high of negative 12.9, stronger than expectations of negative 15.0. German trade data came in below expectations as exports for December fell by 4.6% m/m, weaker than expectations of 2.8% m/m and the biggest decline in a year. Imports for December fell by 6.7% m/m, which was weaker than expectations of 1.9% m/m and was the biggest decline of the year. Swaps estimate the odds of a 25 bps ECB rate cut at 13% at the next meeting on March 7 and 68% at the April 11 meeting.

WTI crude futures rose to around $73 a barrel on Tuesday, extending gains from the previous session amid concerns about escalating tensions in the Middle East that could disrupt oil supplies from the region. Analysts pointed to a series of US strikes against Iranian-backed militias over the weekend, although US officials emphasized that the country was not seeking a wider conflict in the region.

Asian markets traded mixed on Monday. Japan’s Nikkei 225 (JP225) decreased by 0.24% for the day, China’s FTSE China A50 (CHA50) jumped by 1.54%, Hong Kong’s Hang Seng (HK50) closed Monday at its opening price, and Australia’s ASX 200 (AU200) ended the day negative 0.85%. Hong Kong and Chinese stocks rose sharply on Tuesday opening as authorities introduced measures to maintain market stability and halt a sharp sell-off in equities.

The Australian dollar rose to around $0.65, rebounding slightly from 11-week lows after the Reserve Bank of Australia (RBA) left interest rates unchanged as expected but warned that further interest rate hikes were possible due to persistently high inflation. The RBA acknowledged that inflation fell more than expected in the fourth quarter but was undecided on when inflation would return to the 2-3% target. Policymakers added that the path of interest rates will depend on data and the evolving assessment of risks.

S&P 500 (US500) 4,942.81 −15.80 (−0.32%)

Dow Jones (US30) 38,380.12 −274.30 (−0.71%)

DAX (DE40) 16,904.06 −14.15 (−0.08%)

FTSE 100 (UK100) 7,612.86 −2.68 (−0.4%)

USD Index 104.32 −0.14 (−0.13%)

• – Australia Retail Sales (m/m) at 02:30 (GMT+2);
• – Australia RBA Interest Rate Decision at 05:30 (GMT+2);
• – Australia RBA Rate Statement at 05:30 (GMT+2);
• – UK Construction PMI (m/m) at 11:30 (GMT+2);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+2);
• – US FOMC Member Mester Speaks at 19:00 (GMT+2);
• – Canada BoC Gov Macklem’s Speech at 20:00 (GMT+2);
• – New Zealand Unemployment Rate (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.