InvestMacro

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.35%, while the S&P 500 Index (US500) added 0.59%. The NASDAQ Technology Index (US100) closed positive by 0.83% on Thursday.

Fed spokesman Neel Kashkari continued his aggressive stance on monetary policy yesterday, stating the potential need for another Fed interest rate hike. The US second quarter GDP was revised downward, and home sales fell more than expected in August. On the positive side, Thursday was a weaker dollar and dovish comments from Chicago Fed Chairman Goolsbee, who said policymakers risked raising interest rates too much.

The head of the largest US bank, Jamie Dimon, said yesterday that the world is not ready for a 7% rate along with stagflation and that going from 5% to 7% would be much more painful than 3% to 5%. In fact, even 5% is already a pain that no one has fully felt yet, as current actual US government debt service rates are only approaching 3%. The cost of servicing private sector debt is also far from rates consistent with 5%.

Recent data shows that Reverse Repo volumes are actively declining. This suggests that banks are no longer “parking” excess liquidity with the Fed and are beginning to actively buy short-term Treasury bills. In periods of such rotations, the capital flow of investors does not go into shares, and it leads to the weakness of stock indices.

US GDP in Q2 amounted to 2.1% (annualized q/q), which was weaker than expectations of a 2.2% increase. But overall, the US economy continues to show economic resilience. The second quarter personal consumption reading was revised downward to 0.8% from the previously announced 1.7%. US weekly initial jobless claims rose by 2,000 to 204,000, indicating a robust labor market. US home sales in August fell by 7.1% m/m, weaker than expectations of 1.0% m/m and the largest decline in 11 months.

Equity markets in Europe were mostly up on Thursday. Germany’s DAX (DE40) rose by 0.70%, France’s CAC 40 (FR40) gained 0.63% yesterday, Spain’s IBEX 35 (ES35) added 1.03%, and the UK’s FTSE 100 (UK100) closed positive by 0.11%.

The Eurozone Economic Confidence Index for September fell by 0.3 to 93.3, which was stronger than expectations of 92.4. The German Consumer Price Index (EU harmonized) fell from 6.1% to 4.5% y/y, the lowest level in two years. ECB Governing Council representative and Bundesbank President Nagel said that additional ECB interest rate hikes could be imminent “if the data show that further action is warranted.” Eurozone inflation data will be released today. Overall inflation is expected to fall from 5.2% to 4.5% y/y, while core inflation (excluding food and energy prices) is expected to fall from 5.3% to 4.8% y/y. Such data would be a dovish factor for ECB policy.

Natural gas prices rose to a 1-week high on Thursday and closed moderately higher. Forecasts of colder weather that will spur demand for natural gas for heating helped push prices higher after WSI Trader reported that below-normal temperatures could spread to the central US by the middle of next month. But natural gas price gains were capped yesterday after the EIA’s weekly natural gas inventories rose 90 bcf, exceeding expectations of 89 bcf. As of September 25, natural gas storage in Europe was 95% full, well above the 5-year seasonal average of 87% for this time of year. The US natural gas inventories as of September 22 were 6.0% above the 5-year seasonal average.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.54% for the day, China’s FTSE China A50 (CHA50) fell by 0.58%, Hong Kong’s Hang Seng (HK50) was down by 1.36% for the day, and Australia’s ASX 200 (AU200) was negative 0.05% for Thursday. Today is a bank holiday in China.

Core inflation in Japan’s capital slowed in September for the third consecutive month, mainly due to lower fuel costs. Tokyo’s core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, came in at 2.5% y/y in September, while the median market forecast called for a 2.6% y/y figure. Other data showed factory output was unchanged in August, suggesting that companies are feeling the pain from weaker global demand and weak signs in China’s economy. Despite slowing inflation, the continued rise in food and service prices is likely to force the Bank of Japan to phase out its massive stimulus, analysts said.

S&P 500 (F)(US500) 4,299.70 +25.19 (+0.59%)

Dow Jones (US30) 33,666.34 +116.07 (+0.35%)

DAX (DE40)  15,323.50 +106.05 (+0.70%)

FTSE 100 (UK100) 7,601.85 +8.63 (+0.11%)

USD Index  106.14 -0.53 (-0.50%)

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3);
• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – UK GDP (q/q) at 09:00 (GMT+3);
• – German Retail Sales (m/m) at 09:00 (GMT+3);
• – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 10:40 (GMT+3);
• – German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Canada GDP (m/m) at 15:30 (GMT+3);
• – US PCE Price index (m/m) at 15:30 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3);
• – US FOMC Member Williams Speaks at 19:45 (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.

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) decreased by 0.20%, while the S&P 500 Index (US500) added 0.02%. The NASDAQ Technology Index (US100) closed positive by 0.22% on Wednesday.

The Dow Jones Industrials (US30) fell to a 3-month low. The broad market moved to the downside yesterday after bond yields resumed their upward trend, with the 10-year German bond yield rising to a new 12-year high. Stocks initially headed higher after bond yields fell amid dovish comments from Minneapolis Fed President Kashkari, who said the government shutdown and a prolonged strike by automakers may require less action from the Fed. Stocks also gained support after Democratic and Republican leaders in the Senate on Tuesday night agreed on a plan to keep the government open through mid-November and provide $6 billion in aid to Ukraine.

According to the Mortgage Bankers Association (MBA), US mortgage applications fell by 1.3% for the week ended September 22 from the previous week. The subindex of home purchase applications fell by 1.5%, and the subindex of refinance applications fell by 0.9%. The average 30-year fixed-rate mortgage rose by 10 bps to 7.1%, the highest rate in 22 years. US new capital goods orders rose by 0.9% m/m in August, beating expectations of 0.1% m/m and the most substantial increase in 7 months.

Markets factor in a 24% probability that the FOMC will raise the interest rate by 25 bps at the next FOMC meeting on November 1 and a 47% probability that the rate will be raised by 25 bps at the meeting ending December 13. Markets then expect the FOMC to start cutting rates in the second half of 2024 in response to an anticipated slowdown in the US economy.

Equity markets in Europe were mostly down on Wednesday. Germany’s DAX (DE40) was down by 0.25%, France’s CAC 40 (FR40) fell by 0.03% yesterday, Spain’s IBEX 35 (ES35) lost 0.42%, and the UK’s FTSE 100 (UK100) closed negative by 0.43%.

Germany’s GfK Consumer Confidence Index for October fell to a 6-month low of 26.5, weaker than expectations of 26.0. The French consumer confidence indicator for September fell to a 4-month low of 83, weaker than expectations of 84. Five German economic institutions downgraded their forecasts for German GDP for 2023 to a contraction of -0.6% from a previous forecast of 0.3% growth. Eurozone M3 money supply contracted by a record 1.3% y/y in August, weaker than expectations of 1.0% y/y.

Oil prices rose to a 13-month-high yesterday. Crude oil prices continue to rise amid concerns that global oil supplies will remain tight for the foreseeable future. The weekly EIA report released on Wednesday showed crude oil inventories fell to a 9-month low, and crude inventories at Cushing, the delivery point for WTI crude futures, fell to a 14-month low.

Asian markets traded flat on Wednesday. Japan’s Nikkei 225 (JP225) gained 0.18% for the day, China’s FTSE China A50 (CHA50) fell by 0.05%, Hong Kong’s Hang Seng (HK50) ended the day up by 0.83%, and Australia’s ASX 200 (AU200) ended Wednesday positive 0.05%.

In China, Evergrande’s suspension has dampened sentiment in Chinese markets ahead of the week-long Autumn Festival holiday. Nevertheless, the holiday is expected to support the Chinese economy by boosting consumer spending.

Uncertainty over China caused Australia’s ASX 200 Index (AU200) to lose most of its gains for the day. Data also showed that Australian retail sales rose less than expected in August amid continued pressure from high-interest rates and inflation.

S&P 500 (F)(US500) 4,274.51 +0.98 (+0.02%)

Dow Jones (US30) 33,550.27 −68.61 (−0.20%)

DAX (DE40)  15,217.45 −38.42 (−0.25%)

FTSE 100 (UK100) 7,593.22 −32.50 (−0.43%)

USD Index  106.73 +0.50 (+0.47%)

• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – German Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US Fed Chair Powell Speaks at 23:00 (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.

By ForexTime

• US government shutdown may further slow economic momentum
• Fed could be prevented from one last rate hike
• Market reaction from 2018 shutdown may repeat itself
• US dollar may weaken, but not much
• Gold, US stock indexes could recover

The US government is set to be shut down temporarily, starting this Sunday, October 1st.

The Democrats and Republicans in the world’s largest economy are at loggerheads, yet again, over how to deploy fiscal funds.

A blast from the past …

Since 1981, the US government has suspended operations (though not entirely) 14 different times.

The last time we saw a US government shutdown was for a 35-day stretch between December 2018 till January 2019 – the longest shutdown in US history.

And during that last shutdown:

• The US dollar (as measured by USDInd) fell by 1.2%
• Gold climbed by 3.8%
• SPX500_m soared by 10.3%

Perhaps the more notable takeaway from that prior episode is this:

The previous US government shutdown also coincided with the Fed’s last interest rate hike for that cycle.

• December 2015: Fed raises US interest rates for the first time since the global financial crisis
• December 2018: US government shuts down for 35 days; Fed’s last rate hike of that cycle that began in Dec 2015
• July 2019: Fed turns tail and begins CUTTING rates, eventually sending it all the way back down to near-zero at the onset of the global pandemic in 2020.

Would Fed adopt same playbook at imminent US government shutdown?

Probably not, given that core US inflation, at 4.1% in August, remains more than double the Fed’s 2% inflation target.

Sticky inflation suggests that one more Fed rate hike could be in the pipeline, or at least US rates staying higher for longer.

Still, markets remain obsessed with trying to figure out:

• Whether the Fed can trigger one last 25-basis point hike by year-end?
  Currently, markets predict a 53% chance of it happening.
• How long will the Fed keep interest rates at this peak?

And we know that these rate hikes are intended to slow down inflation by destroying demand in the economy.

Even prior to the threat of this imminent government shutdown, economists and market watchers had already been bracing for a US economic slowdown, possibly even a recession.

Goldman Sachs predicted that the shutdown may result in a 0.2 percentage point drag on US GDP per week.

How would a government shutdown slow the US economy?

A US government shutdown means that:

• many public employees, including staff at national parks to museums, will see their paycheques halted.
• private companies that get paid from government contracts, stand to lose almost US$ 2 billion a day from this shutdown.
• The highly-anticipated releases of the US nonfarm payrolls report (due Friday, October 6th) and the US consumer price index (due October 12th), as well as other major economic data, may be delayed.

All the above suggests that, the longer the US government stays shut, the more it deprives the world’s largest economy of crucial fiscal spending.

Hence, an extended US government shutdown could yet raise the prospects of a US recession.

And that could prevent one more Fed hike, or even hasten a rate cut.

And such an outlook would have a major impact across global financial markets.

POTENTIAL SCENARIOS

If the US government is shut down, as expected, beginning October 1st, with signs of staying offline for an extended period, we’d expect a similar market reaction from 2018:

• The USD Index may find it tougher to climb higher, and even moderate lower as the shutdown goes on.

However, the US dollar may not fall by much, perhaps only to around the 105.0 region, as long as US yields remain notably higher than its major peers, such as Europe, the UK, and Japan.

• Spot gold may return above $1900

An easing US dollar would make it an easier task ahead for gold bulls (those hoping prices will move higher) as markets wind down bets for one final Fed rate hike.

After all, gold tends to have an inverse relationship with US interest rates/yields/dollar (gold tends to go up when US rates/yields/dollar does down, and vice versa).

Demand for traditional safe havens, which include gold, may also help the precious metal recover.

• US stock indexes (SPX500_m, NQ100_m, WSt30_m) may find some relief

The declines of late for US stock markets have been largely attributed to the fact that the Federal Reserve intends to keep its benchmark rates higher for longer.

However, an extended US government shutdown could alter that narrative, i.e. prevent one last Fed rate hike, or potentially even bring forward the Fed’s rate CUT.

Hopes for a sooner-than-expected Fed rate cut should help US stock indexes pare back recent declines.

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) decreased by 1.14%, while the S&P 500 Index (US500) lost 1.47%. The NASDAQ Technology Index (US100) closed negative 1.57% on Tuesday.

The S&P 500 (US500) and Dow Jones Industrials (US30) fell to 3-month lows, while the NASDAQ (US100) index fell to a 5-week low. Concerns about the health of the US economy pressured stocks yesterday. US new home sales in August fell by 8.7% m/m to a 5-month low of 675,000, weaker than expectations of 698,000. The Conference Board Consumer Confidence Index for September fell by 5.7 to a 4-month low of 103.0, which was weaker than expectations of 105.5.

In addition, falling tech stocks are weighing on the overall market on fears that global central banks will be forced to raise interest rates longer to fight inflation. Also weighing negatively are hawkish comments from the Federal Reserve after Minneapolis FRB President Kashkari said he believes the Fed will have to raise interest rates one more time this year due to a strengthening US economy.

Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) decreased by 0.97%, France’s CAC 40 (FR40) fell by 0.70% yesterday, Spain’s IBEX 35 (ES35) was down by 0.14%, and the UK’s FTSE 100 (UK100) closed up by 0.02%.

ECB spokesman Holtzman said yesterday that it is still unclear whether the ECB has peaked as upside risks to inflation remain. But his ECB counterpart Müller does not currently expect further interest rate hikes by Europe’s Central Bank. This suggests that a rift is maturing within the ECB over the future conduct of monetary policy.

WTI crude oil prices rose moderately amid concerns that global oil supplies will remain tight for the foreseeable future. Oil prices also rose on expectations that the EIA’s weekly oil inventories report will be released on Wednesday, which will show a decline of 900,000 barrels. Tensions in the oil market are expected to continue as OPEC+ production cuts are extended. Saudi Arabia recently said it would maintain its unilateral oil production cut of 1.0 million BPD through December. The move will keep Saudi oil production at around 9 million BPD, the lowest in three years. Russia also recently announced that it will maintain its 300,000 BPD oil production cut through December. The oil rally continues, and there are no factors for a reversal at the moment.

Asian markets traded lower on Tuesday. Japan’s Nikkei 225 (JP225) declined by 1.11% for the day, China’s FTSE China A50 (CHA50) fell by 0.77%, Hong Kong’s Hang Seng (HK50) declined by 1.48%, and Australia’s ASX 200 (AU200) was negative by 0.54% on Tuesday. On Wednesday, most Asian stocks continued to fall amid lingering concerns over a US interest rate hike, while Chinese stocks rose on positive industrial earnings data and PBoC promises to expand stimulus to the economy.

But China’s worsening real estate debt crisis remains a concern for global stock markets due to fears it will derail the country’s growth prospects and drag down the global economy. China Evergrande Group said its subsidiary Hengda Real Estate Group defaulted on a 4 billion yuan ($547 million) debt payment due on Monday, and Chinese authorities have detained former executives of the company.

Minutes from Japan’s latest monetary policy meeting showed that the board’s view was that the current monetary easing should be maintained to achieve the price target in a stable and sustainable manner. Against this backdrop, the Japanese yen continues to depreciate. Yesterday, Japan’s Finance Minister Suzuki said he was closely monitoring market trends, hinting that the government could intervene at any time to support the currency. In 2022, the Japanese government conducted record dollar sales to support the yen, which by then had passed the 150 mark. Now, the currency is on the verge of testing those same levels.

S&P 500 (F)(US500) 4,273.53 −63.91  (−1.47%)

Dow Jones (US30) 33,618.88 −388.00 (−1.14%)

DAX (DE40)  15,255.87 −149.62 (−0.97%)

FTSE 100 (UK100) 7,625.72 +1.73 (+0.023%)

USD Index  106.17 +0.18 (+0.17%)

• – Japan Monetary Policy Meeting Minutes (m/m) at 02:50 (GMT+3);
• – Australia Consumer Price Index (m/m) at 04:30 (GMT+3);
• – German GfK Consumer Confidence (m/m) at 09:00 (GMT+3);
• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – Switzerland Chairman Thomas Jordan speaks at 19:45 (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.

By JustMarkets

At yesterday’s close of the stock market, the Dow Jones Index (US30) increased by 0.13%, while the S&P 500 Index (US500) added 0.40%. The NASDAQ Technology Index (US100) closed positive by 0.45% on Monday. The 10-year bond yield rose to 4.523%, the highest since 2007. The hawkish attitude of the Fed representatives is also yielding results. In the current environment, risk assets (euro, British pound, stock indices) are likely to remain under pressure while the US dollar will continue to rise.

Fears of a US government shutdown continue to grow as Congress has yet to pass any spending bills needed to fund the government beyond October 1. Rating agency Moody’s said that while a US government shutdown would negatively impact the country’s creditworthiness, the economic impact would be short-term.

Amazon.com Inc (AMZN) said it will invest up to $4 billion in Anthropic, a company that develops generative artificial intelligence technologies, including chatbots based on large language models, such as ChatGPT, for Amazon Web Services customers. Alphabet Inc Class A (GOOGL) also owns about 10% of Anthropic after investing $300 million earlier this year.

Equity markets in Europe were mostly down on Monday. Germany’s DAX (DE40) decreased by 0.98%, France’s CAC 40 (FR40) fell by 0.85% yesterday, Spain’s IBEX 35 (ES35) lost 1.22%, and the UK’s FTSE 100 (UK100) closed down by 0.78%.

Germany’s IFO business climate index for September fell by 0.1 to 85.7, the lowest level in five months. According to analysts, Europe’s leading economy is at risk of a second recession in a year.

ECB spokesman Villeroy made several statements yesterday:

• The ECB has growing confidence in achieving the 2% target by 2025;
• The ECB should focus on persistence rather than raising rates;
• There is also a risk of easing monetary policy too early.

So, the ECB is following in the steps of the US Fed and plans to keep rates high as long as possible. But if economic data starts to deteriorate sharply, policymakers are prepared to consider cutting rates if necessary.

The rally in the dollar index, which reached a 6-month high on Monday, depressed energy prices. And gasoline prices fell to a 3-week low. Crude oil prices were also falling due to concerns that the worsening debt crisis in China will worsen the Chinese economy and energy demand. However, oil price losses were limited by expectations that global oil supplies would remain tight.

Asian markets traded flat on Monday. Japan’s Nikkei 225 (JP225) added 0.85% for the day, China’s FTSE China A50 (CHA50) decreased by 0.67%, Hong Kong’s Hang Seng (HK50) lost 1.82%, and Australia’s ASX 200 (AU200) was positive 0.11% on Monday.

Economists have growing fears that a worsening real estate crisis in China will undermine the country’s economy. On Sunday, China Evergrande Group canceled a meeting with creditors and said it should review its restructuring plan. In addition, China Oceanwide Holdings Ltd. said it faces liquidation after a Bermuda court ordered the company into liquidation for defaulting on a $175 million loan principal payment. There are also growing fears that China Country Garden Holdings may default after breaching initial interest payment deadlines on dollar bonds.

The Japanese government the other day promised to issue a new economic package to “ease the pain of inflation,” which, paradoxically, is still “below target levels,” according to the Bank of Japan. The package will include measures to protect the Japanese from cost inflation (energy and product subsidies), support for wage and income growth (wages and salaries are also costs and demand inflation), support for investment to stimulate growth, measures to counter population decline, and encourage infrastructure investment.

S&P 500 (F)(US500) 4,337.51 +17.45 (+0.40%)

Dow Jones (US30) 34,007.21 +43.37 (+0.13%)

DAX (DE40)  15,405.49 −151.80 (−0.98%)

FTSE 100 (UK100) 7,623.99 −59.92 (−0.78%)

USD Index  105.96 +0.37 (+0.35%)

• – US FOMC Member Kashkari Speaks at 01:00 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3);
• – US FOMC Member Bowman Speaks at 20:30 (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.

By JustMarkets

At the close of the stock market on Friday, the Dow Jones Index (US30) decreased by 0.31% (-1.87% for the week), and the S&P 500 Index (US500) was down by 0.23% (-2.81% for the week). The NASDAQ Technology Index (US100) closed negative by 0.09% (-3.35% for the week). On Friday, hawkish comments from several FOMC policymakers supported the dollar, which was a negative factor for stock indices. In addition, a bullish factor for the dollar was the US manufacturing PMI data released on Friday. The US manufacturing PMI for September rose by 1.0 to 48.9, exceeding expectations of 48.2.

San Francisco Fed Chairwoman Daley said Friday she was not ready to declare victory in the fight against inflation and said inflation is unlikely to reach the Fed’s 2% target in 2024. Kansas Fed Chair Michelle Bowman said the same thing, only in different words, “I continue to expect that further rate increases are likely to be needed to return inflation to 2% in a timely manner.” FRB Boston President Collins said, “I expect that rates may need to be raised longer than previously thought, and further tightening is certainly not out of the question.”

According to EPFR Global, outflows from global equity funds totaled $16.9 billion for the week ended September 20, the highest in 9 months. Bank of America said investors are fleeing equities due to the prospect of higher interest rates for an extended period of time.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down by 0.09% (week-to-date -1.90%), France’s CAC 40 (FR 40) fell by 0.40% (week-to-date -2.29%) on Friday, Spain’s IBEX 35 (ES35) was down by 0.49% (week-to-date -0.30%), and the UK’s FTSE 100 (UK100) closed up by 0.07% (week-to-date -0.36%).

The EUR/USD pair has continued its steady decline since mid-July. This trend was primarily due to the contrasting economic performance of the US and Eurozone, as well as differences in the monetary policies pursued by the central banks of these countries. In recent days, these differences have pushed US Treasury yields to multi-year highs across all maturities. The Fed’s benchmark rate currently stands at 5.50%, well ahead of the European Central Bank’s 4.5% rate. This gap could widen further in the coming months as US borrowing costs could rise another 25 basis points in 2023, while the ECB has signaled that its policy tightening campaign is over.

UK private companies are cutting the number of workers at the fastest pace since the pandemic and deep financial crisis, confirming the Bank of England’s decision to pause interest rate hikes for the first time in nearly two years. S&P Global’s composite purchasing managers’ index fell to 46.8 in September from 48.6 a month earlier, the sharpest decline in output since January 2021, when the UK was in lockdown. The reading was worse than economists had expected and sent the private sector deeper into contraction.

Precious metals prices closed moderately higher on Friday, with silver posting a two-week-high. A decline in T-note yields on Friday provided support for precious metals. Silver was also supported by a stronger-than-expected US manufacturing PMI report from S&P, which was positive for industrial metals demand.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 3.07% for the week, China’s FTSE China A50 (CHA50) gained 0.54%, Hong Kong’s Hang Seng (HK50) ended the week down by 0.06%, and Australia’s ASX 200 (AU200) ended the week negative 2.89%.

Singapore’s Consumer Price Index fell to 3.4% from 3.8%, better than the expected 3.5%. Core inflation (excluding food and energy prices) fell from 4.1% to 4.0%, which was in line with forecasts. With inflation slowing and GDP growth having a weak outlook, economists generally expect the Central Bank of Singapore (MAS) to leave monetary policy settings unchanged during its scheduled meeting next month.

S&P 500 (F)(US500) 4,320.06 −9.94 (−0.23%)

Dow Jones (US30) 33,963.84 −106.58 (−0.31%)

DAX (DE40)  15,557.29 −14.57 (−0.094%)

FTSE 100 (UK100) 7,683.91 +5.29 (+0.07%)

USD Index  105.58 +0.22 (+0.21%)

• – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• – Eurozone German IFO Business Climate (m/m) at 11:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 16:00 (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.

By JustMarkets

At Thursday’s stock market close, the Dow Jones Index (US30) decreased by 1.08%, while the S&P 500 Index (US500) fell by 1.64%. The NASDAQ Technology Index (US100) closed yesterday negative by 1.82%. Stocks and indices extended Wednesday’s losses yesterday as the hawkish tone of Wednesday’s FOMC meeting dampened global risk sentiment. Stock index futures added to their losses after weekly US jobless claims unexpectedly fell to a 7-month low, indicating a strengthening labor market and a hawkish tone for Fed policy.

The Philadelphia Business Outlook Survey of US business activity for September fell from 25.5 to 13.5, weaker than expectations of 1.0. US home sales for August unexpectedly fell by 0.7% m/m to a 7-month low of 4.04 million units, weaker than expectations for a 0.7% m/m increase to 4.10 million units.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) fell by 1.33%, France’s CAC 40 (FR40) lost 1.59%, Spain’s IBEX 35 (ES35) decreased by 1.03%, and the UK’s FTSE 100 (UK100) closed down by 0.69%.

A representative of the ECB Governing Council and Bundesbank President Nagel said yesterday that it is too early to say that interest rates have reached a plateau, as inflation is still “too high” and forecasts still show only a slow decline towards the ECB’s 2% target. Another ECB official, Central Bank of Ireland Governor Makhlouf, said that an ECB rate hike is still possible in October and that it is too early to plan for a rate cut next March.

The Bank of England (BoE) unexpectedly left the rate unchanged at 5.25% yesterday, although the market expected an increase to 5.5%. However, the margin of votes was only 5 vs. 4. The accompanying statement of the bank stated the following: “If there are signs of more sustained inflationary pressures, further tightening of monetary policy will be required.” Overall, the Bank of England is following the same path as the Fed and ECB – a pause with a possible increase in the future.

The Swiss National Bank (SNB) followed the ECB and the Fed and left the rate unchanged at 1.75%, although the market was expecting a 0.25% increase at the current meeting. By taking a pause, the Central Bank kept the door open for a further increase. At the same time, the Swiss National Bank said it could intervene (in support of the Swiss franc exchange rate) in the foreign exchange market as needed.

The National Bank of Sweden (Riksbank) raised the rate by 25 bps to 4% and may raise it again as “inflationary pressures are too high.” The inflation forecast for 2024 has been raised to 4.6% and will be 8.6% this year after 8.4% in 2022. Meanwhile, the Riksbank said it would start intervening to support the Swedish krona exchange rate to the level of $8 bn and €2 bn (about 1/4 of its foreign exchange reserves) over the next 4-6 months, calling it “hedging foreign exchange reserves.”

Norway’s Central Bank (Norges Bank) on Thursday raised its main deposit rate by 25 basis points to 4.25%, the highest since 2008. The move adds pressure to Norway’s economy, which is currently experiencing a slowdown. The bank also hinted at the possibility of a further rate hike in December. In addition to the rate hike, Norges Bank slightly revised its key rate forecasts, suggesting that it will be around 4.5% until 2024.

Crude oil prices rose yesterday after Russia said it would ban gasoline and diesel exports in an attempt to stabilize domestic fuel prices. The ban will reduce fuel supplies by about 1 million BPD, which is about 3.4% of total global demand (according to Vortexa), and will further squeeze supply in an already tight global market.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 was down by 1.37%, China’s FTSE China A50 (CHA50) lost 1.24%, Hong Kong’s Hang Seng (HK50) decreased by 1.29% on the day, and Australia’s ASX 200 (AU200) was negative by 1.37% on Thursday.

The Bank of Japan (BOJ) left interest rates at negative levels as expected. The BOJ said it will maintain the current yield curve control (YCC) rates, allowing bond yields to fluctuate between minus 0.5% and plus 0.5%, allowing up to 1%. The BOJ also said that amid high uncertainty surrounding the Japanese economy, especially amid slowing growth in countries that are its largest trading partners, it will continue to ease monetary policy and strive to achieve its 2% annualized inflation target. Japanese 10-year bond yields fell nearly 2% after the BOJ statement. Data released earlier on Friday showed Japan’s consumer price index inflation rose more than expected in August amid solid consumer spending, rising oil prices, and a renewed yen depreciation.

S&P 500 (F)(US500) 4,330.00 −72.20 (−1.64%)

Dow Jones (US30) 34,070.42 −370.46 (−1.08%)

DAX (DE40)  15,571.86 −209.73 (−1.33%)

FTSE 100 (UK100) 7,678.62 −53.03 (−0.69%)

USD Index  105.39 +0.19 (+0.18%)

• – New Zealand Trade Balance (m/m) at 01:45 (GMT+3);
• – Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
• – Australia Services PMI (m/m) at 02:00 (GMT+3);
• – Japan National Core Consumer Price Index (m/m) at 02:30 (GMT+3);
• – Japan BoJ Outlook Report at 06:00 (GMT+3);
• – Japan BoJ Interest Rate Decision at 06:00 (GMT+3);
• – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• – Japan BoJ Press Conference at 09:30 (GMT+3);
• – UK Retail Sales (m/m) at 09:00 (GMT+3);
• – Eurozone German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Eurozone German Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Canada Retail Sales (m/m) at 15:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (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.

By RoboForex.com

Article By RoboForex.com

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