InvestMacro

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) decreased by 1.02%, while the S&P 500 Index (US500) lost 1.16%. The NASDAQ Technology Index (US100) closed negative 1.14% on Tuesday.

Stronger-than-expected consumer spending increased the likelihood that the Federal Reserve may resume raising rates this year. Retail sales rose by 0.7% last month (the most significant increase since the beginning of the year), above expectations of 0.4%. According to the CME FedWatch Tool, bets on a Fed rate hike in November rose to 34% from 26%. But economists predict retail sales will weaken for the rest of the year as falling credit availability will weigh on economic activity and the labor market.

Fitch Ratings said yesterday that the agency might be forced to downgrade a number of US banks, including JPMorgan (JPM), if the banking sector deteriorates further. Another downgrade of the US banking industry to A+ from AA+ would force the agency to revise its ratings on each of the more than seventy US banks.

Equity markets in Europe traded lower yesterday. Germany’s DAX (DE40) was down 0.86%, France’s CAC 40 (FR40) fell by 1.10% on Tuesday, Spain’s IBEX 35 (ES35) lost 0.93%, and the UK’s FTSE 100 (UK100) closed negative 1.57%.

According to the ZEW report, German investor sentiment unexpectedly improved in August but is still in negative territory. The ZEW economic sentiment index rose to negative 12.3 points from 14.7 points in July. The slight increase in the reading indicates that investors expect Germany to improve by the end of the year.

Wage growth in the UK was slightly higher than expected, and this should only solidify the September interest rate hike by the Bank of England. But overall, the labor market showed signs of cooling as jobless claims rose sharply and the unemployment rate climbed from 4.0% to 4.2%. As for today’s CPI figures, there is some potential for a positive surprise on services inflation, but ultimately September’s 0.25% rate hike is considered a decided choice. Crude oil prices fell nearly 2% on Tuesday as deteriorating economic data from China, the largest oil importer, partially offset market enthusiasm for Saudi Arabia’s production cuts.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.56% yesterday, China’s FTSE China A50 (CHA50) gained 0.19%, Hong Kong’s Hang Seng (HK50) fell by 1.03% on the day, and Australia’s S&P/ASX 200 (AU200) was positive 0.38% on Tuesday. On Wednesday, most Asian stocks began to decline amid fresh signs of deteriorating economic conditions in China, coupled with renewed concerns over the hawkish policies of the US Federal Reserve, which undermined appetite for risky assets. The Goldman Sachs report showed that hedge funds have begun aggressively selling Chinese stocks amid heightened concerns about the country’s real estate sector and weak economic data. Goldman Sachs estimates that hedge funds sold 70% of what they bought in the first five days after China’s July 24 Party meeting in hopes of stimulating the economy.

The Central Bank of New Zealand (RBNZ) expectedly kept rates unchanged at 5.5% and said interest rates should remain high or rise further due to the country’s challenging inflation outlook. The Central Bank acknowledged that some aspects of the New Zealand economy are currently slowing due to higher rates. The RBNZ expects consumer inflation to remain stable in the coming months as the country still struggles with the effects of this year’s two devastating cyclones. Weakness in the Chinese economy, which is New Zealand’s leading trading partner, is also putting negative pressure on the economy, especially as export prices fall.

Japan spent over 9 trillion yen ($62 billion) intervening in foreign exchange markets last year to stem the yen’s fall, buying the yen in September and October – first at around 145 and then at 32-year lows just below 152. Currently, the yen has already surpassed the 145 yen per dollar mark.

S&P 500 (F)(US500) 4,437.86 −51.86 (−1.16%)

Dow Jones (US30) 34,946.39 −361.24 (−1.02%)

DAX (DE40)   15,767.28 −136.97 (−0.86%)

FTSE 100 (UK100) 7,389.64 −117.51 (−1.57%)

USD Index  103.22 +0.03 (+0.03%)

• – 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 Building Permits (m/m) at 15:30 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3).
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – US FOMC Meeting Minutes (m/m) 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.

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.07%, while the S&P 500 Index (US500) added 0.58%. The NASDAQ Technology Index (US100) closed positive 1.05% on Monday. US indices closed higher on Monday as bank weakness was offset by renewed demand for technology amid a surge in Nvidia (NVDA) shares and ahead of a slew of economic data releases.

On Tuesday, the US will release retail sales data for July, which is expected to show a pickup in demand early in the third quarter after a smaller-than-expected increase in June. Other data likely indicates that the manufacturing sector is still struggling, with the Empire State manufacturing index expected to fall into negative territory, while the Federal Reserve Bank of Philadelphia’s manufacturing index is also expected to remain negative.

The Federal Reserve Bank of New York’s Microeconomic Data Center released its July 2023 Survey of Consumer Expectations yesterday, which showed that inflation expectations have declined in the short, medium, and long term. Expectations for year-ahead price increases for food, health care, and rent fell to the lowest level in early 2021. Labour market expectations have strengthened, and households’ perceptions of their current financial situation and expectations for the future have improved. These are signs that the Fed will succeed in giving the economy a “soft” landing.

Equity markets in Europe traded yesterday without single dynamics. German DAX (DE40) rose by 0.46%, French CAC 40 (FR40) increased by 0.12% on Monday, Spanish IBEX 35 (ES35) fell by 0.05%, and British FTSE 100 (UK100) closed negative by 0.23%.

Economists believe the European Central Bank (ECB) will pause its rate hike campaign in September, but a further increase by the end of the year is still expected. The ECB rate has been raised nine times in a row since July 2022. But ECB President Christine Lagarde has begun to pave the way for the pause. Faced with a slowdown in activity, especially in the bloc’s number one economy, Germany, Lagarde also said the incoming data would be critical to future decisions.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.27% yesterday, China’s FTSE China A50 (CHA50) lost 1.40%, Hong Kong’s Hang Seng (HK50) fell by 1.58% for the day, and Australia’s S&P/ASX 200 (AU200) was negative 0.86% on Monday. On Tuesday, Asian markets were once again pressured by another set of weak economic data from China. Data on Tuesday showed that China’s industrial production and retail sales growth slowed in July, adding to fears of a fragile post-pandemic recovery in the world’s second-largest economy. Less than an hour before the data was released, China unexpectedly cut key interest rates for the second time in three months, which analysts said opened the door for a potential cut in China’s benchmark lending rate (LPR) next week.

Japan’s second-quarter GDP beat forecasts due to higher exports. Japan’s 6.0% annualized growth rate led to a quarterly gain of 1.5%, well above the average estimate of 0.8%. The key GDP data provides some relief to policymakers seeking to balance economic growth with inflation.

In Australia, wage growth was unchanged in the June quarter, while the pace of annual wage increases slowed unexpectedly. This, and the release of dovish minutes from the central bank’s July meeting, has strengthened bets that the Reserve Bank of Australia (RBA) will keep rates unchanged at the next meeting.

Analysts believe the Central Bank of New Zealand (RBNZ) will leave interest rates unchanged at 5.5% for the second consecutive meeting on Wednesday, indicating the need for policy to remain restrictive for some time. After raising rates for 12 consecutive meetings, the RBNZ left rates unchanged in July, saying the weaker economy was beginning to ease price pressures. Since then, indicators have pointed to a further loss of economic momentum. Most economists believe the OCR has peaked in this cycle and that the next step will be a rate cut, possibly in the first half of next year. However, ANZ Bank New Zealand and Westpac Banking Corporation expect another quarter percentage point increase will be needed before the end of 2023.

S&P 500 (F)(US500) 4,489.72 +25.67 (+0.58%)

Dow Jones (US30) 35,307.63 +26.23 (+0.074%)

DAX (DE40)  15,904.25 +72.08 (+0.46%)

FTSE 100 (UK100) 7,507.15  −17.01 (−0.23%)

USD Index  103.17 +0.33 (+0.32%)

• – Japan GDP (q/q) at 02:50 (GMT+3);
• – Australia RBA Meeting Minutes at 04:30 (GMT+3);
• – Australia Wage Price Index (q/q) 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 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);
• – Switzerland Producer Price Index (m/m) at 09:30 (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 Retail Sales (m/m) at 15:30 (GMT+3);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+3);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US FOMC member Kashkari Speaks at 18:00 (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

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 Friday’s close, the Dow Jones (US30) index increased by 0.30% (+0.44% for the week), while the S&P 500 (US500) index was down 0.11% (-0.61% for the week). The NASDAQ Technology Index (US100) closed Friday negative 0.36% (-2.99% for the week).

Friday’s Producer Price Index (PPI) data released on Friday came in slightly higher at 0.3% in July, up from the previously revised reading of 0%. This was likely another reason why the dollar held on to its high ground at the end of the week, as the PPI index is usually a precursor to a rising CPI index as price pressures trickle down from manufacturing to the final consumer. Friday also saw the release of the University of Michigan’s consumer sentiment data. The report showed a slight improvement in one-year inflation expectations, which fell to 3.3% from the previous reading of 3.4%. Current conditions improved, but the expectations index fell to 67.3 from 68.3.

Bankruptcy filings are on the rise in the US, and the index has already reached the peak area of 2008. What does this mean? There is the following procedure in the United States: first, a company files a petition to the court, and only then the court decides on the company’s bankruptcy. So this is a leading indicator of the bankruptcy rate. In the previous severe recession of 2008, it was the same thing – bankruptcies started rising before the recession, and during the recession, the bankruptcy rate rose even more.

This week, the July Federal Open Market Committee (FOMC) meeting protocols will be released. Analysts expect the FOMC minutes to show a hawkish sentiment as policymakers all continue to say in one voice that there is more work to be done. The Fed’s next major event will be the Jackson Hole Symposium on August 24-26, and analysts expect to hear more hints and guidance from Fed Chairman Jerome Powell on potential near-term interest rate developments.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) decreased by 1.03% (-0.29% for the week), France’s CAC 40 (FR40) was down 1.26% (+0.68% for the week) on Friday, Spain’s IBEX 35 (ES35) lost 0.77% (+0.89% for the week), and the UK’s FTSE 100 (UK100) closed negative 1.24% (-0.53% for the week).

Energy worries are returning to Europe. Europe’s dependence on imports of liquefied natural gas has intensified since Russia invaded Ukraine last year. The withdrawal of energy supplies from Russia is fueling inflation and risks, adding to future price pressures as the region remains highly vulnerable to any disruption in global energy markets. Spot natural gas prices jumped nearly 30% in one single day after investors became alarmed by threats of a strike in Australia. ING Groep NV, Rabobank, and Saxo Bank A/S recommend preparing for a rise in hawkish sentiment from the European Central Bank as energy prices rise again and officials will seek to keep long-term inflation expectations from rising further.

Precious metals came under pressure from higher real yields amid a growing view that interest rates will remain high for a long time given stubbornly high inflation. As long as the risk of further tightening by the US Federal Reserve remains, gold and silver will be pressured by rising government bond yields. Investors should wait for the US Fed to complete the current tightening cycle. And that will happen either in September or November this year.

Thanks to forecasts of record global oil demand this month and supply cuts, oil prices rose for the seventh straight week. This is the longest winning streak for oil bulls since June 2022. The IEA estimates that global oil demand hit a record 103 million bpd in June and could reach another peak this month. Analysts say growth shows no signs of depletion. But technical traders expect a pause in growth and a temporary correction in oil prices.

Asian markets traded flat last week. Japan’s Nikkei 225 (JP225) gained 1.42% for the week, China’s FTSE China A50 (CHA50) fell by 2.49%, Hong Kong’s Hang Seng (HK50) ended the week down 2.05%, and Australia’s S&P/ASX 200 (AU200) ended the week positive on 0.20%. Most Asian stock markets opened lower on Monday, with Chinese indices leading the way due to lingering concerns over slowing economic growth. Also, another default in China’s real estate market portends new headwinds for the country’s key economic engines. Government officials have not provided details on how additional economic support will be provided.

S&P 500 (F)(US500) 4,464.05 −4.78 (−0.11%)

Dow Jones (US30) 35,281.40 +105.25 (+0.30%)

DAX (DE40)  15,832.17 −164.35 (−1.03%)

FTSE 100 (UK100) 7,524.16 −94.44 (−1.24%)

USD Index  102.85 +0.33 (+0.32%)

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.