04 Oct

Economists expect a strong US labor market report. Oil rises amid possible Israeli attack on Iranian oil facilities

By JustMarkets

At Thursday’s close, the Dow Jones (US30) Index was down 0.44%, while the S&P 500 (US500) Index decreased by 0.17%. The NASDAQ Technology Index (US100) closed negative 0.04%. On Thursday, all three major US indices ended trading in the red as investors fear escalating tensions in the Middle East ahead of the release of the September payrolls report. Sentiment on Wall Street worsened after President Biden voiced support for an Israeli strike on Iran’s oil facilities, raising fears of energy supply disruptions around the world.

Meanwhile, the US service sector data showed growth in September, which briefly lifted markets. The labor market showed signs of cooling, with a slight increase in jobless claims and a drop in planned layoffs. Today, the US will release Non-Farm Payrolls labor market data for September. Economists expect the US economy to expand by 144,000 jobs in September after 142,000 in the previous month. The US Federal Reserve began its rate-cutting cycle in September with a large 50 basis point rate cut. However, the labor market continues to be the focus of investors assessing how quickly the Central Bank will have to cut rates in the coming months. A weak report scenario would put pressure on the dollar index, which would give strength to stock indices and precious metals (gold and silver). The probability of a double rate cut at the November meeting is currently at 50%. On the other hand, unexpectedly strong employment growth could raise concerns that the Fed will not cut rates as much, which would support the US dollar and put pressure on risk assets, especially equities.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) was down 0.78%, France’s CAC 40 (FR40) closed negative 1.32%, Spain’s IBEX 35 (ES35) was up 0.07%, and the UK’s FTSE 100 (UK100) closed down 0.10%.

The Eurozone PMI for September from S&P was revised upward by 0.7 to 49.6 from the previously released reading of 48.9. Swaps discount the odds of a 25 bp ECB rate cut at the October 17 meeting at 95% and a 25 bp rate cut at the December 12 meeting at 100%.

WTI crude oil prices rose 5% to $73.7 per barrel on Thursday, extending the week’s gains to a one-month high after US President Biden refrained from directly condemning the likelihood that Israel could attack Iran’s oil facilities. In addition to the subsequent shock to short-term supplies that such an attack would lead to, oil prices also rose thanks to the risk premium in futures amid the growing escalation of geopolitical tensions in the Middle East. Tel Aviv has vowed to retaliate against Iran with a series of ballistic missiles this week, as well as increase its activity in Beirut as it battles Hezbollah. Meanwhile, signs of resilience in the US economy also supported the outlook for fuel demand in the world’s top oil consumer.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up 1.97%, China’s FTSE China A50 (CHA50) was not trading due to holidays, Hong Kong’s Hang Seng (HK50) was down 1.47%, and Australia’s ASX 200 (AU200) was positive 0.09%. The weakening yen has improved the outlook for Japan’s export-oriented industry and is supporting local equities. Earlier this week, newly inaugurated Prime Minister Shigeru Ishiba and his Economy Minister Ryosei Akazawa urged caution before proceeding with further interest rate hikes.

The New Zealand dollar (NZD/USD) fell to a 2-week low. Traders expect a significant interest rate cut by the Reserve Bank of New Zealand (RBNZ) amid concerns over the country’s economic growth prospects. The RBNZ began its monetary easing cycle in August with a 25 basis point rate cut and is expected to make further reductions. Markets are now fully pricing in the possibility of a half-point rate cut at next week’s Central Bank meeting.

S&P 500 (US500) 5,699.94 −9.60 (−0.17%)

Dow Jones (US30) 42,011.59 −184.93 (−0.44%)

DAX (DE40) 19,015.41 −149.34 (−0.78%)

FTSE 100 (UK100) 8,282.52 −8.34 (−0.10%)

USD Index 101.94 +0.26 (+0.26%)

News feed for: 2024.10.04

  • Switzerland Unemployment Rate (m/m) at 08:45 (GMT+3);
  • UK Construction PMI (m/m) at 11:30 (GMT+3);
  • US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
  • US Unemployment Rate (m/m) at 15:30 (GMT+3);
  • US FOMC Member Williams Speaks (m/m) at 16:00 (GMT+3);
  • Canada Ivey PMI (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
04 Oct

Week Ahead: US30 ripe for a steep pullback?

By ForexTime

*Note: This report was written before the US NFP data was published*

  • US30 ↑ 8% in Q3
  • April only negative trading month in 2024
  • Over past year, US CPI triggered ↑ 0.7% & ↓ 0.8%
  • Technical levels – 42400 & 41900

A cocktail of high-impact events could present fresh trading opportunities in the week ahead.

Ongoing geopolitical tensions, top-tier economic data and earnings announcements by big US banks will be in focus:

Monday, 7th October

  • AU200: Australia CPI report
  • EU50: Eurozone retail sales
  • GER40: Germany factory orders
  • USDInd: Speeches by Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic and St. Louis Fed President Alberto Musalem

Tuesday, 8th October

  • AU200: Australia consumer confidence
  • GER40: Germany industrial production
  • JP225: Japan household spending, current account
  • TWN: Taiwan trade, CPI
  • USDInd: Speeches by Atlanta Fed President Raphael Bostic, Boston Fed President Susan Collins and Fed Governor Adriana Kugler

Wednesday, 9th October

  • USDInd: FOMC minutes
  • US500: Speeches by Dallas Fed Presidents Lorie Logan, Atlanta Fed President Raphael Bostic, Chicago Fed President Austan Goolsbee and Mary Daly of San Francisco

Thursday, 10th October

  • JP225: Japan PPI
  • NZD: New Zealand home sales
  • SG20: Singapore GDP
  • ZAR: South Africa manufacturing production
  • NAS100: Tesla CEO Elon Musk host Robotaxi launch
  • US30: US September CPI, initial jobless claims, New York Fed President John Williams speech

Friday, 11th October

  • CAD: Canada unemployment
  • GER40: Germany CPI
  • NZD: New Zealand food prices, PMI
  • UK100: UK industrial production, GDP
  • US500: Speeches by Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee, Wells Fargo earnings
  • US30: US PPI, University of Michigan sentiment, JPMorgan Chase earnings

But the spotlight shines on FXTM’s US30 which tracks the benchmark Dow Jones Industrial Average index.

Before we cover what to expect in the week ahead, it’s worth noting that the index could be rocked by the US jobs report this afternoon – (Friday 4th October).

It has been a shaky start to Q4 for the US30 due to geopolitical risk and cooling Fed cut bets. Although the trend is bullish, a technical pullback may be pending…

Weekly US30

Note: A pullback is a temporary pause or decline in an asset’s overall bullish trend.

These 4 factors may influence the US30’s outlook in the week ahead:

 

    1) Geopolitical tensions

Escalating tensions in the Middle East have rattled global sentiment.

After Iran launched a barrage of ballistic missiles at Israel, investors are concerned about a potential retaliation dragging more countries into the conflict. This growing uncertainty could promote a “risk-off” mood, dragging US equities lower amid the flight to safety.

  • The US30 could tumble on further signs of escalating geopolitical tensions.
  • Any signs of easing tensions could boost market sentiment, supporting the US30.

 

    2) US September CPI report

The incoming US Consumer Price Index (CPI) will likely impact bets around how deep the Fed cuts rates in Q4.

Markets are forecasting:

  • CPI year-on-year (September 2024 vs. September 2023) to cool 2.3% from 2.5% in the prior month.
  • Core CPI year-on-year to remain unchanged at 3.2%.
  • CPI month-on-month (September vs August 2024) to cool 0.1% from 0.2% in the prior month.
  • Core CPI month-on-month to cool 0.2% from 0.3% in the prior month

Ultimately, further signs of cooling price pressures may support the case for deeper Fed cuts.

Note: Before the key US inflation data on Thursday, the US30 may be impacted by the FOMC meeting minutes on Wednesday and a host of Fed speeches throughout the week. This will be topped off with more US data on Friday.

Golden nugget: Over the past 12 months, the US CPI report has triggered upside moves of as much as 0.7% of declines of 0.8% in a 6-hour window post-release.

 

    3) Big bank earnings

Third quarter earnings season kicks off on Friday 11th October, led by the biggest US banks.

JPMorgan Chase will be under the spotlight and could offer crucial insight into what Fed rate cuts mean for American banks.  So, all eyes will be on the outlook for net interest income (NII) – which is the difference between interest revenues and interest expenses. In a nutshell, what the bank earns on loans and what it pays on deposits.

Note: Profitability in the banking sector rises when interest rates increase. When interest rates fall, this lowers the profit from loans.

When factoring in how financial stocks make up 23% of the US30 with JPMorgan Chase accounting for 3.2% of its weighting, the incoming earnings could spark some volatility.

Golden nugget: Markets are forecasting a 3.4% move, either Up or Down, for JPMorgan Chase stocks on Friday post earnings.

 

    4) Technical forces

The US30 is respecting a bullish channel on the daily charts with prices trading above the 21, 50, 100 and 200-day SMA. However, prices have been trapped within a range since mid-September with support at 41900 and resistance at 42400.

  • A solid breakout and daily close above 42400 may open a path toward the all-time high at 42708 with the next psychological level at 43000.
  • Should prices slip below 41900, this could trigger a selloff toward the 21-day SMA at 41732 and 41400. Weakness below this point may open a path back toward the 50-day SMA at 41000.

US30

Forex-Time-LogoArticle by ForexTime

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

Economics & Fundamentals Financial News
03 Oct

CubeSats, the tiniest of satellites, are changing the way we explore the solar system

By Mustafa Aksoy, University at Albany, State University of New York 

Most CubeSats weigh less than a bowling ball, and some are small enough to hold in your hand. But the impact these instruments are having on space exploration is gigantic. CubeSats – miniature, agile and cheap satellites – are revolutionizing how scientists study the cosmos.

A standard-size CubeSat is tiny, about 4 pounds (roughly 2 kilograms). Some are larger, maybe four times the standard size, but others are no more than a pound.

As a professor of electrical and computer engineering who works with new space technologies, I can tell you that CubeSats are a simpler and far less costly way to reach other worlds.

Rather than carry many instruments with a vast array of purposes, these Lilliputian-size satellites typically focus on a single, specific scientific goal – whether discovering exoplanets or measuring the size of an asteroid. They are affordable throughout the space community, even to small startup, private companies and university laboratories.

Tiny satellites, big advantages

CubeSats’ advantages over larger satellites are significant. CubeSats are cheaper to develop and test. The savings of time and money means more frequent and diverse missions along with less risk. That alone increases the pace of discovery and space exploration.

CubeSats don’t travel under their own power. Instead, they hitch a ride; they become part of the payload of a larger spacecraft. Stuffed into containers, they’re ejected into space by a spring mechanism attached to their dispensers. Once in space, they power on. CubeSats usually conclude their missions by burning up as they enter the atmosphere after their orbits slowly decay.

Case in point: A team of students at Brown University built a CubeSat in under 18 months for less than US$10,000. The satellite, about the size of a loaf of bread and developed to study the growing problem of space debris, was deployed off a SpaceX rocket in May 2022.

A CubeSat can go from whiteboard to space in less than a year.

Smaller size, single purpose

Sending a satellite into space is nothing new, of course. The Soviet Union launched Sputnik 1 into Earth orbit back in 1957. Today, about 10,000 active satellites are out there, and nearly all are engaged in communications, navigation, military defense, tech development or Earth studies. Only a few – less than 3% – are exploring space.

That is now changing. Satellites large and small are rapidly becoming the backbone of space research. These spacecrafts can now travel long distances to study planets and stars, places where human explorations or robot landings are costly, risky or simply impossible with the current technology.

But the cost of building and launching traditional satellites is considerable. NASA’s lunar reconnaissance orbiter, launched in 2009, is roughly the size of a minivan and cost close to $600 million. The Mars reconnaissance orbiter, with a wingspan the length of a school bus, cost more than $700 million. The European Space Agency’s solar orbiter, a 4,000-pound (1,800-kilogram) probe designed to study the Sun, cost $1.5 billion. And the Europa Clipper – the length of a basketball court and scheduled to launch in October 2024 to the Jupiter moon Europa – will ultimately cost $5 billion.

These satellites, relatively large and stunningly complex, are vulnerable to potential failures, a not uncommon occurrence. In the blink of an eye, years of work and hundreds of millions of dollars could be lost in space.

Two scientists wearing masks, gloves, head coverings and white clean suits work on an instrument in a laboratory.
NASA scientists prep the ASTERIA spacecraft for its April 2017 launch.
NASA/JPL-Caltech

Exploring the Moon, Mars and the Milky Way

Because they are so small, CubeSats can be released in large numbers in a single launch, further reducing costs. Deploying them in batches – known as constellations – means multiple devices can make observations of the same phenomena.

For example, as part of the Artemis I mission in November 2022, NASA launched 10 CubeSats. The satellites are now trying to detect and map water on the Moon. These findings are crucial, not only for the upcoming Artemis missions but to the quest to sustain a permanent human presence on the lunar surface. The CubeSats cost $13 million.

The MarCO CubeSats – two of them – accompanied NASA’s Insight lander to Mars in 2018. They served as a real-time communications relay back to Earth during Insight’s entry, descent and landing on the Martian surface. As a bonus, they captured pictures of the planet with wide-angle cameras. They cost about $20 million.

CubeSats have also studied nearby stars and exoplanets, which are worlds outside the solar system. In 2017, NASA’s Jet Propulsion Laboratory deployed ASTERIA, a CubeSat that observed 55 Cancri e, also known as Janssen, an exoplanet eight times larger than Earth, orbiting a star 41 light years away from us. In reconfirming the existence of that faraway world, ASTERIA became the smallest space instrument ever to detect an exoplanet.

Two more notable CubeSat space missions are on the way: HERA, scheduled to launch in October 2024, will deploy the European Space Agency’s first deep-space CubeSats to visit the Didymos asteroid system, which orbits between Mars and Jupiter in the asteroid belt.

And the M-Argo satellite, with a launch planned for 2025, will study the shape, mass and surface minerals of a soon-to-be-named asteroid. The size of a suitcase, M-Argo will be the smallest CubeSat to perform its own independent mission in interplanetary space.

The swift progress and substantial investments already made in CubeSat missions could help make humans a multiplanetary species. But that journey will be a long one – and depends on the next generation of scientists to develop this dream.The Conversation

About the Author:

Mustafa Aksoy, Assistant Professor of Electrical & Computer Engineering, University at Albany, State University of New York

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

Economics & Fundamentals Opinions
03 Oct

NZD/USD Dips as Market Anticipates RBNZ Rate Cut

By RoboForex Analytical Department 

The NZD/USD pair continues its downward trend, dropping to 0.6240 in its third consecutive session of declines. This ongoing sell-off in the New Zealand dollar is driven by market expectations of an upcoming interest rate cut by the Reserve Bank of New Zealand (RBNZ). New Zealand’s borrowing costs are currently at 5.25% per annum, with widespread anticipation of a 50-basis point reduction at the next RBNZ meeting.

The RBNZ is known for its proactive and flexible monetary policy, which swiftly adjusts to inflationary pressures and external economic indicators. This expected rate cut responds to such factors and aligns with the bank’s strategy to manage economic growth and inflation.

Moreover, the NZD has been under additional pressure from a strengthening US dollar, bolstered by unexpectedly robust US employment statistics for September, reported by ADP. Although the ADP report does not directly correlate with the Nonfarm Payrolls (NFP) due shortly, it still shapes market expectations and sentiment.

Global risk appetite has also waned significantly due to escalating geopolitical tensions in the Middle East, further dampening the prospects for growth-sensitive currencies like the NZD.

NZD/USD technical analysis

The NZD/USD pair followed a bearish pattern, confirming a downward wave to 0.6265 and a corrective rise to 0.6313. The market is now forming a new decline towards 0.6210. Once this target is reached, a corrective move to retest 0.6265 from below may occur, potentially leading to further declines towards 0.6144. This bearish NZD/USD outlook is supported by the MACD indicator, which, despite being above zero, shows a strong downward trajectory.

On the hourly chart, the pair is developing the third wave of its decline towards 0.6210. Following this, a corrective fourth wave up to 0.6260 is anticipated. This forecast aligns with the Stochastic oscillator readings, which indicate the signal line is below 50 and heading towards 20, suggesting a continuation of the downward momentum after a brief correction.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
03 Oct

Brown bananas, crowded ports, empty shelves: What to expect with the US dockworkers strike

By Anna Nagurney, UMass Amherst 

Getting any product to consumers, whether it’s a can of sardines or a screwdriver, requires that supply chains function well.

The availability of labor is essential in each link of the supply chain. That includes the workers who make sure that your tinned fish and handy tools smoothly journey from their point of origin to where they’ll wind up, whether it’s a supermarket, hardware store or your front door.

Amazingly, 90% of all internationally traded products are carried by ships at some point. At the height of the COVID-19 pandemic, it was hard not to notice the supply chain disruptions. For U.S. ports, there were many bouts of congestion. Demand for goods that were either more or less popular than they would normally be became volatile. Shortages of truckers and other freight service providers wreaked havoc on land-based and maritime transportation networks.

Consumers became exasperated when they saw all the empty shelves. They endured price spikes for items that were suddenly scarce, such as hand sanitizer, computer equipment and bleach.

I’m a scholar of supply chain management who belongs to a research group that studies ways to make supply chains better able to withstand disruptions. Based on that research, plus what I learned while writing a book about labor and supply chains, I’m concerned about the turmoil that could be in store for cargo arriving on ships.

Concerns over pay and technology

The International Longshoremen’s Association’s six-year contract with the East Coast and Gulf Coast ports expired on Sept. 30, 2024, at midnight without an agreement. About 45,000 dockworkers are now on a strike that has paralyzed ports from Maine to Texas. Only military cargo and cruise ships, as well as oil, gas and liquid chemicals, can go in and out.

It’s the first such work stoppage for the East Coast ports since 1977.

Labor and management disagree over how much to raise wages, and the union also wants to see strict limits on the use of automation for cranes, gates and trucks at the ports in the new contract. The union is seeking a 77% increase in pay over the next six years and is concerned that jobs may be lost because of automation. When management offered a nearly 50% raise, the union rejected it.

Dockworkers on the West Coast, who are not on strike, are paid much higher regular wages than their East Coast and Gulf Coast counterparts who are on strike. The West Coast workers earn at least an estimated US$116,000 per year, for a 40-hour work week, versus the roughly $81,000 dockworkers at the East Coast and Gulf Coast ports take home, not counting overtime pay.

Management is represented in the talks by the U.S. Maritime Association, which includes the major shippers, terminal operators and port authorities.

What to expect

Starting on Oct. 1, 36 ports, including those in Philadelphia and Houston, ceased operations due to the strike, blocking almost half of the cargo going in and out of the U.S. on ships.

If the strike lasts just a day, then it would not be noticeable to a typical consumer. However, businesses of all kinds would no doubt feel the pinch. J.P. Morgan estimates that a strike could cost the U.S. economy $5 billion every day.

Even if the strike were to last only a day, it could take about five days to straighten out the supply chain.

If a strike lasts a week, the results would quickly become apparent to most consumers.

Some shipping companies have already begun to reroute their cargo to the West Coast. Even had there been no strike at all, costs would have risen and the warehouses could have run out of room.

The effects on everything from bananas and cherries to chocolate, meat, fish and cheese could be severe, and the shipping disruption could also hamper trade in some prescription drugs if the strike lasts at least a week.

If the strike were to last a month or more, supplies needed by factories could be in short supply. Numerous consumer products would not be delivered. Workers would be laid off. U.S. exports, including agricultural ones, might get stuck rather than shipped to their destinations. Inflation might increase again. And there would be a new bout of heightened economic anxiety and uncertainty – along with immense financial losses.

All the while, West Coast ports would face unusually high demand for their services, wreaking havoc on shipping there too.

Yes, we’d have no bananas

My research group’s latest work on supply chain disruptions and the effects of various transportation disruptions, including delays, quantifies the impact on the quality of fresh produce. We did a case study on bananas.

This isn’t a niche problem.

Bananas are the most-consumed fresh fruit in the U.S.

Many of the bananas sold in the U.S. are grown in Ecuador, Guatemala and Costa Rica. About 75% of them arrive at ports on the East and Gulf coasts.

Although bananas are relatively easy to ship, they require appropriate temperatures and humidity. Even under the best conditions, their quality deteriorates. Long delays will mean shippers will be trying to foist mushy brown bananas on consumers who might reject them.

Alternatively, banana growers may opt to find other markets. It’s reasonable to expect to find fewer bananas and much higher prices – possibly of a lower quality. Flying bananas to the U.S. would be too expensive to sustain.

Fresh meat, seafood, cheese and other refrigerated foods could spoil before they can complete their journeys, and fresh berries, along with other fruits and vegetables, could perish before reaching their destinations.

Tons of fresh produce, including bananas arriving after Oct. 1, could end up having to be discarded. That is unfortunate, given the rising food insecurity rate in the U.S.

1947 Taft-Hartley Act

More than 170 trade groups had urged the Biden administration to intervene at the last minute to avoid a strike.

Even now, the government can invoke the 1947 Taft-Hartley Act, which allows the president to ask a court to order an 80-day cooling-off period when public health or safety is at risk.

However, President Joe Biden reportedly does not plan to invoke it. Instead, he has urged the two sides to settle their differences.

So if you’re planning to bake banana bread or were thinking you might get an early start on your holiday shopping, I’d advise you to make those shopping trips as soon as possible – just in case.

This is an updated version of an article first published on Sept. 28, 2024.The Conversation

About the Author:

Anna Nagurney, Professor and Eugene M. Isenberg Chair in Integrative Studies, UMass Amherst

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

 

Economics & Fundamentals Opinions
03 Oct

OPEC+ maintains production quotas. Mexican peso strengthens as new president takes office

By JustMarkets

At the end of Wednesday, the Dow Jones Index (US30) gained 0.09%, while the S&P 500 Index (US500) added 0.01%. NASDAQ Technology Index (US100) closed positive 0.08%. Increasing geopolitical risks dampened optimism over a possible interest rate cut in the US. Meanwhile, economic data showed stronger-than-expected employment growth, with 143,000 private sector jobs created in September. Investors await Friday’s employment report to gain further insight into the economy and the Fed’s interest rate decisions.

Corporate news pressured the market, with Nike (NKE) shares falling 6.8% after withdrawing its full-year guidance and Tesla (TSLA) down 3.5% after weaker-than-expected deliveries, though Nvidia (NVDA) rose by 1.6% and helped support technology stocks higher. Meanwhile, defense and energy stocks rose as investors weighed the impact of heightened geopolitical risks.

The Mexican peso strengthened to 19.4 per US dollar (USD/MXN), rebounding from a two-week low, following President Claudia Sheinbaum’s inauguration speech and hawkish comments from Banxico’s deputy governor. Investor sentiment improved as Sheinbaum reassured markets of the safety of foreign investment, signaling policy continuity. Meanwhile, Jonathan Heath, deputy governor of Banxico, said that while core inflation is roughly in line with the monetary authority’s target, persistent services inflation warrants a pause in the current easing cycle.

Equity markets in Europe traded flat yesterday. The German DAX (DE40) declined by 0.25%, the French CAC 40 (FR40) closed higher by 0.05%, the Spanish IBEX 35 (ES35) fell by 0.55%, and the British FTSE 100 (UK100) closed positive by 0.17% on Wednesday.

Noticeably deteriorating business survey data in the Eurozone, the first inflation reading below 2% in more than three years, and encouraging statements from the Federal Reserve about a shift to policy easing have led to the ECB likely to cut rates at its October 17 meeting. Economists, previously unanimous in predicting only a December move, have changed their views, with forecasters at Morgan Stanley and Barclays among those who did so earlier this week.

Key drivers of the UK Financial Policy Committee’s (FPC) Q3 2024 report:

  • The UK is seeing further signs of easing credit conditions, reflecting an improving macroeconomic outlook;
  • UK households and corporate borrowers remain resilient to rising interest rates, although some highly leveraged businesses, including small businesses and private equity firms, remain under pressure;
  • The UK banking system remains in a strong position to support households and businesses, even if economic and financial conditions have been significantly worse than expected;
  • Global vulnerabilities remain significant, as do uncertainties in the geopolitical environment and global outlook.

Oil prices declined slightly and consolidated around $70-71 per barrel as rising US crude oil inventories indicated the market would be well supplied despite escalating tensions in the Middle East. EIA data showed a 3.89 million barrel increase in crude inventories, while gasoline demand fell to its lowest level in six months, easing fears of a supply shortage. In addition, OPEC+ maintained its plan to gradually increase production, suggesting no immediate threat to the global oil supply.

Asian markets traded yesterday without any unified dynamics. Japan’s Nikkei 225 (JP225) fell by 2.18%, China’s FTSE China A50 (CHA50) was not traded due to holidays, Hong Kong’s Hang Seng (HK50) rose by 6.20%, and Australia’s ASX 200 (AU200) was negative 0.13% for yesterday. Hong Kong stocks were down 3.2% in early trading on Thursday after some profit-taking after Wednesday’s Hang Seng hit its highest since early February 2023 on the back of Beijing’s bold stimulus measures last week. Many traders were also reluctant to open new positions as Chinese markets remain closed until next week due to the Golden Week break.

The Australian dollar continues to be supported by expectations that the Reserve Bank of Australia will start cutting interest rates much later than its peers. Markets are currently pricing in a 72% chance of the RBA cutting rates in December, but if core inflation remains elevated, it is likely to keep policy steady until early 2025.

S&P 500 (US500) 5,709.54 +0.79 (+0.014%)

Dow Jones (US30) 42,196.52 +39.55 (+0.094%)

DAX (DE40) 19,164.75 −48.39 (−0.25%)

FTSE 100 (UK100) 8,290.86 +14.21 (+0.17%)

USD index 101.62 +0.43 (+0.42%)

News feed for: 2024.10.03

  • Japan Services PMI (m/m) at 03:30 (GMT+3);
  • Australia Trade Balance (m/m) at 04:30 (GMT+3);
  • Switzerland Consumer Price Index (m/m) at 09:30 (GMT+3);
  • German Services PMI (m/m) at 10:55 (GMT+3);
  • Eurozone Services PMI (m/m) at 11:00 (GMT+3);
  • UK Services PMI (m/m) at 11:30 (GMT+3);
  • Eurozone Producer Price Index (m/m) at 12:00 (GMT+3);
  • US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • US ISM Services PMI (m/m) at 17:00 (GMT+3);
  • US Natural Gas Storage (w/w) at 17:30 (GMT+3);
  • US FOMC Member Bostic Speaks (m/m) at 17:40 (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
02 Oct

Oil prices rise amid Iran’s attack on Israel. Bank of Japan has a conflict of interest with the new government

By JustMarkets

At Tuesday’s close, the Dow Jones Index (US30) was down 0.41%, while the S&P 500 Index (US500) lost 0.93%. The NASDAQ Technology Index (US100) closed negative 1.53%. Escalating tensions in the Middle East caused long liquidation pressure in equities on Tuesday. Israel launched a limited ground operation in Lebanon, and Iran launched a ballistic missile strike on Israel.

Economic data came out mixed yesterday. August job openings rose by 329,000 to 8.04 million, indicating a stronger labor market than expectations of 7.693 million. The ISM Manufacturing Index for September was unchanged from August at 47.2, weaker than expectations of a rise to 47.5.

The Canadian dollar strengthened above 1.35 per US dollar, rebounding from a one-week low of 1.352 hit on September 30, as positive economic data and an improving outlook for the foreign currency outweighed US dollar strength. Canada’s manufacturing PMI rose to 50.4 in September 2024 from 49.5 in August, marking the first improvement in working conditions since April 2023. This coincided with the start of the Bank of Canada’s rate-cutting cycle, easing pressure for further monetary easing. In addition, rising geopolitical tensions in the Middle East drove oil prices higher, raising the outlook for foreign exchange inflows from Canada’s main export.

Equity markets in Europe fell steadily yesterday. Germany’s DAX (DE40) fell 0.58%, France’s CAC 40 (FR40) closed down 0.81%, Spain’s IBEX 35 (ES35) lost 1.72%, and the UK’s FTSE 100 (UK100) closed plus 0.48%.

Eurozone Consumer Price Index for September rose 1.8% y/y, the slowest pace in nearly 3 years and below the ECB’s 2% target, reinforcing expectations that the ECB will cut interest rates at its October 17 policy meeting.

WTI crude prices rose 3% on Tuesday to above the $70 a barrel mark after Iran fired a barrage of missiles at Israel, heightening fears of a wider regional conflict in the Middle East. The Israel Defense Forces intercepted numerous rockets. Tensions in the Middle East rose sharply as Israel stepped up airstrikes against the Iranian-backed Hezbollah militia, killing its leader, Hassan Nasrallah. On Tuesday, Israel sent ground troops into southern Lebanon. The extent of the oil market reaction will depend on the scale and damage of the Iranian attack, which could dictate an Israeli response and further destabilize the region.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up 1.93%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading due to holidays, and Australia’s ASX 200 (AU200) was negative 0.74%.

Japan’s newly appointed economy minister said that the Central Bank should be cautious about raising rates again as it takes time to fully recover from deflation. He added that incoming Prime Minister Shigeru Ishiba would not necessarily favor further rate hikes without a number of conditions being met. On Tuesday, Ishiba pledged to support households amid rising prices and a sluggish economy. The Bank of Japan, which has been planning to raise rates, may face the interests of the new government in the near future.

S&P 500 (US500) 5,708.75 −53.73 (−0.93%)

Dow Jones (US30) 42,156.97 −173.18 (−0.41%)

DAX (DE40) 19,213.14 −111.79 (−0.58%)

FTSE 100 (UK100) 8,276.65 +39.70 (+0.48%)

USD Index 101.20 +0.42 (+0.42%)

News feed for: 2024.10.02

  • US FOMC Member Barkin Speaks (m/m) at 01:15 (GMT+3);
  • US FOMC Member Collins Speaks (m/m) at 01:15 (GMT+3);
  • Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
  • OPEC+ meeting at 13:00 (GMT+3);
  • US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
  • US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • US FOMC Member Bowman Speaks (m/m) 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.

Economics & Fundamentals Financial News
02 Oct

Markets on edge as geopolitical tensions mount

By ForexTime 

  • Escalating Middle East tensions rock markets
  • Oil prices surge more than 5%
  • Risk-off mood slams US equities and Bitcoin
  • USDInd breaks above 101 while gold rebounds

Risk aversion engulfed global markets yesterday (Tuesday, 1st October) as tensions flared up in the Middle East.

Iran launched a barrage of ballistic missiles at Israel, sparking fears of a wider conflict in the region.

In response, US equities closed lower while oil, gold and the dollar jumped.

  • US500: -0.9%
  • NAS100: -1.4%
  • Brent: 2.5%
  • Crude: 2.4%
  • XAUUSD: 1.0%
  • USDInd: 0.4%

With Benjamin Netanyahu vowing to retaliate against Iran, markets are on high alert with investors on edge.

Geopolitical tensions may remain a key theme this week, possibly overshadowing Fed speeches and Friday’s US jobs report.

Still, this burst of volatility is likely to present fresh trading opportunities across various assets:

    1) USDInd jumps above 101.00

The risk-off mood sent investors rushing toward safe-haven destinations like the dollar.

Despite breaching 100.52 last week, the USDInd is back above 101.00 with bulls eyeing the 50-day SMA at 101.94. This target could become reality if Middle East tensions escalate further. Speeches by Fed officials and the incoming jobs data on Friday will also impact the dollar’s outlook.

  • Prices may hit 101.94 if 101.00 proves to be reliable support.
  • A decline back below 101.00 may re-open the doors towards 100.52.

USDInd

 

    2) XAUUSD heading for fresh records?

Gold closed roughly 1% yesterday due to the geopolitical risk.

The precious metal has the potential to push higher if tensions escalate. Prices remain firmly bullish on the daily charts, but the Relative Strength Index (RSI) is near 70 – indicating that prices are overbought.

Bloomberg’s FX model forecasts a 72% probability that prices trade within the $2591.55 – $2720.28 range over the next one-week period.

  • Prices seem to be in a range with support around $2625 and resistance at $2675.

Gold

 

    3) US500 technical pullback in play?

After repeatedly hitting record highs, could the US500 be preparing for a steep pullback?

Well, the risk-off mood has instilled US equity bears with fresh confidence with futures pointing to a negative open.

Nevertheless, the trend remains firmly bullish with the prospect of lower US interest rates keeping the bull party alive. But bears could take claim more territory if prices slip back under 5675.

  • A breakdown below 5675 may encourage a decline towards 5600 and the 50-day SMA at 5550.
  • Should 5675 prove reliable support, this could push prices back toward 5770.

US500

 

     4) Bitcoin slammed by risk aversion

Bitcoin took a beating on Tuesday, closing almost 5% lower amid the risk-off mood.

Prices are hovering above $60,000 as of writing, a level where the 50 and 100-day SMA reside. If uncertainty continues to sap appetite for risk, this could drag the world’s largest cryptocurrency lower.

Note: Bitcoin may still be influenced by Fed speeches and US jobs report on Friday.

  • Should $60,000 prove to be reliable support, this may encourage a move back towards the 200-day SMA at $64,000.
  • A solid breakdown and daily close below $60,000 may see bears target $58,000 and $54,500.

bitcoin

 

    5) Brent bulls back in town?

In our report yesterday, we discussed how Brent slipped into Q4 on supply fears.

We highlighted how “many forces are set to influence prices, ranging from China’s stimulus plans, a return of Libya’s oil production, ongoing geopolitical tensions, and bets around lower US interest rates.”

A few hours later, oil prices surged over 5% as escalating geopolitical tensions fueled fears of potential major production disruptions.

In our technical section we stated that “Should $70.80 prove reliable support, this could trigger a rebound toward the 21-day SMA at $72.30 and $75.00.”

This target was reached with Brent pushing beyond $75 this morning.

brent

Forex-Time-LogoArticle by ForexTime

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

Economics & Fundamentals Financial News
02 Oct

Brent Crude Oil Prices Rise Amid Geopolitical Tensions

By RoboForex Analytical Department 

Brent crude oil prices climbed to 74.55 USD per barrel by Wednesday, marking a significant increase driven by escalating geopolitical tensions in the Middle East. The previous session saw prices surge by over 2% as fears grew over potential crude oil shortages due to the intensifying conflict in the region, particularly with Iran’s heightened involvement.

Iran, a key member of OPEC, holds substantial influence over global oil supplies. Its assertive stance in the Middle East conflict raises concerns about disruptions in energy exports, which could tighten the global oil market and push prices higher.

Mixed market sentiments

Despite the upward pressure from geopolitical factors, the overall sentiment in the oil market remains mixed. One of the dampening factors is the weak demand from China, the world’s largest oil importer. China’s sluggish economic indicators have limited the potential for a sustained recovery in oil prices, as reduced industrial activity translates to lower energy consumption.

Adding to the complex market dynamics, the American Petroleum Institute (API) reported that US crude oil inventories decreased by 1.5 million barrels during the week. This decline was less than the anticipated drop of 2.1 million barrels, marking the second consecutive weekly decrease but suggesting that demand may not be as robust as expected.

Furthermore, the appreciating US dollar has not yet significantly impacted crude oil prices but could do so in the future. Typically, a stronger dollar makes oil more expensive for holders of other currencies, potentially reducing global demand and applying downward pressure on prices.

Technical analysis of Brent crude oil

On the H4 chart, Brent crude found support at 69.90 USD, forming an upward wave targeting the 75.50 USD level. After reaching this point, a correction back to 72.66 USD is possible. Subsequently, there is potential for a new bullish wave extending to 78.20 USD, which serves as a local target. The MACD indicator technically supports this scenario; its signal line is below zero but trending sharply upwards, indicating increasing bullish momentum.

On the H1 chart, Brent broke above the 72.66 USD level and reached a local target at 75.30 USD. A consolidation range is expected to form below this level. A corrective move back to 72.66 USD (retesting from above) is possible, potentially leading to a downward exit from the consolidation. Once this correction is completed, the price may resume upward towards 75.50 USD, the initial target. The Stochastic oscillator technically confirms this Brent outlook, with its signal line below the 80 level and preparing to decline, suggesting a short-term correction before further gains.

Conclusion

The interplay of escalating geopolitical tensions and mixed economic signals continues to influence Brent crude oil prices. While concerns over supply disruptions due to Middle Eastern conflicts push prices upward, weak demand from China and inventory data from the US temper this rise. Additionally, the strengthening of the US dollar could impact global oil demand in the near future. Traders and investors should closely monitor these factors, as they will likely contribute to continued volatility in the oil market.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Energy Financial News
01 Oct

Inflationary pressure in European countries continues to decline. Markets ruled out the possibility of RBA rate cut in November

By JustMarkets 

On Monday, the Dow Jones Index (US30) gained 0.04%, and the S&P 500 Index (US500) rose 0.42%. The NASDAQ Technology Index (US100) closed positive 0.38%. The US stocks ended Monday in the green as investors digested Powell’s comments. During a speech at the National Association for Business Economics, Fed Chairman Powell emphasized that the Fed is not following a set path but suggested that two quarter-point rate cuts could still occur this year if the economy performs as expected. The odds of a 50 bps rate cut in November currently stand at 35%, down significantly from above 50% the previous week.

Equity markets in Europe fell steadily yesterday. Germany’s DAX (DE40) fell 0.76%, France’s CAC 40 (FR40) closed down 2.00%, Spain’s IBEX 35 (ES35) lost 0.76%, and the UK’s FTSE 100 (UK100) closed negative 1.01% on Monday. The CAC 40 is falling amid weakness in the automotive sector. Leading the decline was Stellantis NV, whose shares fell 14.7% to their lowest level since October 2022. The automaker cut its operating profit margin in 2024 to 5.5-7% from previous double-digit forecasts, citing worsening global industry conditions and increased competition from China. Renault, Vinci, and Kering were also among the top fallers, losing 5.6%, 5.1%, and 3.8%, respectively.

Germany’s inflation rate fell more than expected to 1.8% in September, the lowest since February 2021, while Italy’s fell to 0.8%. Inflation in France and Spain also fell more than expected last week, and markets now expect Eurozone inflation, due for release this week, to fall to the ECB’s 2% target. This will increase the likelihood of a further rate cut from the ECB.

WTI crude oil prices settled at $68.17 per barrel on Monday, finishing down 7% for the month as escalating tensions in the Middle East slightly outweighed rising supplies and weak demand. The market received little support from geopolitical risks, even after an Israeli airstrike killed Hezbollah leader Hassan Nasrallah in Beirut and bombed Houthi targets in Yemen. On the other hand, China’s ongoing economic problems, where manufacturing output contracted for the fifth consecutive month and service sector growth slowed, put additional pressure on prices. Traders remain doubtful that Beijing will take stimulus measures to boost demand.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 4.80%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not traded due to holidays, while Australia’s ASX 200 (AU200) was positive 0.70%.

Indonesia’s inflation hit a near three-year low. Indonesia’s annual inflation rate fell to 1.84% in September 2024, the lowest since November 2021, and remained within the central bank’s target range of 1.5% to 3.5%. Core inflation hit a 13-month high of 2.09% from August’s 2.02%. The CPI fell 0.12% monthly, maintaining its downward trend for the fifth month.

Judo Bank’s Australian Manufacturing PMI fell to 46.7 in September 2024 from 48.5 in August, indicating an eighth consecutive month of contraction in manufacturing activity at the fastest pace since May 2020. Retail sales in Australia rose 0.7% m/m in August 2024, up from an upwardly revised 0.1% increase in the previous month and above market forecasts of 0.4%. This was the fifth consecutive month of growth and the fastest pace since January.  Stronger-than-expected retail sales data for August boosted market sentiment and reduced the risk of an early rate cut by the Reserve Bank of Australia. Markets have ruled out the likelihood of an RBA rate cut in November, while the probability of such a move in December is currently around 71%.

S&P Global’s Vietnam Manufacturing PMI fell to 47.3 in September 2024, entering contractionary territory for the first time since March, down from 52.4 in August. The decline is mainly attributed to Typhoon Yagi, which caused temporary plant closures and production delays due to heavy rains and flooding. The S&P Global Malaysia Manufacturing PMI for September 2024 fell to 49.5 from 49.7 in the previous two months, the lowest reading since April. This is also the fourth month of contraction in the manufacturing sector, with output falling for four months, although the pace of contraction was modest.

S&P 500 (US500) 5,762.48 +24.31 (+0.42%)

Dow Jones (US30) 42,330.15 +17.15 +(0.04%)

DAX (DE40) 19,324.93 −148.70 (−0.76%)

FTSE 100 (UK100) 8,236.95 −83.81 (−1.01%)

USD index 100.77 +0.39 (+0.39%)

News feed for: 2024.10.01

  • Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
  • Japan Tankan Large Manufacturers Index (m/m) at 02:50 (GMT+3);
  • Japan Tankan Large Non-Manufacturers Index (m/m) at 02:50 (GMT+3);
  • Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
  • Australia Retail Sales (m/m) at 04:30 (GMT+3);
  • Switzerland Retail Sales (m/m) at 09:30 (GMT+3);
  • Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+3);
  • German Manufacturing PMI (m/m) at 10:55 (GMT+3);
  • Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
  • UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
  • Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
  • Canada Manufacturing PMI (m/m) at 16:30 (GMT+3);
  • US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3);
  • US JOLTs Job Openings (m/m) at 17:00 (GMT+3);
  • US FOMC Member Bostic Speaks (m/m) at 18:00 (GMT+3);
  • US FOMC Member Cook Speaks (m/m) 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.

Economics & Fundamentals Financial News
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