Key Events and Market Movements: This week brings key economic data and market developments that could significantly impact trading.
From economic releases in Europe and the U.S. to movements in gold, oil, and major currency pairs,
staying updated is crucial for navigating the market effectively. Here’s a quick overview of what to watch.
Gold is trading around levels of 5,224, close to its historical peak of 2,531.
The strong upward movement in gold continues during the current period,
with an anticipated interest rate cut in September, expected to be by 25 basis points.
Gold is expected to achieve new historical highs, potentially targeting the 2,531 level,
followed by a downward correction to retest the 2,484 level before rising again to target the 2,553 level.
Oil
Oil has returned to positive trading; however, concerns about reduced demand from China continue to heavily influence the markets.
Currently, oil is trading at 75.60, close to the resistance level of 75.69.
Breaching this resistance could lead to further gains, with targets at 77 dollars and 78.69. On the other hand,
if a reversal signal emerges near the current levels, a decline to retest the 72.5 level is more likely.
USDJPY
The USDJPY pair returned to downward trading after Jerome Powell’s speech at last week’s Jackson Hole conference.
Powell mentioned that a rate cut is now possible and hinted at the beginning of a rate cut in September.
This is expected to support the dollar-yen pair.
Technically, the USDJPY trades around 143.86 after breaking below the sideways range,
supporting continued downward trading toward the 140.21 level.
EURUSD
The euro remains strong against the U.S. dollar,
the EUR/USD pair is achieving a new high near the 1.1200 level for the year.
The upward movement is expected to continue,
targeting the 1.1279 level as long as trading remains above the 1.1150 level,
especially with the continued weakness of the U.S. dollar.
Nasdaq
U.S. stock indices continue to rise strongly, with the anticipated rate cut expected to support U.S. companies.
Nasdaq is trading at levels of 19,720
after fully absorbing the recent downward wave and closing above the resistance level of 19,472,
retesting it, which supports the continued upward movement towards the peak of around 20,686.
Dow Futures Remain Steady Amid Public Holidays, While Tesla Surges
The U.S. stock market continues to exhibit a mixed trend in the futures market,
with the Dow Jones remaining steady amid public holidays, while Tesla experiences a surge.
The recent session saw Tesla Inc (NASDAQ:TSLA) witnessing a notable increase of 6.9%
following better-than-expected delivery and production numbers.
However, as the clock approached 19:00 ET (23:00 GMT), Dow Jones futures remained unchanged,
while S&P 500 futures recorded a marginal increase of 0.1%, and Nasdaq 100 futures dipped by 0.2%.
During the regular trading hours on Monday, the Dow Jones Industrial Average only added 10.9 points to conclude at 34,418.5.
Similarly, the S&P 500 observed a slight rise of 5.2 points or 0.1%, closing at 4,455.6.
Additionally, the Nasdaq Composite exhibited a gain of 28.9 points or 0.2%, reaching 13,816.8.
It is worth noting that U.S. markets are scheduled to remain closed on Tuesday, most likely due to a public holiday.
Economic Data Recap
In terms of economic data, the Institute for Supply Management’s (ISM) manufacturing
Purchasing Managers’ Index (PMI) came in at 46, falling below the market expectations of 47.2.
This indicates a contraction in the manufacturing sector, raising concerns about overall economic growth.
Bond Market Movement
Shifting our focus to the bond market, the yield on United States 10-Year Treasury rates stood at 3.858%.
It is essential to closely monitor bond market movements as they often have a significant impact on the broader financial markets.
Conclusion & FAQs
The Dow futures have remained stable amid public holidays,
while Tesla experienced a surge driven by impressive delivery and production numbers.
However, the broader market exhibited mixed trends, with slight gains seen in the S&P 500 and Nasdaq Composite.
It is crucial for investors to stay informed about economic data releases
and bond market movements to make well-informed investment decisions.
FAQs (Frequently Asked Questions)
What factors contributed to Tesla’s surge in the stock market?
Tesla’s surge can be attributed to higher-than-expected delivery and production numbers,
which instilled confidence among investors.
Why did the Dow Jones futures remain steady during public holidays?
The Dow Jones futures remained steady during public holidays as trading activity tends to be subdued
when markets are closed, resulting in minimal price movements.
What does the manufacturing PMI indicate for the economy?
The manufacturing PMI below expectations suggests a contraction in the manufacturing sector,
which can impact overall economic growth.
Why are U.S. markets closed on Tuesday?
U.S. markets are closed on Tuesday, most likely due to a public holiday.
Public holidays often result in limited market activity.
How do bond market movements affect financial markets?
Bond market movements can have a significant impact on financial markets,
as they influence borrowing costs, interest rates, and investor sentiment.
Saudi Arabia, the world’s top oil exporter, has announced plans to slash oil production starting next month.
This news has sent oil prices soaring, as the additional production cuts are expected to tighten the market in the second half of the year.
The Saudis revealed that their output would drop to 9 million barrels per day in July,
representing a reduction of approximately one million barrels per day compared to May’s production levels.
The Kingdom’s energy minister has also hinted at the possibility of extending these cuts.
In addition, OPEC+ (Organization of the Petroleum Exporting Countries and their allies)
has agreed to reduce overall production goals by 1.4 million barrels per day starting from January 2024.
This coordinated effort aims to provide support to oil prices,
which have been under pressure due to concerns over slowing global growth and subdued demand.
As a result of these developments, U.S. crude futures traded 2.26% higher at $73.36 a barrel,
while the Brent contract added 2.15% to reach $77.77 per barrel.
Biden signs debt limit bill
U.S. President Joe Biden has signed a bill into law that raises the country’s debt ceiling, averting a potentially catastrophic default.
With the deadline fast approaching, this move brings much-needed relief to the financial markets.
The bill suspends the borrowing limit until 2025 and also introduces caps on certain government spending.
The process of reaching this agreement involved intense negotiations between President Biden
and Republican House Speaker Kevin McCarthy.
Despite opposition from both hardline conservatives and progressives,
the legislation managed to secure passage through both chambers of Congress.
This resolution eliminates the immediate threat of a default,
which would have had severe consequences for the global economy.
Futures mixed after a strong week on Wall Street
Following a robust performance the previous week, U.S. stock futures exhibited a mixed trend.
The major indices had recorded substantial gains, thanks in part to the resolution
of the debt ceiling issue and a stronger-than-anticipated May jobs report.
As of 05:04 ET, Dow futures showed a gain of 38 points or 0.11%,
while S&P 500 futures dipped by 1 point or 0.01%, and Nasdaq 100 futures slipped by 36 points or 0.25%.
The S&P 500 experienced a significant surge of 1.45% on Friday, marking its best week since March.
The Dow Jones Industrial Average and the Nasdaq Composite also demonstrated solid growth,
with gains of 2.12% and 1.07% respectively. The positive momentum in the markets
can be attributed to progress on the debt limit issue and the release of robust employment data.
These factors have eased concerns of an imminent recession and potentially influenced the Federal Reserve’s decision on interest rates.
China’s services sector activity accelerates in May
China’s services sector has shown accelerated growth in May, according to a private survey.
The Caixin services purchasing managers’ index (PMI) rose to 57.1,
surpassing expectations and indicating the ongoing recovery in the sector.
This growth can be attributed to the continued relaxation of anti-COVID measures,
which has boosted consumer demand and led to increased employment in the services industry.
In contrast, China’s manufacturing industry experienced a contraction during the same period.
As the country’s largest economic driver, any weakness in the manufacturing sector raises concerns
about a potential slowdown in China’s post-pandemic recovery.
Apple to Announce ‘Mixed Reality’ Headset
All eyes are on Apple’s developer conference, where the tech giant is set to unveil a highly anticipated “mixed reality” headset.
This product, which has been in development for seven years, aims to combine augmented reality and virtual reality technologies.
By overlaying digital images onto the real world and immersing users in computer-generated simulations, the device promises an innovative and immersive user experience.
While Apple typically focuses on software updates during its annual events, this hardware release is generating significant excitement. Observers are curious to see if the launch of the headset will reinvigorate interest in augmented reality and virtual reality,
which have taken a backseat to the recent hype around generative artificial intelligence.
Reports suggest that the headset will come with a hefty price tag, estimated to be as much as $3,000.
Conclusion & FAQs
The recent developments in the market have significant implications for various sectors and investor sentiment.
Saudi Arabia’s commitment to cutting oil production has led to a surge in oil prices,
while President Biden’s signing of the debt limit bill averted a potential default, providing relief to global markets.
The mixed performance of U.S. stock futures reflects the impact of the debt limit resolution and positive employment data.
In China, the services sector continues to show strength, driving the country’s economic recovery,
while Apple’s highly anticipated “mixed reality” headset release holds the potential to shape the future of augmented
and virtual reality technologies.
It is crucial for investors and market participants to closely monitor these developments
as they navigate the ever-changing landscape of the global market.
FAQs
1. What prompted Saudi Arabia to cut oil production? Saudi Arabia’s decision to cut oil production is aimed at tightening the market and supporting oil prices. Concerns over slowing global growth and sluggish demand have been pressuring oil prices in recent months.
2. How did the resolution of the U.S. debt limit issue impact global markets? The resolution of the U.S. debt limit issue through the signing of a bill by President Biden eliminated the risk of a catastrophic default. This development brought relief to global markets, which were closely monitoring the situation.
3. What factors contributed to the mixed performance of U.S. stock futures? U.S. stock futures showed a mixed trend following a strong week on Wall Street. The resolution of the debt limit issue and better-than-expected employment data positively influenced investor sentiment, but the market also exhibited some cautiousness.
4. How did China’s services sector perform in May? China’s services sector experienced accelerated growth in May, as indicated by the Caixin services PMI. The relaxation of anti-COVID measures has fueled consumer demand and led to increased employment in the services industry.
5. What can we expect from Apple’s “mixed reality” headset? Apple’s “mixed reality” headset, which will be unveiled at its developer conference, aims to blend augmented reality and virtual reality technologies. The headset promises to offer a unique and immersive user experience, potentially sparking renewed interest in AR/VR technology.
The President has proposed a series of tax hikes designed to fund several ambitious spending plans,
including increased capital gains taxes for those earning more than $1 million per year and higher corporate tax rates.
In addition, he’s expected to propose new tax credits aimed
at helping lower- and middle-income Americans
as well as measures that would simplify the filing process for taxpayers.
These proposals are in line with his campaign promises
to make taxation fairer across all income levels
while also providing relief for those who need it most.
The upcoming speech could prove pivotal in terms of both public opinion
and policy implementation moving forward into 2023.
It remains unclear how much support these proposals will have from Congress
or if they can pass muster with fiscal conservatives who may be opposed to any form of increased taxation
but regardless, this address should provide some clarity regarding
where exactly President Biden stands when it comes to our
nation’s finances going forward into next year (and beyond).
Fed’s Powell on inflation
The Federal Reserve has been closely monitoring the state of inflation in the U.S. economy.
Recently, Fed Chair Jerome Powell gave an update on its progress during a virtual press conference.
Powell noted that while overall inflation remains low,
there have been signs of improvement
since last year’s pandemic-induced recession.
He pointed to rising prices for goods like used cars and recreational vehicles as evidence
that demand is increasing in some regions of the economy a positive sign for future growth prospects.
However, Powell cautioned against expecting too much from any single indicator
or data point when measuring economic health:
“Inflation can be volatile month by month…It’s important not to overreact
or draw conclusions about where things are headed based on one piece of data alone.”
He went on to emphasize that although some sectors may be seeing price increases
due to increased demand from consumers who are now more comfortable
spending money again after months spent at home during lockdowns; this does not necessarily mean we should expect broad-based inflationary pressures across all sectors
anytime soon given how uncertain our current economic environment still is right now
with ongoing public health restrictions continuing throughout many parts of America even today.
Overall though he did express his optimism about what lies ahead
if conditions continue improving as they have been:
“[The] outlook depends importantly upon successful containment [of COVID],
which would support further gains in employment and incomes…
That could lead ultimately—if these trends persist—to higher levels than those currently prevailing.”
For investors looking for guidance around their portfolios then this news should come as welcome relief;
but it also serves as an important reminder that no matter how encouraging individual indicators may appear at times,
caution must always remain paramount when making decisions related solely to short-term market movements
rather than taking into account broader macroeconomic factors such as longer-term expectations
regarding monetary policy actions taken by central banks worldwide in the future.
eBay Layoffs
Recently, eBay announced that they would be laying off 500 employees
to streamline their operations and reduce costs.
This decision was not made lightly and comes as a result of the company’s continued
focus on improving efficiency throughout its business.
At eBay, we take pride in our commitment to creating an environment
where our employees can thrive.
We understand that these changes will significantly impact those affected
but we are confident that this move is necessary for the long-term success of our organization.
We recognize how difficult it can be for those impacted by layoffs
and are committed to providing support during this transition period through severance packages,
outplacement services, career counseling, resume writing assistance, and more. Additionally, we will continue investing in training opportunities
so current team members may develop new skills or pursue other interests within the company as needed or desired.
It is important to note that while these layoffs represent approximately 2% of the total workforce at eBay;
they do not reflect any change in strategy nor signal any lack of confidence from the leadership
about the future potential for growth at this iconic e-commerce platform.
Rather than detracting from what makes us great –
namely innovation driven by creativity
these cuts should only serve further fuel efforts toward achieving
more outstanding operational excellence across all areas of business activity going forward.
We thank all departing colleagues for their contributions here at eBay;
wishing them well wherever life takes them next!
Zoom Gloom
As the world continues to grapple with the economic impact of COVID-19, companies are being forced to make tough decisions to stay afloat.
Recently, Zoom Gloom 2023 made headlines when they announced
massive layoffs and a 98% pay cut for their CEO.
The company had been struggling financially since March 2020
due to decreased service demand during the pandemic.
To reduce costs and remain operational, Zoom Gloom 2023 decided that 1,300 staff members would be laid off
within minutes of announcing their decision on June 3rd, 2021. To add insult to injury;
CEO Martin Bremner took a 98% pay cut as part of his commitment
to helping his employees through this difficult period.
Although these measures were taken with good intentions
namely ensuring that no further job losses occurred – it has left many people feeling betrayed by their employer
who had promised them stability during turbulent times only months earlier?
Moreover, such drastic cuts have led many individuals into financial distress
which could take years before they can recover from. More needs to be done not just by businesses
but also governments worldwide if we are going to ensure workers’
rights are protected even when faced with challenging circumstances like this one.
The Stock Market Slide: Fear of Recession, it’s been a strange year for the stock market.
Despite an economy that has seen its fair share of turbulence,
stocks have managed to make gains in 2020. But could this be about to change?
The so-called ‘market snapshot’ effect, where bad news about the economy is seen as good news for equities,
may finally be coming to an end.
This means that investors should expect bad news to have a negative impact on stocks going into 2021,
and there could well be plenty of it given how tumultuous 2020 has been economically speaking.
Of course, no one knows exactly what will happen next year
but it’s important not just to keep up with economic developments
but also to consider other factors such as company earnings and sentiment when making investment decisions.
As always though, diversifying your portfolio remains key in order
to minimise risk while still having potential upside from any positive surprises which might come along throughout 2023!
After the Federal Reserve aggressively raised rates to combat inflation,
many were expecting good news that would result in market gains.
However, recent economic data is pointing to slower growth and less fuel for inflation.
It’s important to remember that while slower growth may seem like a negative thing at first glance,
it can be beneficial in some ways if it results in lower interest rates or even future rate cuts from the Fed.
Lower interest rates mean more borrowing power and greater access to capital,
both of which are essential components of economic expansion and job creation across all industries.
What’s more, with lower borrowing costs come increased incentives for companies
(both small-scale businesses as well as large corporations)
who can now invest their money into new projects without fear of taking on too much debt
due to high-interest payments down the line; this ultimately leads to higher productivity levels
throughout an economy, since resources are being used efficiently
instead of sitting idle due solely high cost associated with them priorly.
A Smart Investment
Low-interest loans also give consumers more buying power when they want to purchase products or services;
by having access to cheaper financing options, people will have extra funds available
to spend on items such as cars, homes etc… thereby boosting local economies further.
All things considered, there is no one size fits all approach when evaluating what constitutes “good news”
but understanding how different macroeconomic factors interact together
can help us make informed decisions about our investments going forward into 2023!
The past week saw a softer-than-expected November consumer price index reading,
and it’s been met with mixed reactions from investors.
On one hand, prices are still rising more than 7% year over year,
an impressive figure by any measure. But on the other hand,
inflation appears to have peaked at roughly four-decade highs above 9% in June and is now cooling off.
What does this mean for financial markets?
It could be seen as a game changer of sorts as the Federal Reserve has indicated that they intend to keep lifting rates into 2023,
albeit at a slower pace – yet keep them elevated longer than previously anticipated.
This could be cause for concern among some investors who fear that this may lead us closer towards recession territory;
However, many others remain optimistic about what these changes
will bring in terms of future economic growth prospects despite potential short-term hiccups along the way.
Navigating the Financial Landscape
It’s clear that no matter what happens next, we’ll need to pay close attention to how these changes affect our investments moving forward; after all, there is no one size fits all approach when it comes down to managing your finances during times like these! That said, if you’re feeling uncertain or overwhelmed then consulting with an experienced financial advisor can help ensure you make informed decisions based on your individual circumstances, something worth considering before making any major moves in 2023! new fears of an impending recession are now looming on the horizon.
This sentiment was reinforced by recent manufacturing data as well as weaker-than-expected retail sales readings reported this week.
According to Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors in a phone interview “markets are probably headed back to a period where bad news is bad news not because rates will be driving concerns for investors but because earnings growth will falter”.
It’s clear that we’re entering into uncertain times and investors should be prepared for potential volatility ahead.
However, there may also still be opportunities out there if you know where to look!
It’s important not to get caught up in fear or panic when making decisions about your investments – instead, focus on doing research and understanding what kind of risks you’re comfortable taking with your money before investing any capital.
Also, consider speaking with an experienced financial advisor who can help provide guidance during these turbulent times so that you can make informed decisions about how best to protect yourself from market downturns while still achieving long-term goals like retirement planning or wealth accumulation strategies.
Outline of the week A jump for oil but a setback for gold: Outline of the week: Last week was an event week, some of which affected financial markets,
while others were ignored.
Perhaps the most prominent event was the storming of the Capitol by supporters of Trump,
after questioning the outcome of the last US presidential election that took place in November of last year.
Trump supporters gathered in a rally around the building where an extraordinary session of Senate
and representatives were being held in order to ratify the election result by announcing Joe Biden’s winning.
The outgoing US President Donald Trump
The outgoing US President Donald Trump called for these demonstrations which amounted to
violent acts that led to the killing of nearly 4 people and the injuring of others.
Then, Trump asked his supporters to go back home, but at the same time some of his words
meant some incitement to violence, which made Twitter permanently ban his account,
while Facebook and Instagram suspended his account for two weeks.
Evest brings you the outline of markets this week.
A positive week for crude oil
The first full week of this year’s trading has ended. It was a very promising start for the oil sector
which managed to make a major recovery and maintain the upward momentum.
Brent crude oil crossed $ 55 a barrel for the first time since February 2020
and the week was roughly closed at $ 56 a barrel.
US West Texas Intermediate crude futures
US West Texas Intermediate crude futures also unexpectedly breached the $ 50 barrier for the first time
since early 2020 and closed the week at the rate of 52.24 a barrel.
This uptrend in the market came amid prospects for greater fiscal stimulus in the United States
in addition to optimism about vaccines and the weakening of the US dollar.
The significant decline in US oil inventories announced by US Energy Information Administration last week,
besides, the positive results from the first OPEC+ meeting in 2020,
also contributed to supporting prices.
Traders ignored much of the negative news
Traders ignored much of the negative news during last week,
as it appears that they have shifted their focus and sentiment only towards optimism.
They were not alarmed by the Chaos that occurred in the Capitol building when Trump supporters stormed
the building of the Senate,
rioted, and sabotaged it.
This led to the postponement of the confirmation hearing on Joe Biden winning Presidency for a few hours.
Oil prices also rose despite new closures in Europe that delayed expectations of a recovery in demand.
Forecast for cooler-than-normal weather
Forecast for cooler-than-normal weather in Europe and Northern Hemisphere should support rising demand for heating oil
as everyone tries to warm their houses during the lockdown.
However, this factor has not been realized yet.
Although 2021 has begun and everyone expects the price of oil to decline but these expectations have now faded,
as prices unexpectedly began to rise.
The most optimistic forecast for oil prices was that price of a barrel of Brent crude
would reach $60 in the second quarter of 2021.
Energy Information Agency has forecast that Brent and West Texas crude oil
will be respected at $ 48.53 and $ 45.78 in 2021.
A sharp drop of gold
Gold prices have witnessed a decline since the start of this year.
The yellow metal has lost much of its value and returned to levels below $1850 an ounce.
Both US Treasury yields and increasing expectations regarding the approval of a major economic relief package
that will be approved soon because of Democrats winning everything in the United States
of America have affected fluctuations of precious metal.
Joe Biden won President’s seat.
The last run-off in Senate in Georgia was able to complete the Democratic Party’s
control of the Senate and also to become his legislative arm in the USA.
The ten-year yield on US Treasuries rose above 1%, which pushed billions to be back down.
Market participants are now awaiting
Market participants are now awaiting the nonfarm payroll report which will affect monetary policy outlook
as the US economy unexpectedly sheds 140.000 jobs in December.
Next week, precious metal may get a boost from the US Consumer Price Index update
as inflation reading is expected to rise from 1.2% in November
to reach 1.3% in December on an annual basis, while expectations indicate
that the core consumer price index has stabilized for the third month in a row at 1.6%.
On the other hand, expectations indicate a 0.2% decline in retail sales in December,
while the US consumer confidence survey may record a reading of 79.2 in January compared to 80.7 in December 2020.
Drop-in household spending in addition to signs of diminishing consumer confidence
may undermine the recent rise in US Treasury yields, which supports gold this week.
Gold needs to stabilize at least till January 27th, when a new interest rate decision will be issued by
Federal Open Market Committee.
During last week, the yellow metal has weakened its performance to decline at a rate of 4.5% on Friday.
This is the biggest drop since November 2020, as prices settled below $ 1.859 an ounce.
Nikkei is at its best during 30 years
As the safe haven of investments fell, world stocks were flying higher with the Japanese Nikkei index
soaring for more than 3 decades on Friday,
despite political turmoil in the US after Trump supporters stormed Capitol.
Bitcoin surpasses $ 40.000 for the first time
Cryptocurrency Bitcoin is back into controversy again as it rose significantly,
to record more than $ 40.000 for the first time in its history,
after doubling its value in less than a month.
Bitcoin has jumped by more tha700% since the spread of the Corona Covid-19 virus
was announced in March 2020, when it was trading at only $ 500.
