Daily Market News by Golden Brokers

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DAILY MARKET NEWS - 17-04-2024

Federal Reserve officials, including Chair Jerome Powell, have pushed back on expectations for interest rate cuts this year, stating that monetary policy needs to remain restrictive for longer, citing "lack of further progress." The central bank's preferred measure of underlying inflation is expected to have remained elevated in March, leading the Fed to maintain its current high-interest rate policy until it gains greater confidence that price pressures are subsiding. Analysts believe the Fed has adopted a more neutral communication stance, showing a less immediate bias towards cutting rates.

EQUITY

The market closed in the red on Tuesday. However, Dow Jones got a lift from UnitedHealth Group's better earnings results, while big banks that recorded overall better earnings fell on a shrinking profit margin after capitulation in the bond market. The broader S&P 500 and Nasdaq indices were weighed down by declines in sectors like real estate and utilities, although losses were limited by gains in tech.

GOLD

The gold market held steady after last week's record highs as more traders saw it as being severely overbought. Although geopolitical risks in the Middle East have been taught to drive safe-haven demand, some suggest that locked-up capital in AI and chip manufacturers prevented money from flowing into gold mining operations, further accelerating pricing.

OIL

Crude oil prices fell slightly ahead of U.S. inventories data, where last week indicated looser market conditions, despite ongoing supply disruptions from escalating tensions, although Iran indicated an unwillingness to continue with direct assault. Additionally, the rally in oil prices over the past two weeks stalled on a stronger dollar and fears that weakening global economic conditions could dent oil demand in 2024, with mixed data from China adding to these worries.

CURRENCY

The global currency market is in unrest, as the U.S. dollar reverses trends, putting emerging market currencies, particularly in Asia, under immense pressure. The dollar defeated the initial narrative that it would be cut soon in lieu of a stronger economy compared to Europe and Asia. Furthermore, China's decision to widen its yuan trading band has given the dollar an additional boost, forcing neighbouring countries to adjust their currencies accordingly and complicating the ability of smaller central banks to lower rates without causing currency instability.
 
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DAILY MARKET NEWS – 18-04-2024​

Recent market volatility has seen volatility-linked funds start reducing their equity exposure, and analysts expect further escalation in the market VIX index could prompt these funds to sell an estimated $45 billion worth of stocks. While the selling so far has been relatively modest, a jump in volatility could also trigger selling from slower-moving strategies like commodity trading advisors. The ongoing earnings season and economic data releases will be closely watched as potential triggers for increased market volatility, as the market is currently 4.5% down from its peak.

EQUITY

April selloff in stocks deepened as investors abandoned early interest rate cut prospects, noting their fourth straight bearish session. However, some individual stocks diverged from the trend - United Airlines surged 17%, while rival airlines American and Southwest also gained. Then again, the worst performer in the S&P 500 was J.B. Hunt Transport Services, falling 8% following weak earnings. Analysts believe the current market pullback could present a buying opportunity, especially if upcoming data shows a moderation in inflation.

GOLD

Gold prices have been volatile, regaining some of their losses on Wednesday after the dollar gapped down from its highs. In other metals, the Silver Institute Industry Association has forecast a 17% rise in the global silver deficit in 2024, potentially increasing demand and creating more upside for the precious metals complex.

OIL

Oil prices were steady after losing 3% as the market weighed in higher U.S. crude inventories against the easing of tensions between Israel and Iran. Analysts highlighted that the latest bout of risk premium from the conflict has now been eroded, with Brent prices returning to levels seen before the April 1 attack on an Iranian consulate. In other news, the Biden administration may reimpose oil sanctions on Venezuela based on its actions regarding its upcoming elections..

CURRENCY

Asian currencies saw some relief as the U.S. dollar retreated from multi-month highs, but concerns over higher U.S. interest rates continue to weigh on the region. The Japanese yen briefly recovered after G7 finance leaders reaffirmed their stance against excessive currency volatility, while the Chinese yuan remained under pressure from economic uncertainty and outflows.
 

DAILY MARKET NEWS – 23-04-2024​


Japan is hopeful that inflation will remain around the 2% target for the next three years. This has set expectations of further interest rate hikes by the BOJ after its exit from the Yield Curve Control Easy policy earlier this year. Governor Ueda stated that the BOJ will raise rates if trend inflation accelerates towards the 2% target as projected. As a result, the yen depreciated sharply against the dollar, reaching multi-year lows, putting Japanese authorities in distress. Finance Minister Suzuki has also warned of strong intervention in currency markets, stating that recent trilateral meetings with U.S. and South Korea have paved the way for action against excessive yen weakness.

EQUITY

The stock market rebounded on Monday, with the S&P 500 and Nasdaq rising after a recent sell-off that saw a 6% drop from highs to lows. Investors are looking ahead to a busy week of quarterly results from major companies like Tesla, Meta, Alphabet, and Microsoft, which could be behind the recent volatility shock. The market is also awaiting the release of the PCE inflation data to gauge Fed's policy path, as more officials advocate later cuts and a seemingly indefinite pause.

GOLD

Gold prices fell on Tuesday to their lowest point in over two weeks, down nearly 1% in addition to Monday's 2.7% drop, as safe-haven demand receded due to easing worries over a potential Middle East conflict, leading to profit-taking by investors. Market focus now shifts to upcoming U.S. GDP and PCE data, which could impact the Federal Reserve's monetary policy outlook.

OIL

Crude prices restored some strength as supply concerns outweighed the diminished risks of an Iran-Israel conflict escalation, although Israel's ongoing strikes in Gaza reduced hopes of avoiding a broader regional war. However, prospects of tightening global supplies, driven by Russia's export cuts and potential U.S. sanctions on Iranian crude for Pakistan, solidify bullish sentiment.

CURRENCY

The dollar reached a fresh 34-year high against the Japanese yen, driven by recent Federal Reserve officials support for a higher-for-longer rate. Although the Bank of Japan has refrained from intervening, it is wary of going against the dollar's strength brought about by higher U.S. yields. Traders remain watchful for any signs of intervention as the dollar nears the 155 yen per dollar level, while also awaiting the Bank of Japan's policy meeting on Friday.
 
DAILY MARKET NEWS - 26-04-2024

U.S. economic growth slowed more than anticipated in the first quarter ahead of the PCE measure. The GDP came in at an annualised rate of 1.6%, below economists' forecasts of 2.4%, while the PCE price index is expected to accelerate, presenting a challenging scenario for the Fed as it navigates between taming inflation and avoiding an economic downturn. Analysts view the report as a "toxic mix" for central bankers, with slowing growth and rebounding inflation, potentially pushing back rate cut expectations and injecting uncertainty into bond and stock markets.

EQUITY

The S&P 500 closed lower on Thursday even as VIX plunged, driven by tech, where Meta closed 10% lower from weak guidance, although losses were minimised on intrasession gains from Alphabet and Microsoft, which reported strong results. Treasury yields climbed on data showing slowing growth but sticky inflation, pushing out rate-cut bets to September.

GOLD

The gold market surged with prices going above $2,330 after U.S. GDP growth for the first quarter fell short of expectations, marking the worst growth rate in nearly two years, while the acceleration in consumer inflation drove speculation that the Fed would maintain its restrictive monetary policy for an extended period of time. Despite higher rates affecting gold's appeal, escalating price pressures boost its utility as a reinflation hedge.

OIL

Oil prices rose on Friday, on track for weekly gains hinging on gains that were made on Tuesday, as supply concerns persisted due to conflicts in the Middle East, although weak U.S. economic growth may increase demand anxiety. However, gains were capped as traders priced out expectations of an early rate cut.

CURRENCY

The dollar is weaker ahead of inflation data, which could drive sentiment. Attention is now on the PCE price index data for March, widely seen as the Fed's most important gauge of inflation, as it could lead to a scaling back of expectations for U.S. rate cuts if the core figure comes in higher than expected. In Europe, the euro gained ground against the dollar, benefiting from the greenback's weaker tone, in addition to Eurozone inflation expectations for the next 12 months at the lowest level since December 2021, according to the ECB's Consumer Expectations Survey.
 

DAILY MARKET NEWS – 02-05-2024​

The Federal Reserve met and has decided not to lower interest rates this time around, citing reaccelerating inflation as a dangerous territory that may hurt confidence if rate cuts were made earlier, which was the trajectory before entering this year. Treasury yields were down slightly, as there is no significant hawkish tone to any rate hike that was endorsed by some Fed members weeks ago. However, the Fed has also announced a reduction in quantitative tightening, from $95 billion to $60 billion per month, signalling a shift towards easier monetary policy. As an analyst suggested, this current cycle is not quantitative easing, but not quantitative tightening either, as fed tries to achieve duration-neutral balance.

EQUITY

The trading session was volatile in conjunction with FOMC, which closed overall negative with a 67 point difference between the S&P 500 open and its high. Amazon's stock closed 2% higher after its solid first-quarter earnings , driven by increased demand for its cloud business. However, chip stocks like Super Micro Computer and Advanced Micro Devices faced downturns, despite AMD's positive forecast for AI chip sales in 2024. Consumer goods companies struggled due to inflation-weary consumers pushing back on higher prices and weakening demand.

GOLD

Gold prices reacted positively to the FOMC, as there is indication that future rate cuts are still on the table, although the Fed kept interest rates unchanged for now, with Chair Jerome Powell stating that the central bank's next move is unlikely to be a rate hike. Traders were relieved by Powell's dismissal of further rate hikes, driving gold prices above $2,300. With the Fed's policy statement framing the discussion around conditions for potential rate cuts, traders increased their bets on at least one rate cut this year.

OIL

Oil prices rebounded on expectations that the U.S. would start replenishing its strategic petroleum reserve at lower price levels, reversing trends after three days of losses. However, prices had fallen sharply the previous day due to the U.S. Federal Reserve keeping interest rates steady, which could limit economic growth and oil demand, which saw slower growth over the over the last two weeks.

CURRENCY

Japanese authorities are likely to continue intervening in the currency markets to prevent a free fall of the yen, especially against the US dollar, which saw the dollar spike against the yen, a suspected currency intervention. A former Bank of Japan official involved in past interventions stated that sudden, large movements in the yen's value risk triggering speculative trading that could cause a yen free fall, aiming to maximise the psychological impact and keep traders on guard.
 

DAILY MARKET NEWS – 07-05-2024​

The European Central Bank (ECB) is growing increasingly confident about cutting interest rates as inflation in the euro zone continues to ease. ECB policymakers Philip Lane, Gediminas Simkus, and Boris Vujcic stated that recent data on inflation and economic growth support their view that inflation will return to the ECB's 2% target by mid-2024. The ECB has virtually promised a rate cut in June, and markets are pricing in three rate cuts this year. This would lower the deposit rate from 4% to 3.25%, still considered restrictive but intended to slow declining economic activity. Meanwhile, in the UK, the pound was higher ahead of the Bank of England's (BoE) policy announcement this week, though markets largely shrugged off the ruling Conservatives' losses in local elections.

EQUITY

The U.S. stock market rallied on Monday, sparked by weaker nonfarm payroll data that may affect rate cut expectations. Earnings season continued, with Spirit Airlines falling over 9% after reporting a Q1 loss and weaker guidance due to aircraft groundings. Meanwhile, semiconductor stocks like Micron Technology, Super Micro Computer, and Silicon Motion saw gains, with analysts bullish on their prospects. Berkshire Hathaway also rose after reporting a 40% jump in Q1 operating earnings.

GOLD

Gold prices started the week strong, supported by a changing rate cut bet after a weaker job growth report, increasing the likelihood of much needed rate cuts as early as September. Lower interest rates tend to boost non-yielding assets, like gold, as a hedge. Traders are currently pricing in a 50% chance of a Fed rate cut in September, according to CME's FedWatch Tool.

OIL

Oil prices recovered some losses after the ongoing conflict between Israel and Gaza, which could escalate political tension as more countries cut relations with Israel. Traders were pricing in a risk premium due to Israel's air and ground strikes in Rafah after Hamas agreed to a ceasefire proposal that Israel deemed unsatisfactory. Saudi Arabia's decision to raise its official selling prices for crude sold to Asia, Northwest Europe, and the Mediterranean in June also supported higher oil prices.

CURRENCY

The U.S. dollar is recovering after falling for four consecutive sessions, as recent labour market data and comments from Fed officials brought back rate-cut projections. However, the greenback strengthened against the yen following last week's suspected interventions by Japanese authorities. While the interventions provided only temporary relief for the yen, analysts warn that betting on further yen weakness against the dollar could be "treacherous" if the Bank of Japan perceives U.S. yields to have peaked.
 

DAILY MARKET NEWS – 09-05-2024​

Japan's currency diplomat, Masato Kanda, came out and refuted claims about limitations in the country's foreign currency reserves for market intervention, asserting their readiness to take action after 160 lines on the sand are washing away, with markets remaining bearish ahead of the upcoming U.S. inflation data release. Finance Minister Shunichi Suzuki reiterated his concerns about the economic impacts of excessive yen weakness, particularly regarding higher import costs. During the April meeting, BOJ members emphasised the need for steady interest rate hikes and the necessity of reducing bond purchases in the future. One member suggested that policy rates could rise higher than currently priced in by the market if the BOJ's growth and inflation projections are realised.

EQUITY

Quarterly earnings reports continued to shape market sentiment, with Uber Technologies falling after reporting a surprise loss and lower-than-expected gross bookings. In contrast, social media platform Reddit surprised with stronger-than-expected first-quarter earnings and an upbeat outlook, while ride-sharing company Lyft projected higher gross bookings and a positive core profit for the current quarter.

GOLD

Gold prices consolidated as investors awaited crucial U.S. economic data that could provide insights into the potential timing of interest rate cuts by the Federal Reserve. The weekly jobless claims data and the University of Michigan's consumer sentiment reading. The consumer price index data is also set to be released next week, holding gold prices within a narrow range.

OIL

Oil prices rebounded off their March low, driven by a drop in crude inventories and an increase in refinery activity in preparation for peak driving season. China's crude oil imports in April also increased by 5.45% year-on-year, indicating a higher demand projection. The International Energy Agency data showed a draw of 1.4 million barrels in U.S. crude stockpiles, surpassing analysts' forecasts of a 1.1-million-barrel decline. Crude is expected to retest $85 soon as technical oversold kicks in.

CURRENCY

The U.S. dollar is on a sprint, recovering somewhat after hitting a one-month low last week and gaining for the fourth session ahead of key inflation data coming out next week. At the same time, the British pound slipped a little lower before the Bank of England's upcoming policy meeting. The central bank is not expected to change interest rates during this meeting, but the market will be closely watching for any signals regarding a potential rate cut in June.
 

DAILY MARKET NEWS – 16-05-2024​

The CPI inflation report is here, and it shows a slight improvement, with headline inflation down to 3.4% from 3.5% last month, but still higher than January's 3.1%. This tiny change means the Federal Reserve is far from cutting interest rates in June, with odds dropping to just 2.7%. Core inflation, which excludes food and energy, fell from 3.8% to 3.6%, but remains well above the Fed's 2% target. Energy prices are among the biggest contributors, having increased by 7.2% this year, while food prices have been stuck at a 2.2% increase, raising doubts about the reported figures. Shelter inflation, now at 5.5%, is not accurate due to outdated lease data, masking the real impact on housing affordability. Although service inflation dropped slightly from 5.4% to 5.3%, it remains high, triggered by wage inflation in a labour market that appears weaker than official reports suggest.

EQUITY

Pop the champagne, because it's another all time high. Wall Street rallied, although dollar and Treasury yields fell after CPI came in softer than expected, enough to keep the two-cut narrative in sight. GameStop and AMC ended a short-lived two-day rally, while Chubb Ltd.'s gained over 7% to a record high after Warren Buffett's Berkshire Hathaway revealed a $6.72 billion stake.

GOLD

Gold prices are nearing record highs, primarily attributed to softer U.S. inflation data that sent the dollar lower and raised expectations for Fed rate cuts as soon as September. The prospect of lower rates boosted non-yielding gold's appeal, and in addition to the potential economic cooldown, it also increased safe-haven demand for gold.

OIL

Oil extended Wednesday's small, volatile gains after there were signs of stronger demand in the U.S., where data showed slower inflation than expected that could indirectly boost consumption. The U.S. crude oil, gasoline, and distillate inventories have also been reported to have fallen, reflecting higher fuel demand, although the IEA cited weak demand in developed nations as the reason for cutting its demand growth estimate by 140,000 barrels per day.

CURRENCY

The dollar steadied in London session after dropping to multi-week lows overnight, following a milder U.S. inflation report that brought Fed rate cuts back into focus, likely starting in September. Treasury yields also sank to six-week lows as traders reassessed the potential path of monetary policy. The euro fell lower as the ECB is widely expected to start cutting interest rates from record highs in June, eyeing up to three rate cuts this year.
 

DAILY MARKET NEWS – 30-05-2024​

Mortgage rates have been volatile recently. After dropping below 6.9% in mid-May, the average 30-year fixed rate has hovered around 7% for the past few weeks. Although this is much lower than last fall's 23-year high of over 8%, homebuyers are still hoping for further reductions. Significant drops in rates are unlikely unless the Federal Reserve cuts interest rates in response to sustained lower inflation. Experts also emphasise the need for reduced consumer spending and a decline in the 10-year Treasury yield. However, a sharp drop in rates could reignite competition, potentially pricing some buyers out of the already limited housing market.

EQUITY

Stocks fell broadly on Wednesday, with the Dow Jones Industrial Average dropping over 1%. The energy and industrial sectors were hit, with airline stocks like American Airlines crashing after cutting profit guidance, and financial sectors down as economic slowdown fears from the GDP report that is coming. Offsetting some losses, Marathon Oil gained on news of its $17.1 billion all-stock acquisition by ConocoPhillips, and Dick's Sporting Goods rallied after raising its full-year forecast.

GOLD

Gold prices remained relatively flat on Thursday as investors braced for the release of the PCE price index to gauge Fed's next action. While gold is traditionally viewed as an inflation hedge, rising interest rates increase the opportunity cost of holding the asset. Goldman Sachs maintains a selective bullish stance on commodities, citing solid demand growth and expectations of structural upside in industrial metals and gold.

OIL

Oil prices down on Wednesday after three straight sessions of gains. Both benchmarks are poised for monthly losses, with Brent futures on track for a decline of over 5% and WTI futures set for a slide of more than 3%. The broader risk-off environment and larger-than-expected drawdown in U.S. crude inventories, as indicated by the API data, put pressure on oil prices. OPEC+ producers are considering extending their current supply cuts when they meet on June 2nd.

CURRENCY

The U.S. dollar index surged past 105, blamed on rising longer-dated U.S. Treasury yields, driven by disappointing auctions and foreign offloading. The stronger dollar aligned with firmer short-term U.S. rates, reflecting recalibrated expectations of the Fed's policy easing stance. The Fed's Beige Book struck a dovish tone, highlighting economic pessimism and shifting labour market dynamics. The yen slipped against the dollar but stayed close to recent highs ahead of Tokyo's inflation report while yuan slid as China's central bank allowed it to hit six-month lows.
 

DAILY MARKET NEWS – 05-06-2024​

The Bank of Japan is expected to reduce its purchases of Japanese government bonds, which are currently above 6 trillion yen per month. This reduction in bond purchases is seen as a softer form of monetary tightening compared to outright rate hikes. Although some analysts predict another rate hike to counter the depreciation of the Japanese yen, UBS argues that currency market management falls more under the purview of the Ministry of Finance. UBS forecasts the BOJ to hike rates by October to 0.25%, but a surprise hike in July cannot be ruled out due to recent wage data for April that show promising signs of improved consumption and higher inflation. The gains in base pay are expected to spread to employees of smaller firms, but workers' earnings are still lagging behind rising costs.

EQUITY

The Dow rose after job openings fell to a 3-year low of 8.1 million in April, boosting bets on a September rate cut as Treasury yields declined, although there is more job data coming. Intel unveiled new AI chips to try catching Nvidia and AMD, while Tesla's China EV sales dropped 6.6% in May. GameStop rallies were short-lived after investor Keith Gill showed his position. Nikkei fell on wage growth, while India's markets tanked after the BJP secured a slimmer-than-expected majority in elections, raising reform concerns.

GOLD

Gold prices edged up slightly on Wednesday, supported by lower Treasury yields that fell on a cooling labour market. However, prices remained rangebound as investors awaited more labour market data and the central bank's decision, namely the Bank of Canada and the European Central Bank. Indian tanker equity could drive up physical demand for gold as investors shift to commodities. However, Swiss gold reported declining exports as higher shipments to India and Türkiye were outweighed by lower exports to China and Hong Kong.

OIL

Oil prices fell close to four-month lows after OPEC+ decided to boost supply in October, which some view as committing to a 500,000 barrels per day hike in Q4 2024. However, Saudi Arabia said OPEC+ could pause or reverse the supply increase if demand is too weak. Rising U.S. stocks could further dent oil demand views, with Memorial Day data indicating the start of the summer driving season.

CURRENCY

The dollar has rallied over 3% this year on sticky inflation that keeps interest rates higher for longer. The strong dollar is weighing on the euro despite eurozone economic data turning positive, which may see the Bank of England cut rate on Thursday. The yen remains weak, while the yuan saw modest gains on solid service data. However, the dollar's strength should endure if U.S. inflation picks up again and forces a short Fed easing cycle, leaving the dollar overvalued.
 
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