DAILY MARKET NEWS - 07-02-2024

Ariff Azraei

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According to the U.S. Energy Information Administration (EIA), U.S. power consumption will reach new records in 2024 and 2025. The latest report shows an increasing use of electricity for heat and transportation. The demand for natural gas will also rise, while coal’s share of power generation will decline as renewable sources gain more prominence. Nuclear power is expected to maintain its share of the energy mix, while power sales will grow for residential and commercial customers but decrease for industrial customers.


Wall Street is up slightly as stronger corporate earnings offset the weakness in tech and chip stocks. Eli Lilly, Palantir, and Spotify impressed on the earnings stage, although capital gains vary, while NVIDIA and AMD pulled down the semiconductor sector on profit-taking. Chinese stocks show hopes of more government support, with the Shanghai index rebounding from multi-year lows.


Gold prices consolidated as investors awaited more clarity from the Fed on its monetary policy outlook. The Fed officials expressed mixed views on the timing and pace of interest rate cuts, remaining data-dependent on U.S. economic performance and inflation. Gold faces resistance at $2,055/oz, looking for a break to determine further direction.


U.S. crude oil production and demand dropped in January due to the cold weather but are expected to recover in February. However, the EIA projects no growth in U.S. output until 2025. OPEC, on the other hand, sees strong oil demand and a supply deficit until next year and urges more investments in the sector. The geopolitical developments in the Middle East and Russia are still largely affecting price movements.


The U.S. dollar pulled back after reaching a three-month high, as the Fed’s hawkish stance on interest rates and strong economic data reduced the reason for rate cuts. The euro and the Aussie gained as the ECB and the RBA sees no rush to ease policy, while the pound rebounded from a seven-week low. The dollar’s strength depends on how much it cuts rates compared to other central banks in the next two years.