Daily Market News by Golden Brokers

[Ariff Azraei]

Visit our website for more updates and analysis: https://goldenbrokers.my/en/daily-market-news-751

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.

 

[Ariff Azraei]

Visit our website for more analysis and updates: https://goldenbrokers.my/en/daily-market-news-752

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.

 

[Ariff Azraei]

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.

 

[Ariff Azraei]

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.