Daily Market News by Golden Brokers

[Ariff Azraei]

DAILY MARKET NEWS – 17-07-2024​

After the failed assassination attempt on former president Trump changed sentiment that his next presidency is probable, the newly appointed VP may have the opposite effect instead. J.D. Vance's previous criticism of Trump in 2016 is seen as hypocritical, despite his current reversion to supporting Trump. The market's reaction to Trump's increased likelihood of re-election and his VP pick has been mixed. Investors are particularly focused on potential changes in international trade relations, especially with countries like Taiwan and China, which could significantly impact global supply chains and technology sectors. This was based on isolationist or protectionist stance under the old Trump administration that may repeat if he is reelected.

EQUITY

Taiwan and China stocks crashed after Trump's comments on Taiwan paying for U.S.-provided defence. Wall Street's strong performance limited broader losses, with the Dow jumping 1.85% to record close with rumours that investors are shifting from tech to economically sensitive (small-cap) sectors over valuations and interest rate cuts. Key chipmakers like TSMC fell ahead of crucial earnings reports, while the banking index climbed 3% after good results from banking giants, namely Goldman Sachs, Blackrock, and Morgan Stanley.

GOLD

Gold prices closed above the all-time high on Tuesday and continued to test a higher trendline before retreating slightly. Soft inflation data and dovish Fed signals, along with a high chance of a Trump presidency, drove these gains, as fear is nigh towards the Chinese market. Fed Chair Powell's comments on easing inflation have also boosted rate cut bets, and lower rates make gold more attractive by reducing opportunity costs. Gold to the euro, however, has not reached an all-time high, an antithesis to continued gold strength that is already at excessive buying levels.

OIL

Oil prices dipped on Tuesday but are recovering in London session. The drop stems mainly from China's weakening demand and weaker retail sales in June, along with a 3.7% drop in refinery output year-on-year. The IEA points out that China's lacklustre consumption is dragging down global oil demand growth. Incoming crude oil inventories data on the other hand, will tell whether domestic demand will stay in a drawdown.

CURRENCY

The yen may have been through another round of intervention that saw the price go to 156 yen per dollar. Sterling hit a one-year high after UK inflation data exceeded expectations. The dollar weakened as markets anticipated a September Fed rate cut. New Zealand's inflation remained high, but rate cuts are still expected. The Taiwan dollar and Chinese yuan were particularly hurt by Trump's remarks about Taiwan's defence payments. The market is looking forward to the ECB interest rate decision for Thursday.

 

[Ariff Azraei]

Home prices have reached a new record high, with a 4% year-over-year increase. Low inventory levels and sustained high prices even in areas with increased listings where inventory remains 25% lower than pre-pandemic levels, which is propping up prices. Mortgage rates are currently around 6.8% and are expected to stay between 6.5% and 7.5%. The Federal Reserve projects one rate cut in 2024, likely in September, with more cuts in the year after that. Mortgage rates may drift down to the 6% range by Q4 2024 if September cuts become a reality. However, affordable housing remains a distant goal, requiring lower home prices, higher wages, and lower interest rates.

EQUITY

Stocks pulled back after a positive Monday as tech giants' earnings were closely monitored to gauge the buzz about a possible shift from megacaps to underdog sectors. Companies missing targets took a beating, while even strong performers saw limited gains. Energy stocks were the day's biggest losers as oil prices spiralled. Asian markets have also seen losses , tracking subpar earnings from Tesla and Alphabet.

GOLD

Gold prices edged up for the second day after taking a beating last week, retracing from an all-time high. India slashed gold import duties from 15% to 6%, potentially boosting jewellery manufacturing and demand for gold in the world's second-largest bullion consumer. The reasons behind this shift were rising smuggling, a lower deficit, and increased imports.

OIL
Oil prices are seeing hope after a woeful start to the week. Brent crude bounced back to around $81.5 per barrel after a four-day slump after barely reaching a fresh breakout level. This uptick was mainly due to a higher drawdown in U.S. oil stocks and ongoing wildfires in Canada threatening oil production. Traders are keeping an eye on the upcoming OPEC+ meeting, though no major changes are expected.

CURRENCY

The U.S. dollar showed a mixed picture, gaining overall with the dollar index reached a two-week high. but weakening against the yen. Comments from a Japanese politician about normalising monetary policy boosted the yen as well as suspected intervention behind the scene. The euro and pound declined against the dollar while China's surprise interest rate cuts negatively impacted the Australian and New Zealand dollars. These cuts were seen by some as a sign of economic desperation in China, possibly triggering a carry trade into the dollar.

 

[Ariff Azraei]

DAILY MARKET NEWS – 01-08-2024​

The Federal Reserve has concluded its FOMC meeting and, as expected, decided not to cut interest rates. However, market expectations indicate a 100% chance of a rate cut at the next meeting on September 18th. According to the CME fed tool, there's an 86.5% chance of a trim and a 13.5% chance of a drastic cut. The Federal Reserve's projections outline their expectations for various economic indicators. For 2024, they project core PCE inflation at 2.8% and plan to lower interest rates to 5.25%. The Fed anticipates continued rate cuts in the coming years, with projections of 4.25% by the end of 2025 and 3.25% by the end of 2026. Fed Chair Powell stressed that no decision has been made and the focus remains on upcoming CPI and employment data, noting that the economy isn't currently signalling for drastic measures.

EQUITY

With July closing, the market has seen a significant shift known as the "Great Rotation," last month, with investors moving away from big tech stocks into value stocks and small caps. The overall market performance for the year remained positive, but The S&P 500 failed to close above the previous month's high and Nasdaq suffered, while the Dow and smaller cap indices performed better. This rotation was specifically obvious with gains in healthcare, real estate, and financials, while the information technology and communication services sectors lagged behind.

GOLD

Gold prices closed higher in July, slightly lower than previous record highs in May. Expectations of a looser US monetary policy have fed into increased safe-haven demand. Gold advanced in four of the last five months, up 5.7% in the most recent month, with the strongest push being March. The current economic and political climate strongly favours gold prices as mounting risk becomes apparent.

OIL

Oil prices jumped on Thursday, building on Wednesday's almost 4% gains on growing fears of a bigger war in the Middle East compounded by a weaker dollar right after FOMC. Hamas leader Ismail Haniyeh was killed in Iran, while a top Hezbollah commander was taken out in Beirut. These killings have struck fears of a widening conflict with Iran, which could potentially try to block the Strait of Hormuz, a chokepoint for global oil and gas trade. On top of that, U.S. oil stockpiles dropped more than expected, pushing prices even higher.

CURRENCY

The dollar seems to be recovering after receiving a hard blow after FOMC, where the Fed kept rates steady but hinted at a September cut. The euro and pound both took a hit against the dollar, with the pound dropping to a three-week low as everyone waited on the Bank of England's next move with growing expectation of a cut. Japan's yen, though, had a great month, gaining in July, bulk of it came from potential Japan intervention in compounding effect with the growing gap or direction between U.S. and Japanese interest rates that got smaller, leading to carry trade from dollar to yen.

 

[Ariff Azraei]

DAILY MARKET NEWS – 06-08-2024​

Japanese stocks witnessed a dramatic rebound on Tuesday, following their worst single day decline since the 1987 Black Monday crash. The Nikkei 225 index recovered over 8% to above 34,000, while the broader Topix index gained 8% to 2,410. This recovery came after both benchmarks had crashed more than 12% the previous day. Technology and AI-related stocks, such as Tokyo Electron, Advantest, and SoftBank Group, drove the rebound, though they were still below their mid-July highs. The yen's strength, that came from the yen carry trade, had pressured Japanese equities, but the currency's rally showed signs of easing after hitting 142 yen against the USD.

EQUITY

The U.S. stock market took a nosedive on Monday, with the Nasdaq and S&P 500 both closing over 3% in negative territory. This drastic selloff came on the heels of last week's sell-off, triggered by growing recession prospects. Weak economic data, including a plummeting job market, supported the case. Big tech stocks like Apple, Nvidia, and Microsoft were hit hard after Warren Buffett's Berkshire Hathaway cut its Apple stake in half, stacking most of its wealth in cash and bonds. The market's fear gauge has also spiked to levels not seen since late 2020.

GOLD

Gold prices crashed along with the dollar on Monday, although it now sees support, rebounding off around $2,364 per ounce. The precious metal's appeal as a safe-haven asset remains stronger during the market risk-off and rate adjustment cycles. Investors are weighing the possibility of a recession, with weak economic data and disappointing corporate earnings contributing to a risk-averse sentiment in the markets. Bullion could also be affected by the return of cash flow into its industry, that can regain its production capacity.

OIL

Brent crude oil prices have been purging, reaching 8-month lows before rebounding due to various global factors. Production halts at Libya's largest oil field, Sharara, due to protests have supported prices. However, both the US and China have reported contractions in their manufacturing sectors, heightening concerns related to lowered oil consumption and recession fears.

CURRENCY

The global currency market saw enormous volatility, with the Japanese yen and Swiss franc showing strong movement. The yen initially strengthened to a seven-month high against the dollar, driven by the Bank of Japan's interest rate hike and the unwinding of carry trades. However, the yen later stabilised as market sentiment shifted, with the dollar regaining some ground against major currencies. Cryptocurrency markets were not immune to these volatile moves, with Bitcoin and Ethereum going through bigger slumps. The market is hoping for an emergency feed meeting, but it is unlikely to manifest.

 

[Ariff Azraei]

DAILY MARKET NEWS – 07-08-2024​

The Bank of Japan's deputy governor, Shinichi Uchida, has spared excessive volatility by stating that the BoJ will put brakes on interest rate hikes during unstable market conditions. This goes against what the governor, Kazuo Ueda, said last week after they surprisingly raised rates that made carry trades expensive, ensuing panic selling to cover their debt. Uchida stressed that they need to keep things as they are for now because markets are all over the place. He pointed out that a stronger yen and wild stock market swings would affect their decisions. When Uchida said this, it made the dollar jump against the yen and restored Japanese stocks. Some experts think this means the Bank of Japan might hold off on more rate hikes, wondering if they can really raise rates much if they're always watching how the market reacts.

EQUITY

Global markets saw a broad rebound on Tuesday, recovering from Monday's sharp sell-off, along with a VIX at the last Friday level. The Bank of Japan and positive sentiment from Federal Reserve officials' comments played a crucial role in calming markets. However, some tech companies, such as Super Micro Computer and Airbnb, fell after being hit by poor earnings reports. All major S&P 500 sectors ended in positive territory, with real estate and financials leading the gains.

GOLD

Gold prices have been mixed and largely flat, finding support at $2380 and rebounding slightly. The precious metal has been in a sell-off along with other asset classes on Monday as investors shifted towards bonds, contrary to gold's traditional role as a safe haven, instead serving as liquidity. While some buyers are supporting the price, there's hesitation to push it higher, and increased flows into gold exchange-traded funds have been noted.

OIL
Crude rebounded slightly, as the market showed signs of tightness, supply concerns, and a general rebound in risk appetite across financial markets. The situation in Libya, where the largest oil field is going through lesser production capacity, and ongoing tensions in the Middle East are contributing to supply concerns. The EIA has also revised down its global crude consumption estimate for 2025 to 104.5 million barrels per day, although it expects prices to reach $85–$90 per barrel by year-end.

CURRENCY

The U.S. dollar has been recovering from earlier sell-offs, rising to 103.32, moving away from the seven-month low of 102.15 it touched on Monday. Traders have adjusted their expectations for Federal Reserve rate cuts, now pricing in about 105 basis points of easing by year-end. Other major currencies are mixed with the euro easing, while sterling edged up, though still near a five-week low. The Australian dollar strengthened after the central bank ruled out rate cuts for the year.

 

[Ariff Azraei]

DAILY MARKET NEWS – 15-08-2024​

Markets cheered this week as U.S. inflation came in as expected and was lower year over year. The July consumer price index clocked in at 2.9% compared to last year, beating the 3.0% forecast. Investors took this as a sign that the Fed might ease up on interest rates soon, although it's far from the 2% target, and stocks went on a bit of a tear. Meanwhile, bonds picked up on the inflation news, with yields taking a dip, and the dollar lost some ground against other major currencies. Investor focus has now shifted to the Federal Reserve's forthcoming decisions, with some market participants anticipating rate cuts as early as September and as much as a 36% chance of a 50 bps cut.

EQUITY

The S&P 500 notched five winning days in a row, and the good vibes spread to Asian markets too, although worries about China's economy kept things from getting too excited. The VIX retreated to almost 15, historically the fastest return to a low-volatility condition. Starbucks closed only 2% lower after an initial 24% expansion to the upside after acquiring Chipotle CEO. The Kellanova agreement for confectionary giant Mars acquisition made it Wednesday's best performer, with another 30% potential upside for the purchase amount.

GOLD

The gold price showed a slight recovery after inflation data dragged it lower, that may have also triggered profit-taking activity. This uptick is attributed to a ranging U.S. dollar and Treasury yields. Gold remains below the $2,500 mark, although a new all-time high is hopeful for bigger rate cuts.

OIL
Oil prices stabilised on Thursday, with a slight increase driven by optimism that potential U.S. interest rate cuts could boost economic activity and fuel consumption. However, weaker global demand saw prices drop for two consecutive sessions due to unexpected increases in U.S. crude inventories, which eased fears of Iranian retaliation as world leaders called for peace.

CURRENCY

The U.S. dollar dipped following the release of July's inflation data but perked back up and continued in consolidation as the market awaited retail sales data to gauge market direction. Although a 50 basis-point cut is considered unlikely, it would be volatile if more participants priced it in. For a more substantial rate cut to occur, the upcoming August labour market report would need to show significant weakness.

 

[Ariff Azraei]

DAILY MARKET NEWS – 22-08-2024​

Canadian National Railway and Canadian Pacific Kansas City have locked out approximately 10,000 unionised workers in an unprecedented concurrent work stoppage that has halted most rail freight operations in Canada. It's expected to have far-reaching effects on North American supply chains, potentially costing over C$341 million per day, according to Moody's, affecting various sectors, including agriculture, mining, and manufacturing, with about a third of the traffic crossing the U.S.-Canada border. While the rail networks south of the border will continue to operate, the incident threatens to cripple shipments of essential commodities like grain, potash, and petroleum products. The alternative, trucking industry, which faces surging demand and rising freight rates, lacks the capacity to fully replace rail distribution, posing a significant risk to both the Canadian and U.S. economies.

EQUITY

The U.S. stock market saw minimal gains on Wednesday, powered by investor reactions to the minutes from the Federal Reserve's July meeting, which suggested a likely interest rate cut in September if economic data aligns with expectations. Sectors such as consumer discretionary and materials led the charge, while financials and energy lagged behind. Retailer Target Inc. was up 10%, and equipment manufacturer Keysight Tech gained 14% on better earnings and raised guidance.

GOLD

Gold prices are on slight declines but continue to hold near record highs, guided by a weaker U.S. dollar. Analysts at MUFG suggest that the dollar's weakness stems from rate cuts, with Fed Chair Jerome Powell's upcoming Jackson Hole symposium speech in scope. The weaker dollar has boosted gold, traditionally seen as a hedge in times of low interest rates, with some forecasts suggesting prices could rise to $2,750 per ounce by the end of the year.

OIL
The global oil market is facing a bearish outlook on prices, with analysts at Piper Sandler highlighting continued weak demand, particularly from China, where industrial activity and transportation demand fell off. OPEC and its allies are struggling to stabilise prices, with concerns that they may need to implement further production cuts. However, next week's inventories report could mitigate the loss as the incident in Canada encourages increased fuel consumption.

CURRENCY

The dollar's decline continued, albeit slower now that investors are looking forward to Fed Chair Powell's speech and flash PMIs, with the euro and sterling reaching their highest levels since July 2023. Meanwhile, the Japanese yen also weakened slightly following the Bank of Japan's recent interest rate hike, though further increases in rates can be expected by year-end.

 

[Ariff Azraei]

DAILY MARKET NEWS – 29-08-2024​

Nvidia, the AI kingmaker, set records with $30 billion in Q2 revenue, but its shares fell 7% in after-hours trading after missing forecasts for next quarter. Data centre revenue grew to $26.3 billion, but doubts over potential growth slowdowns and capacity issues remain. The company's gross margin slipped to 75.1% from 78.4%, with further shrinkage expected as costs rise and new projects fall out of VC's favour due to its profit horizon. Adding to the risk, Nvidia's next-gen Blackwell AI chips might face a three-month delay due to design flaws. However, things are looking up after Nvidia announced a $50 billion share buyback, expressing long-term confidence even as market sentiment wavers, especially in the AI business.

EQUITY

The U.S. stock market closed lower on Wednesday, led by the technology sector, with other chip stocks and major tech companies dragging the market down. Investors are now looking ahead to Thursday's U.S. GDP report and Friday's PCE index release, which could provide insights into the Federal Reserve's future interest rate decisions.

GOLD

Gold prices drove lower after being challenged by a strong resistance level at $2528, a few dollars below the all time high as prices consolidated in a high volatility fashion that is expected to severely retrace or keep breaking higher highs. The overpriced nature of gold this season is expected to temporarily benefit from rate cuts before repricing lower.

OIL

Crude oil prices may rebound as they reach a significant support level following two consecutive days of losses, primarily supported by the sudden shutdown of Libyan oilfields given escalating political tensions in the OPEC nation. The production halt, which has affected nearly 500,000 barrels per day, has temporarily overshadowed persistent concerns about weakening demand in major economies like the United States and China. It could, however, potentially reverse due to a smaller drawdown in U.S. oil inventories as the summer travel season winds down.

CURRENCY

The dollar edged higher on Thursday, recovering from recent lows. The euro retreated following preliminary data confirming lower inflation in German states, increasing expectations for more rate cuts. The Japanese yen is steadying after a strong rally earlier in the week, with traders closely monitoring upcoming economic indicators to further confirm a bigger cut or what is promised.

 

[Ariff Azraei]

DAILY MARKET NEWS – 05-09-2024​

It seems like a distant memory when the yield curve is inverted and recession alarmists are widespread. The relationship between the highlighted 10-year and 2-year Treasury yield just now normalised on Wednesday, reversing a classic recession indicator. One of the factors stems from a sharp decline in job openings and dovish stance from the Federal Reserve. An inverted yield curve, where shorter-duration yields are higher than longer-duration ones, has historically signalled most recessions since World War II. However, this event does not necessarily indicate positive economic times ahead. In fact, the curve typically reverts before a recession hits, suggesting the real challenge is now here. The yield curve inversion had been the longest on record, lasting 544 consecutive trading days as of Wednesday.

EQUITY

U.S. stocks ended slightly lower as the volatility index went slightly higher, influenced by job openings that fell to a 3.5-year low in July. Utilities and consumer staples stocks led gains, while energy and technology sectors dragged as giant Nvidia's shares continued to fall by 1.7% even though rumours of a Department of Justice subpoena were denied. Other major tech stocks also declined, including Apple, Microsoft, Alphabet, and Amazon.

GOLD

Gold prices shot up to break an important resistance level at $2507 ahead of crucial US jobs data. A drop in job openings and weakening US factory activity initially provided the momentum for the current rally. Investors now anticipate 125 basis points in rate cuts over the Fed's remaining three meetings this year, up from the previous consensus of 100 basis points.

OIL
Oil prices edged up from multi-month lows after a significant drawdown in U.S. crude inventories. The American Petroleum Institute reported a larger-than-expected 7.431 million barrel extracted in U.S. crude stocks, far exceeding consensus. Even with these factors, both Brent and WTI crude futures settled lower on Wednesday, suggesting an abnormal slowdowns in major economies and their impact on oil demand.

CURRENCY

The U.S. dollar crashed against major currencies after disappointing economic data raised bets for higher interest rate cuts, with market participants expecting a 45% chance of a 50 basis point rate cut at the Fed's upcoming meeting, with over 100 basis points of cuts priced in by year-end. Investors are closely watching upcoming economic indicators, particularly Friday's nonfarm payrolls report, which could further influence market expectations and currency movements.

 

[Ariff Azraei]

DAILY MARKET NEWS – 10-09-2024​

China's exports grew by 8.7% year-on-year in August, primarily by manufacturers rushing orders ahead of anticipated tariffs from trade partners. However, imports increased by only 0.5%, missing expectations and pointing to weak domestic demand. The mixed trade data highlights Beijing's challenge in boosting overall growth without overreliance on exports, especially given tightening consumer spending. China faces growing trade barriers from various countries, including the United States, European Union, Canada, India, Indonesia, and Malaysia, which could threaten its export momentum. Some analysts believe China's exports may remain strong due to the relative weakness of the yuan and exporters' ability to reroute goods to avoid tariffs. Nevertheless, there is remaining doubt on the sustainability of China's export growth and overall economic recovery.

EQUITY

Wall Street's major indexes rebounded on Monday, with all three gaining over 1% with bargain purchases after the previous week's sell-off. Apple's new release caught attention but not the right one after internet users were disappointed at the sight of the same form factor. Nvidia on the other hand, gained 3.5% in a wide market gain. Palantir rose 14% and Dell Technologies added 3.8% on news that they will join the S&P 500 index on September 23rd.

GOLD

Gold hovers around $2,500 per ounce ahead of key U.S. inflation data. The Consumer Price Index release on Wednesday will likely influence the Federal Reserve's rate cut decision. Expectations are split between a 25 and 50 basis point reduction at the upcoming meeting. Lower inflation could boost gold prices by increasing the likelihood of a larger rate cut.

OIL
Oil prices are still weighed down by weaker Chinese demand and global oversupply concerns, despite supply disruptions from Tropical Storm Francine in the Gulf of Mexico that offered some relief. The storm has led to the closure of some Texas ports and the suspension of oil production at several offshore platforms, putting at least 125,000 barrels per day of oil capacity at risk.

CURRENCY

The US dollar is expected to recover in the coming months due to global economic risk and worsening liquidity conditions, according to BCA Research. UBS, however, advises investors to sell the dollar in the short term, anticipating a more bearish medium-term outlook for the currency. Asian currencies see little volatility, while investors are looking ahead for key US inflation data.