DAILY MARKET NEWS - 06-07-2023

Ariff Azraei

Fight with text and later with a fist. Meta's CEO, Mark Zuckerberg, launched Threads, a Twitter-like companion app for Instagram, escalating his rivalry with Elon Musk a week after being challenged by the SpaceX CEO to a cage fight. Within two hours, the app garnered 2 million sign-ups while Meta's share is up almost 3%. Threads allow users to make short text posts, like, repost, and reply. The launch presents an opportunity for Meta to compete with Twitter and divert ad revenue as more social media content focuses on short videos and text-based interactions. Success hinges on attracting Instagram users rather than converting Twitter power users, but it is not impossible as Twitter is temporarily limiting daily tweet views that are taken negatively by users.
Wall Street's main indexes were slightly down as investors digested the Fed's meeting minutes ahead of vital labour data. The minutes showed the Fed's decision to hold interest rates steady for now while investors still anticipate rate hikes at the next meeting. Chip stocks were impacted by China's embargo, while mega-cap stocks, like Meta Platforms, have been driving market gains. The leisure sector was down, indicating lower consumer demands and cutting back on unnecessary spending.
Gold prices stabilised on Thursday following a decline as Federal Reserve minutes revealed support for additional rate hikes. Despite worsening economic conditions, investors have favoured the US dollar as a safe haven, anticipating further interest rate increases that would push the dollar higher. Technical analysis shows prices reverse after a triple top and break below support.
Oil prices in Asian trade rose slightly due to a larger-than-expected draw in U.S. inventories and tighter supplies. U.S. crude exports have increased to compensate for production cuts by Saudi Arabia. However, weak economic indicators from China and fears of a U.S.-China trade war escalation have undermined expectations for an oil demand recovery this year.
The U.S. dollar strengthened after the Federal Reserve's June meeting minutes reinforced the likelihood of an interest rate hike in July. However, the upcoming jobs report will be important for assessing the labour market. The euro weakened while the Chinese yuan faced pressure due to an economic slowdown and trade tensions. Other Asian currencies declined, while the Japanese yen remained resilient amid intervention speculation.

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