The recent US GDP print has sparked a variety of market reactions, with the most notable being a significant increase in US yields. This increase comes as a response to the anticipation of higher interest rates persisting for a longer duration, a prospect brought about by the strong performance of the GDP [1]. This development, however, has its complications. While it has eased recessionary fears, the possibility of enduring high interest rates has curbed the risk appetite in financial markets [1].
This sentiment is reflected in the performance of various assets. Gold prices have seen a drop due to rising US yields, although they have experienced a slight recovery. However, the strong US dollar is restricting the potential growth of gold prices [1]. Contrastingly, crude oil is faring well, primarily due to the US’s positive economic outlook and OPEC+’s limited supply, with the WTI contract nearing $80 [1].
In Europe, the Central Bank has raised rates as anticipated, but uncertainties about future rates, coupled with a stronger US dollar, have caused the euro to fall back [1]. Similarly, the Australian dollar has taken a hit due to lower-than-expected retail sales and Producer Price Index (PPI) data [1].
With the US Core PCE price index expected to be released soon, all eyes are on this data as potential surprises could further impact interest rates and consequently, the dollar’s strength [1][2]. This situation could potentially disrupt the current strategies of dollar bulls and put the Federal Reserve in a challenging position [2][3].
References: [1] US GDP Print Throws A Spanner In The Works – BusinessToday [2] Bond Bloodbath Supports Dollar [3] Stronger US data maintains goldilocks scenario for risk …
Crude Oil Prices Have Been Surging
Crude oil prices have been surging, buoyed by the optimistic economic outlook in the U.S. which is expected to bolster oil demand[1]. Concurrently, controls implemented on the supply side by OPEC+ have also contributed to the price surge. These controls include output cuts from major oil producers like Saudi Arabia and Russia, which have resulted in a total reduction of about 5% of global oil demand[2]. These factors have driven oil prices to a nine-week high, with Brent futures settling at $78.47 a barrel, the highest since May 1, and U.S. West Texas Intermediate crude settling at $79.69, the highest since April 25. This is a level that has not been seen since April.
References: [1] US GDP Print Throws A Spanner In The Works – BusinessToday [2] Oil prices up 3% to 9-week high on supply concerns [3] Oil Market Report – May 2023 – Analysis
Dow Jones Industrial Average saw a significant drop of 237 points, ending a historic 13-day rally
On Thursday, July 27, 2023, the Dow Jones Industrial Average saw a significant drop of 237 points, ending a historic 13-day rally[1]. The Dow’s decline of 0.67% marked the end of its longest winning streak in years[2]. This downturn also affected other major indexes, with the S&P 500 and the Nasdaq Composite falling by 0.64% and 0.55% respectively[2]. Despite the setback, market sentiment remains largely positive due to strong corporate earnings, such as Meta Platforms’ better-than-expected results[2]. However, Honeywell’s shares took a hit due to lighter revenue, falling by more than 5%[2]. Investors are still optimistic, but future moves by the Federal Reserve will be closely watched[2].
References: [1] Stock market today: Live updates [2] Dow Loses Over 200 Points To Snap Historic 13-Day Rally … [3] Dow loses more than 200 points Thursday to snap historic …
