Daily Market Analysis from ForexMart

[KostiaForexMart]

The global economy is slowing down, risk appetite is decreasing, and the USS is experiencing increased demand. Overview of USD, CAD, JPY

Activity in the currency market remains subdued in the absence of significant economic reports, with the main focus on the US inflation report on Thursday, which could lead to more pronounced movements.

Risk assets are still under pressure due to weak data from China, indicating a decline in global demand. Following Tuesday's disappointing external trade data, it was revealed that China's economy has slipped into deflation, with inflation turning negative at -0.3% YoY in July. Consumer prices rarely decrease in China, and given that other countries continue to grapple with high inflation, this is a worrying sign for the global economy as a whole.

The US dollar remains the leader in the currency market, playing the role of the primary safe-haven currency in the current conditions.

USD/CAD
The Canadian dollar has received several sensitive blows and lost its positive momentum against the USD. The labor market report for July showed a decrease in the number of new jobs (-6.4K), while an increase of 21.1K was forecasted, which is particularly noticeable against the backdrop of strong growth in June (+59.9K).

The unemployment rate rose from 5.4% to 5.5%, and more importantly, the average wage growth increased from 3.9% YoY to 5% YoY. Wage growth is usually a bullish factor as it fuels high inflation, but with simultaneous economic slowdown, this factor begins to work against it.

The Ivey Purchasing Managers Index (PMI) for July dipped into contraction territory, hitting a multi-month low of 48.6 points. This indicates an economic slowdown. However, the price sub-index rose to a 5-month high, increasing from 60.6 points to 65.1 points.

The Canadian economy has suddenly lost the advantage that allowed for expectations of sustainable CAD growth. Inflation remains strong, and to contain it, it is logical to anticipate further actions by the Bank of Canada. These expectations are in favor of CAD strengthening. However, simultaneously, a slowdown in activity with further tightening of monetary policy could lead Canada's economy into a recession. This, on the contrary, limits the resolve of the Bank of Canada.

The unstable equilibrium deprives the Canadian currency of its advantage, weakening the bullish momentum.

The net long position on CAD has increased slightly over the reporting week, with positioning being neutral. However, the calculated price after the release of the disappointing employment report turned upwards and moved above the long-term average.

The sharp upward turn in the calculated price reduces the chances of a confident resumption of USD/CAD decline. Currently, the pair is trading near the middle of a corrective bearish channel. If no additional arguments arise from the Canadian side, the likelihood of further growth will remain high. The long-term target is the upper band of the channel at 1.3690/3720, with support at 1.3350/70.

USD/JPY
The key question that will determine the fate of the Japanese yen remains how resolutely the Bank of Japan is prepared to act in order to reduce domestic inflation. Alternatively, the Bank might continue adopting a wait-and-see position, resorting to adjustments to the current monetary policy.

Possible hawkish steps by the BOJ involve two potential actions - either a complete abandonment of the yield curve control (YCC) policy or a withdrawal from negative interest rates. Any actions in this direction will be interpreted by the market as a hawkish signal, leading to yen strengthening. Conversely, maintaining the current policy will inevitably contribute to further yen weakening.

The recent comments from BOJ officials after the July 28 meeting are cautious and do not provide grounds to expect any decisive steps. For example, BOJ Deputy Chief Uchida Shinichi stated at a press conference that the Bank is "considering an exit from monetary easing but does not see reasons for any actions in the foreseeable future," and that the decision is still "far off."

In other words, the "wait and see" policy remains in place. The yen can start to strengthen under current conditions only if negative trends in the global economy intensify, leading to a noticeable increase in demand for safe-haven assets. As long as there is no reason for such a scenario, there is no reason for yen strengthening.

The net short position on the yen has slightly increased over the reporting week and solidified just above -7 billion, speculative positioning is confidently bearish. The calculated price is above the long-term average and aimed at continuation of growth.

The development of the upward movement for USD/JPY is still the main scenario, despite attempts at consolidation near the 143 level. A week ago, we identified the local high at 145.06 as the target for bullish momentum development and the upper band of the channel at 147.30/70 as the long-term target. These targets remain relevant and can only be adjusted in case of truly significant changes from the BOJ in its monetary policy. As long as changes are cosmetic, the dollar is objectively stronger in this pair.

 

[KostiaForexMart]

EUR/USD. Weekly preview. US retail sales, Fed minutes, ZEW indices

Over the course of the first two weeks of August, the EUR/USD pair has failed to establish a clear direction. Despite prevailing bearish sentiments, sellers have been unable to solidify their position at the base of the 9th figure, let alone breach the support level at 1.0870. All of this indicates that the bears are hesitant, who are eager to lock in profits as soon as the price dips below the 1.0950 level (the middle line of the Bollinger Bands indicator on the weekly chart). The significant events of the previous week, like China's foreign trade data, the downgrade of American banks' ratings by Moody's, and the US inflation reports, led to a certain level of volatility. However, once again, the price remained within the confines of the 9th figure, with a brief impulsive surge to 1.1062. The pair completed a circle and returned to it's previous positions.

The economic calendar for the upcoming trading week is relatively modest, although not entirely devoid of events. Let's review the main highlights of the next five days.

Monday - Tuesday
At the start of the trading week, the pair is likely to trade with the momentum of Friday. Monday's economic calendar is almost empty, with perhaps the German Wholesale Price Index being of interest. This indicator is expected to show a positive trend, but will still remain in the negative territory, both on a yearly basis (-2.6%) and on a monthly basis (-0.1%).

The main release on Tuesday is the US Retail Sales report. Positive dynamics are anticipated here. According to forecasts, retail sales volume in the US is expected to increase by 0.4% in July, following a 0.2% growth in June. Excluding auto sales, the indicator is also projected to rise by 0.4%. Additionally, the Empire State Manufacturing Index, which is based on a survey of manufacturers in the New York Federal Reserve District, will be released on Tuesday. Here, on the contrary, negative dynamics are expected, with the indicator predicted to decline to -0.3.

Furthermore, on Tuesday, Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, will be speaking. He could potentially generate increased volatility among the dollar pairs. Firstly, he holds voting rights in the Committee this year. Secondly, Kashkari has already commented on recent inflation releases, and his tone was rather positive. According to him, the US central bank has made "good progress" in combating inflation. If he voices similar rhetoric next week, the dollar might come under pressure again.

During the European session on Tuesday, traders should pay attention to the German ZEW Economic Sentiment indices. In particular, the business sentiment index for Germany in August is expected to remain at the July level of -12 points. The business expectations index is expected to deteriorate to -15 points (the worst reading since December 2022). The current situation index is also projected to worsen to -63 points (the lowest reading since November of the previous year).

Wednesday
On Wednesday, EUR/USD traders will focus on the minutes of the July Federal Reserve meeting. Recall that the outcomes of the July meeting did not favor the US dollar. Among all the possible scenarios, the Fed implemented perhaps the most dovish one. The US central bank tied the fate of the interest rate to the dynamics of key macroeconomic indicators. The central bank retained the key formulations of the accompanying statement in their previous form, and Fed Chairman Jerome Powell, during the final press conference, indicated that the September Fed meeting could end with either another rate hike or keeping it unchanged. He emphasized that the central bank in the fall will evaluate the entire set of macroeconomic data "with special emphasis on progress in the field of inflation." The Fed's indecisive stance was interpreted against the US dollar.

A hawkish tone in the minutes of the July meeting could provide support to the US dollar, especially since this meeting took place before the release of US inflation data for July. However, in my opinion, the document will likely reflect the Fed members' hesitant stance, considering the corresponding formulations in the final communique.

In addition, on Wednesday, the report on the volume of building permits issued in the US will be released (expected growth of 1.1%), as well as the industrial production report (also expected to grow by 0.3%, following two months of negative dynamics).

Thursday
On Thursday, traders should focus on the Philadelphia Federal Reserve's Manufacturing Index. The indicator has been in the negative zone since September 2022. According to forecasts, in August, the index will also remain below the "waterline" but will demonstrate positive dynamics, rising to the level of -9.8 points.

Furthermore, on Thursday, traders could also pay attention to the Initial Jobless Claims data in the US. Over the past two weeks, this indicator has been rising, and according to forecasts, this trend will continue: next week, the number of claims is expected to increase by 250,000 (last week - 248,000, the week before last - 227,000).

Friday
The economic calendar for the final trading day of the week is not packed with events for the EUR/USD pair. The only thing of interest is the eurozone inflation data for July. We will learn the final assessment of July's Consumer Price Index (CPI), which, according to forecasts, should match the initial assessment (a decrease in the Consumer Price Index and an increase to 5.5% in the core CPI).

Conclusions
The EUR/USD pair is in a hanging state. In order to develop a downtrend, sellers need more than just to establish themselves at the base of the 9th figure – they need to overcome the support level of 1.0870 – at this price point, the lower line of the Bollinger Bands indicator on the daily chart coincides with the upper and lower bands of the Kumo cloud. If the bears break through this price barrier, the Ichimoku indicator will form a bearish "Parade of Lines" signal, indicating the strength of the downward movement. This is not an easy task, considering the fact that over the last two weeks, the downward momentum has faded at the base of the 9th figure.

The bulls don't have an easy task either: they need to establish themselves above the 1.1050 mark – this is the upper line of the Bollinger Bands, coinciding with the Kijun-sen line on the same timeframe. In that case, the pair can move towards the 11th figure. However, throughout August, buyers only impulsively tested the 1.1050 target, afterwards they retreated, locking in profits. Given the relatively uneventful economic calendar for the upcoming week, we can assume that the pair will continue to trade within the range of 1.0950 – 1.1050, with periodic attempts to establish themselves at the base of the 9th figure.

 

[KostiaForexMart]

Growth in yields and stable inflation suggest further rate hikes. USD, EUR, GBP Review

The net short position in USD grew by $490 million to -$16.272 billion over the reporting week after a strong correction a week earlier. The decline is largely related to long positions on the euro, and in terms of other major currencies, the notable trend is selling across all significant commodity currencies (Canadian, Australian, New Zealand dollars, and also the Mexican peso). The yen and franc are slightly doing better, i.e., there is demand for safe-haven currencies and a sell-off in commodity currencies. Since long positions in gold have decreased by $4.5 billion, we can expect increasing demand for the US dollar.

PMIs for the eurozone, the UK, and the US will be published on Wednesday, which can significantly influence the rate forecasts of the European Central Bank, the Bank of England, and the Federal Reserve. Last week, we witnessed a clear uptrend in bond yields, suggesting increased demand for risk amid more upbeat economic reports. At the same time, we see a sharp deterioration in China's economy, which, on the contrary, points to slowing demand. This dilemma may be resolved after the release of the PMIs, so we can expect increased volatility.

EUR/USD
The final estimate confirmed that the euro area annual inflation rate was 5.3% in July 2023, with core inflation unchanged at 5.5%. Since there are no seasonal factors that could explain the price increase at the moment, it would be best to assume the most obvious explanation - price growth is supported by broad price pressures in the growing services sector.

Stubborn inflation supports market expectations that the ECB will raise rates in September, and this increase is already reflected in current prices. The strong labor market is also in favor of a rate hike.

After a sharp decrease a week earlier, the net long position in the euro grew by $1.275 billion, putting the bearish trend into question. The settlement price is below the long-term average, giving grounds to expect a continuation of the euro's decline, but the momentum has noticeably weakened.

A week earlier, we assumed that the bearish trend would continue. Indeed, the euro consistently passed two support levels, but did not reach the 1.0830 level. The resistance at 1.0960, which the euro can reach if a correction develops, is still considered in the long term. We assume that the trend remains bearish, and the 1.0830 level will be tested in the short term.

GBP/USD
Inflation in July fell from 7.9% to 6.8%. This is mostly due to the fall in the marginal price of OFGEM (Office of Gas and Electricity Markets) from 2500 pounds to 2074. Without this decline, inflation would have still fallen, but much less - to 7.3%.

Despite the sharp decline, inflation remains at a very high level, and further falls in the marginal price of energy carriers are unlikely. The NIESR Institute suggests that, among the possible scenarios for future inflation behavior, we should choose between "very high", assuming an average annual inflation of around 5% over 12 months, and "high persistence", which is equivalent to an annual level of 7.4%. Needless to say, both scenarios imply inflation higher than in the US, so the likelihood of a higher BoE rate remains, leading to a yield spread in favor of the pound.

These considerations do not allow the pound to fall and support it against the dollar, while against most major currencies, the dollar continues to grow.

After three weeks of decline, the long position in GBP grew by $302 million to $4.049 billion. Positioning is bullish, the price is still below the long-term average, but, as in the case of the euro, an upward reversal is emerging.

In the previous review, we assumed that the pound would continue to decline, but UK inflation pressure remains stubborn, which changed the rate forecast and supported the pound. A correction may develop, and the nearest resistance level is 1.2813. If the pound goes higher, the long-term forecast will be revised. At the same time, we still consider the bearish trend, and the chances of restoring growth are high, with the nearest target being the support area of 1.2590/2620.

 

[KostiaForexMart]

Trading Signals for GOLD (XAU/USD) for October 20-23, 2023: sell below $1,980 (21 SMA - double top)

Early in the European session, gold is trading around 1,977.41, above the 21 SMA, and below the 8/8 Murray. Gold reached a new high around 1,982.12 and is showing indecision which is likely to trigger a strong technical correction in the coming hours.

Since October 4, gold has been trading within an uptrend channel and has now reached the top of this channel, which means that a technical correction could occur in the next few hours with the target in the area of 1,944 (21 SMA).

Yesterday, during a speech by the Fed Chairman, expectations were generated that the Fed would not raise interest rates anymore. This fueled the demand for gold as a safe haven asset reaching a new high.

As investors do not expect any further interest rate hikes this year, gold could continue to rise. However, we should expect a technical correction to occur as long as gold trades below the psychological level of $2,000.

A good level to buy could be around 1,944 (21SMA) or around 6/8 Murray at 1,937. Both levels could give us the opportunity to buy again with goals at the psychological level of $2,000.

On the other hand, if XAU/USD continues to rise and reaches the 8/8 Murray level around $2,000 in the next few hours, it could face strong rejection. This 8/8 area acts as strong resistance and a key level. We could use the pullback to sell below this area with the target at 1,937.

The eagle indicator once again reached the extremely overbought zone. So, we expect a technical correction to occur in the next few hours. Hence, our strategy could be to sell below 1,980 with targets at 1,962 and 1,944.

 

[KostiaForexMart]

GBP/USD: Pound slightly weakens, but selling still risky as dollar remains weak

The pound-dollar pair surged by more than 200 points yesterday, reacting to the publication of inflation growth data in the United States. The resonant release put an end to discussions about the Federal Reserve's future steps—at least in the context of the December meeting. The probability of the Fed raising interest rates in December decreased to 5%, meaning the market is almost certain that the U.S. regulator will maintain the status quo next month.

The inflation report played the role of a cold shower for dollar bulls. Last week, Federal Reserve representatives, including Chairman Jerome Powell, thoroughly heated the public with their hawkish statements, so the sharp shift in sentiment significantly impacted the greenback. The U.S. Dollar Index dropped from 105.60 to 103.80 in just a few hours, reflecting the anti-rally of the American currency. The GBP/USD pair did not stay on the sidelines and updated a two-month price high, testing the 1.2500 level for the first time since September.

But, as they say, "not everything is rosy." The pound rested on its laurels only briefly, as inflation data in the United Kingdom were also published following the U.S. report. It can be said that today, GBP/USD buyers also experienced a cold shower, as almost all components of the UK data were in the red. Certain conclusions can be drawn here as well, primarily regarding the prospects of tightening monetary policy by the Bank of England. These conclusions do not favor the pound as they suggest the central bank will maintain the status quo after the upcoming meetings.

For instance, the overall Consumer Price Index in the UK sharply dropped to zero month-on-month (forecasted to decline to 0.1%) after two consecutive months of growth (0.5% in September). In the year-on-year calculation, the overall index also ended up in the red, reaching 4.6% (forecast at 4.8%)—the weakest growth rate since October 2021. For comparison, the overall CPI was at 6.7% YoY in September.

A separate line needs to be drawn for the core Consumer Price Index, excluding energy and food prices. In June and July, it was at 6.9%, but it dropped to 6.2% in August. In September, the indicator again demonstrated a downward trend (6.1%), as well as in October—5.7% (while most experts predicted a decline to 6.0%). This is the lowest value of the indicator since March 2022.

The Retail Price Index, used by British employers in salary negotiations, similarly ended up in the red zone: -0.2% MoM (forecasted to grow by 0.1% MoM) and 6.1% YoY (forecasted to grow to 6.3%)—a two-year low, the weakest growth rate of the indicator since October 2021.

However, some components of the data entered the green zone but remained in the negative territory. For example, the Producer Purchase Price Index in the year-on-year calculation rose to -2.6% (forecast at -3.3%), and the Producer Selling Price Index reached -0.6% YoY (forecasted to decline to -1.0% YoY).

Commenting on the published report, the chief economist of the Office for National Statistics stated that the decline in inflation occurred against the backdrop of falling energy prices. According to him, the downward trend in key indicators is associated with the decrease this month in the maximum level of energy prices, which limits the amount that suppliers can charge consumers per unit of energy.

The sharp decline in inflation in the United Kingdom is a significant blow to the positions of the British currency. However, an interesting situation has developed for the GBP/USD pair: the dollar is knocked out after yesterday's release, and the pound is knocked down after today's news. Sellers of the pair managed to muffle the upward impulse but failed to turn the situation in their favor.

At the moment, it is challenging to say whether sellers of GBP/USD will be able to reverse the trend. Despite the weak positions of the pound, the pair may resume its upward movement due to further weakening of the American currency. The disappointment of the dollar bulls is too great: just last week, Powell stated that the current level of the Fed's rate might be "insufficient" to curb inflation. However, after the publication of CPI growth data in October, his words lost their relevance. Therefore, rushing to sell GBP/USD now may not be advisable—after a short pause, buyers may regain the initiative in the pair.

From a technical perspective, the pair is currently testing the support level of 1.2450 (the upper line of the Bollinger Bands indicator on the daily chart). In this price range, the downward pullback has stalled. This is another signal indicating the unreliability of short positions. It is advisable to consider selling only after sellers firmly establish themselves below the 1.2450 target—in this case, the next price target will be the level of 1.2340 (the Tenkan-sen line on D1).

 

[KostiaForexMart]

Dollar versus Gold: New Employment Data in the U.S. and Its Impact on the Market

This significant rise in gold prices was recorded on Monday, but by Tuesday, the situation had dramatically changed: the price decreased by 0.5%, reaching $2,020.29 per ounce. This decline followed the record achievement and a reduction of more than $100 in a single day, closing the market session with a loss of over 2%.

It is noteworthy that American gold futures also showed a decrease, falling by 0.3% to $2,036.30.

Experts predict that the growth that led to Monday's record may temporarily subside. This is due to uncertainties around the prospects of the U.S. monetary and credit policy. However, geopolitical risks may contribute to gold reaching new heights in the future.

Jim Wyckoff, a senior analyst at Kitco Metals, emphasized that the gold market has taken a pause after the recent rally. He also suggested that the $2,000 level might become a new floor for gold in the market.

Significant impact on market trends is also exerted by employment data in the U.S. Recent reports showed a decrease in the number of job openings in the country to a level not seen in more than two and a half years. This indicates that the rise in interest rates is starting to affect the demand for labor.

Thus, investors are eagerly awaiting the U.S. non-farm employment report for November, which will be published on Friday. These data may provide a clearer understanding of the future movements of U.S. interest rates, which, in turn, will affect the dynamics of both the dollar and gold.

The dollar, in turn, has strengthened its position, showing a growth of 0.2% and approaching a two-week high. Such strengthening of the currency made gold more expensive for holders of foreign currencies, which also played a role in changing market dynamics.

Traders are actively assessing current economic trends, especially the likelihood of a reduction in interest rates by the U.S. Federal Reserve (Fed) in March. According to the CME FedWatch tool, the probability of such a reduction is currently estimated at 66%. Historically, a decrease in interest rates is a factor that typically provides support in the market for non-interest-bearing bullion such as gold.

In light of this, experts from Commerzbank suggest that the price of gold may reach $2,100 per troy ounce by the second half of 2024. This forecast is based on the expectation that the Fed will begin the process of lowering interest rates.

Against this backdrop, there is also a decline in prices of other precious metals. Spot silver fell by 1.4%, reaching a price of $24.16 per ounce. The price of platinum also decreased, by 1.8%, settling at $899.80 per ounce.

Palladium, continuing the trend, also showed a decline of 4.1%, reaching a more than five-year low at $936.24 per ounce. This decrease highlights the overall trend of instability in the precious metals market, influenced by both economic and geopolitical factors.

 

[KostiaForexMart]

WGC Gold Forecast for 2024

The World Gold Council on Wednesday published a report on gold demand trends for the fourth quarter and the year 2023. The report states that the annual demand for the precious metal, excluding over-the-counter markets, amounted to 4,448 tonnes. This is 5% lower than the demand registered in 2022. However, considering over-the-counter markets and equity flows, the overall demand for gold last year rose to a record 4,899 tonnes.

According to the latest report from the World Gold Council, central bank purchases and purchases of metal on over-the-counter markets contributed to a huge physical demand, leading to a record-high price in the last month of the year. Juan Carlos Artigas, head of WGC's research department, said despite challenging obstacles, as the Federal Reserve continued its aggressive monetary policy, supporting higher bond yields, the precious metal managed to grow by 15%.

Judging by the final price of gold on LBMA, the yellow metal ended 2023 at $2,078.40 per ounce with an average price of $1,940.54 per ounce. This is also a record, 8% higher than the prices of 2022. According to final estimates, central banks bought 1,037 tonnes of gold last year, falling short of the 2022 record by only 45 tonnes.

Over the last ten years, central bank demand has almost doubled compared to the average figure.

As for the World Gold Council's forecast, WGC still expects substantial purchases by central banks in 2024. The report states that central bank demand will return to the pre-record average level of around 500 tonnes.

Analysts also noted that the leader among central banks in gold purchases last year was the People's Bank of China, which acquired 225 tonnes throughout the year. For comparison, the National Bank of Poland was the second-largest gold buyer, purchasing 130 tonnes, thereby increasing its gold reserves by 57%.

Demand for gold-backed ETFs was also driven by Chinese investors. However, China's economy is facing growing obstacles and economic uncertainty. Nevertheless, the precious metal may attract certain demand from Chinese investors.

The report also suggests that central banks may not continue the rapid pace of purchases observed in the last two years, but this trend clearly indicates that gold has become an important risk management tool.

 

[KostiaForexMart]

Stocks and the dollar: stability vs. growth ahead of key consumer price index

At the start of the week, global market indices remained virtually unchanged, while the US currency slightly strengthened ahead of Tuesday's consumer price index report in the US, which could hint at when the Federal Reserve might begin cutting interest rates.

In the realm of cryptocurrencies, Bitcoin reached $50,000, a level not seen in over two years, with its value increasing by 5.6% to $50,207. Cryptocurrency stocks also saw gains: Coinbase Global (COIN.O) increased by 3.7%.

The S&P 500 index slightly fell after reaching a new intraday record high. Last week, the S&P 500 index surpassed 5,000 points for the first time in history. The MSCI global stock index remained unchanged after reaching its highest level since January 2022.

The January report on the consumer price index is expected on Tuesday, with the US producer price report to follow later in the week. Investors are also eagerly awaiting the January US retail sales report, set for release on Thursday.

Initial expectations of a Fed rate cut at the upcoming meeting were not met due to data indicating the economy remains stable.

Market estimates put the likelihood of rates staying unchanged in March at 84.5%. According to CME FedWatch Tool data, the chance of a rate cut of at least 25 basis points in May dropped to 61% from over 95% at the start of 2024.

"Moderate consumer price index data and soft retail sales should reinforce the Fed's confidence that inflation is returning to its target," said Mark Chandler, chief market strategist at Bannockburn Global Forex in New York.

The Dow Jones Industrial Index (.DJI) rose by 125.69 points, or 0.33%, to 38,797.38, the S&P 500 (.SPX) lost 4.77 points, or 0.09%, to 5,021.84, and the Nasdaq Composite (.IXIC) dropped 48.12 points, or 0.30%, to 15,942.55.

Among the Dow Jones index components, Nike Inc (NYSE:NKE) shares increased by 2.71 points (2.59%) and closed at 107.21. Shares of Goldman Sachs Group Inc (NYSE:GS) went up by 8.63 points (2.25%), finishing at 392.89. Shares of 3M Company (NYSE:MMM) rose by 1.76 points (1.89%), closing at 94.66.

Shares of Salesforce Inc (NYSE:CRM) fell by 3.76 points (1.29%), ending the session at 287.54. Shares of Microsoft Corporation (NASDAQ:MSFT) rose by 5.29 points (1.26%), closing at 415.26, while shares of Apple Inc (NASDAQ:AAPL) dropped in price by 1.70 points (0.90%), finishing trading at 187.15.

Among the S&P 500 index components, shares of VF Corporation (NYSE:VFC) appreciated by 13.92% to 17.43, Diamondback Energy Inc (NASDAQ:FANG) gained 9.38%, closing at 165.98, and shares of Mohawk Industries Inc (NYSE:MHK) increased by 6.61%, ending the session at 117.28.

Shares of Motorola Solutions Inc (NYSE:MSI) decreased in price by 3.20%, closing at 320.30. Shares of ServiceNow Inc (NYSE:NOW) lost 3.19%, ending trading at 786.98. Quotes of Monolithic Power Systems Inc (NASDAQ:MPWR) dropped by 2.98% to 729.87.

Among the NASDAQ Composite index components, shares of Beamr Imaging Ltd (NASDAQ:BMR) surged by 371.56% to 9.95, Renalytix Ai Plc (NASDAQ:RNLX) increased by 228.00%, closing at 1.25, and shares of Millennium Group International Holdings Ltd (NASDAQ:MGIH) rose by 201.94%, ending the session at 3.11.

Shares of AN2 Therapeutics Inc (NASDAQ:ANTX) decreased in price by 74.50%, closing at 5.10. Shares of Medavail Holdings Inc (NASDAQ:MDVL) lost 43.22%, ending trading at 1.80. Quotes of TOP Financial Group Ltd (NASDAQ:TOP) dropped by 40.63% to 3.20.

Shares of Goldman Sachs Group Inc (NYSE:GS) reached a 52-week high, increasing by 2.25%, 8.63 points, and finished trading at 392.89. Shares of Beamr Imaging Ltd (NASDAQ:BMR) reached a historical high, rising by 371.56%, 7.84 points, and ended trading at 9.95. Shares of Medavail Holdings Inc (NASDAQ:MDVL) fell to a 3-year low, losing 43.22%, 1.37 points, and closed at 1.80.

The global stock index MSCI (.MIWD00000PUS), tracking stocks in 49 countries, dropped by 0.01%. European stocks (.STOXX) increased by 0.5%.

Markets in China, Hong Kong, Japan, South Korea, Singapore, Taiwan, Vietnam, and Malaysia were closed for holidays.

Financial markets in mainland China were closed for the Lunar New Year holiday and will resume trading on Monday, February 19. Trading in Hong Kong will resume on February 14.

Investors also tempered their expectations for a European Central Bank rate cut after two policy makers stated last week that the ECB needs more evidence of inflation falling before it can reduce rates.

On Monday, the Federal Reserve Bank of New York published its January survey of consumer expectations, which showed that inflation expectations for one year and five years remained unchanged at 3% and 2.5%, respectively. The predicted inflation growth over three years fell to 2.4%, the lowest level since March 2020, from December's 2.6%.

The dollar index, which tracks the dollar's performance against a basket of other major trading partners' currencies, increased by 0.1% to 104.13.

The dollar rose by 0.03% against the yen to 149.35, while the euro dropped by 0.1% for the day to $1.0769.

The yield on US Treasury bonds fell, with the rates on benchmark 10-year bonds decreasing after three consecutive periods of growth.

The yield on the benchmark 10-year US Treasury bonds decreased by 1.9 basis points to 4.168% from 4.187% late on Friday.

Oil futures closed mixed, almost unchanged. Concerns over interest rates and global demand caused the market to pause after prices jumped by about 6% last week.

US oil increased by 8 cents and settled at $76.92 per barrel. Brent crude oil decreased by 19 cents and settled at $82.

Spot gold prices fell by 0.3%.

 

[KostiaForexMart]

Inflationary explosion in the US: how do the dollar and bonds react?

The consequences of high inflation are felt across the financial market. Specifically, the main Wall Street indices reacted to this news with a decrease after the publication of data indicating a higher than expected rise in consumer prices. This event pressured the expectations regarding the imminent lowering of interest rates, which in turn led to an increase in the yield of US Treasury bonds.

Among other things, the Dow Jones Industrial Average recorded its most significant drop in almost 11 months after the US Department of Labor's report showed an unexpected increase in consumer prices in January, especially due to the rise in housing costs.

Against this backdrop, market indices, which were on the rise in anticipation that the Federal Reserve System (FRS) would begin to lower rates as early as May, showed negative dynamics. The S&P 500 index, for example, closed above the 5000 point mark for the first time, and the Dow Jones index traded near record-high values. However, the publication of inflation data revised expectations regarding the FRS's policy, increasing the likelihood that rate cuts may not occur until June.

Mega-cap companies sensitive to rates, such as Microsoft, Alphabet, Amazon.com, and Meta Platforms, showed a decrease in stock prices amid the rise in yields of US Treasury bonds to a two-month high. A similar situation was observed among chip manufacturers, including Micron Technology, Qualcomm, and Broadcom, which led to a 2% drop in the Philadelphia SE Semiconductor index.

The real estate, consumer discretionary, and utilities sectors faced the most significant losses among the 11 major industry indices of the S&P 500, especially real estate, which reached its lowest values in more than two months.

Small-cap companies also felt the pressure, with the Russell 2000 index showing the most significant daily drop since June 2022.

"Various statements by Federal Reserve System officials in recent weeks have indicated that the market-anticipated rate cuts in the first half of the year might have been premature. The latest consumer price index data certainly confirms this trend," commented Bob Elliott from Unlimited Funds.

The consumer inflation data followed a modest revision of inflation figures for the last quarter of 2023, giving investors temporary relief regarding inflation expectations.

The Cboe Volatility Index reached its highest level since November, highlighting the growing market concern. The S&P 500 and Nasdaq Composite indices lost 1.37% and 1.79% respectively, while the Dow Jones Industrial Average fell by 1.36%, marking its most significant decline since March 2023.

Among other developments, JetBlue Airways shares surged by 21.6% after Carl Icahn disclosed his stake in the company, calling the shares "undervalued." Arista Networks' shares declined by 5.5% following a gross profit forecast below expectations, and Marriott International lost value after forecasting annual earnings below analyst expectations.

Cadence Design Systems and toy manufacturer Hasbro also faced a drop in share value after publishing gloomy forecasts. Meanwhile, Tripadvisor shares jumped by 13.8% following the announcement of the creation of a special committee to review deal proposals.

The total trading volume on US exchanges reached 12.9 billion shares, comparable to the average of the last 20 sessions at 11.71 billion shares.

The US stock market continues to demonstrate record levels, supported by leading technology companies and expectations of Federal Reserve rate cuts. The global stock index MSCI and the Stoxx 600 European index also showed a decline amid current events.

The dollar index reached a three-month high, and bitcoin set a new record since December 2021, despite subsequent declines.

Data on US retail sales and the producer price report are expected shortly, which may further influence market sentiments.

The rise in oil prices continues amid tensions in the Middle East and Eastern Europe, with Brent crude futures and West Texas Intermediate showing significant increases. Meanwhile, gold prices fell below the key level of $2000 per ounce after the CPI data was released, reaching a two-month low.

 

[KostiaForexMart]

XAU/USD: review and analysis

The positive factor for raw materials currently lies in the fact that the dollar bulls are awaiting important economic events regarding the path and timing of the Federal Reserve's interest rate reduction. This week, the FOMC minutes will be published, which is expected to contribute to some impulse in the precious metal.

Also, a decent increase in Treasury bond yields provides some support for the U.S. dollar and limits the rise of the non-yielding yellow metal. In addition, the overall positive tone in the stock markets contributes to restraining the global increase in the price of gold.

And since yesterday was a holiday in the United States, there were no significant movements in the markets. From a technical point of view, any upward movement is likely to encounter some resistance near the $2,030 level, where the 50-day SMA is located, with subsequent testing. If this level is decisively surpassed, it will create a foundation for further growth beyond the intermediate barrier at $2,044–2,045 towards the supply zone at $2,065.

On the other hand, the 100-day SMA, currently around $1,992–1,991, may act as immediate support before the $1,983 region or the two-month low reached on Wednesday. Following this is the 200-day SMA, currently tied to the $1,965 area, and in the case of a decisive breakthrough, it will be considered a new trigger for the bears.

After that, gold may accelerate its decline to the November 2023 low, with some obstacles along this path.

 

[KostiaForexMart]

2025: Gold and oil raise rates

In Asian markets on Tuesday, gold prices remained within a narrow range amid fears of long-term interest rate hikes. The absence of trading signals was also due to a holiday in the American market.

Gold demonstrated some strengthening, reaching the $2000 per ounce mark after recovering from a two-month low over the last two trading sessions. However, current fluctuations in gold prices are still occurring within the range of $2,000-$2,050, which was established for the majority of 2024.

Spot gold prices increased slightly by 0.1% to $2,019.17 per ounce, while the price of gold futures expiring in April settled at $2,030.20 per ounce as of 23:34 Eastern Time.

Analysts from Citibank highlight three main catalysts that could push gold prices to $3000 per ounce and oil to $100 per barrel in the next 12-18 months. Among them are a sharp increase in gold purchases by central banks, stagflation, and a deep global recession. Currently, gold is trading around the $2016 mark and could rise by approximately 50% in the event of any of these scenarios materializing.

Analysts point to dedollarization in central banks of developing countries as the most likely path to reaching $3000 per ounce of gold. This would lead to a doubling of gold purchases by central banks and shift the focus of demand from jewelry to gold as the main driver.

Central bank gold purchases have reached record levels in recent years, aiming to diversify their reserves and reduce credit risk. Leading this trend are the central banks of China and Russia, as well as India, Turkey, and Brazil, actively increasing their gold bullion purchases. According to the World Gold Council, global central banks have maintained a level of net gold purchases exceeding 1000 tons for two consecutive years.

In the context of a global recession, a deep economic downturn could force the United States Federal Reserve to drastically cut rates, which, in turn, could be the reason for gold prices to rise to $3000. Gold traditionally exhibits an inverse correlation with interest rates, becoming a more attractive asset compared to fixed income in a low-rate environment.

Stagflation, combining high inflation with economic slowdown and rising unemployment, could also trigger a rise in gold prices, despite the low likelihood of such a scenario. Gold is perceived as a safe haven in periods of economic instability, attracting investors looking to avoid risks.

In addition to the above factors, Citi suggests that the baseline scenario for gold involves reaching a price of $2150 per ounce in the second half of 2024, with an expected average price just over $2000 per ounce in the first half of the year. Record prices may be achieved by the end of 2024.

Although geopolitical tensions in the Middle East provide support for gold prices, a more significant price increase is restrained by the prospect of long-term interest rate hikes in the US.

Traders are lowering expectations regarding the Federal Reserve's imminent rate cuts following reports of high inflation in the US, and statements from Fed officials reinforce assumptions about maintaining high interest rates over a longer period.

The outlook for gold in the near future remains uncertain, similar to the situation in the market for other precious metals. Prices for platinum and silver show a decline, and copper experiences a slight drop in price, despite a reduction in the base interest rate in China, the largest importer of the metal.

In the context of the oil market, analysts consider a scenario where oil prices could once again reach $100 per barrel, considering risks associated with geopolitical tensions, actions by OPEC+, and possible supply disruptions from key oil-producing regions. Tensions in the Middle East, particularly the conflict between Israel and Hamas, and increasing tension on the border between Israel and Lebanon highlight potential risks for oil suppliers in the OPEC+ region.

 

[KostiaForexMart]

Keynote speech by Fed Chairman Jerome Powell

The euro and the British pound continue to strengthen against the US dollar amid weak fundamental statistics coming from the United States recently. However, today we are anticipating a more interesting event: a speech by the Federal Reserve Chairman on Capitol Hill. Today marks the first of two speeches before Congress. Powell will first speak at the House Financial Services Committee and then repeat a similar speech at the Senate Banking Committee tomorrow. It is expected that legislators will pose a number of important questions to him, concerning not only the economy and monetary policy but also the operation of the banking system.
The discussion will include the widely criticized proposal by the Federal Reserve to increase capital requirements for large banks. However, the cost of borrowing will also be an important issue on the agenda.

Since July 2023, the Fed has maintained interest rates at their highest level in the last two decades, making access to credit increasingly difficult for many Americans. This affects purchases of homes and cars, not to mention servicing credit card debt.

Lately, Democrats have sharply criticized Powell's actions. Senators Sherrod Brown and Elizabeth Warren have called on the Fed's head to lower interest rates soon, arguing that there is no longer a need for such a strict approach. Although recent inflation data suggest otherwise, many dovish policymakers consider the inflation spike to be temporary.

It is clear that even against the backdrop of slowing economic growth, the Fed is in no hurry to make changes to interest rates. The labor market remains strong, and the monthly inflation rate in January this year was much higher than economists' expectations. Persistent concerns about price pressure have rallied central bank representatives who are convinced that additional evidence is needed that inflation is firmly moving towards the 2% target before starting a cycle of lowering interest rates.

Some experts note that the longer the Fed delays the rate cut, the higher the chances that they will be lowered by the November presidential elections, which are almost certain to be a rematch between President Joe Biden and former President Donald Trump.

While Fed representatives have repeatedly stressed that their decisions were independent of politics, lowering interest rates closer to election day could lead to sharp criticism of the Central Bank's work from Trump and the Republicans. Obviously, lowering rates at the time of presidential elections would benefit the Democrats and Biden, which they will surely take advantage of.

As for the euro/dollar pair, demand for the euro persists after a series of weak statistics from the US. Now, bulls need to think about how to push the price to 1.0875. This will allow them to test 1.0900. From there, the pair may reach 1.0930, but doing so without support from major players will be quite challenging. The next target is the peak of 1.0965. If the trading instrument declines to 1.0835, I expect some serious actions from major buyers. If they do not take action, it would be wise to wait for the pair to hit the low of 1.0790, or to open long positions from 1.0760.

As for the pound/dollar pair, bulls need to drag the price to the nearest resistance at 1.2730 to start an uptrend. This will allow them to target 1.2770, above which it will be quite difficult to break through. The next target is the area of 1.2800, after which we can talk about a more rapid surge to 1.2830. In case of a decline, bears will try to take control over 1.2690. If they succeed, breaking through this range may push the pair towards the low of 1.2660 with the perspective of reaching 1.2630.

More analytics on our website: https://bit.ly/3VobLUv

 

[KostiaForexMart]

US election: Wall Street at a crossroads

The S&P 500 and Nasdaq indices ended the trading session in the negative on Friday, retreating from the record highs reached during the day. This decline occurred against the backdrop of a decline in the sector of chip manufacturers and mixed data on the labor market, reflecting the exceeding of expectations for the number of jobs created while the unemployment rate rose.

During the trading session, the S&P 500 and Nasdaq indices briefly hit all-time highs, but by evening their dynamics changed to decline. The Philadelphia Semiconductor Index (.SOX) experienced a noticeable drop, losing 4% by the close of the day after earlier reaching the day's high.

Shares of Nvidia (NVDA.O), highly regarded in the market for its contributions to the development of chips for artificial intelligence, suffered a 5.6% loss, ending their six consecutive sessions of gains. This was despite the fact that they were up more than 5% in early trading.

Broadcom (AVGO.O) shares in the chipmaker index also experienced a significant decline of 7%, driven by low investor expectations for the company's full-year outlook. In addition, Marvell Technology (MRVL.O) lost 11.4% in value after its first-quarter guidance fell short of market expectations due to weaker demand.

The stock posted gains at the open after data showed that U.S. job growth accelerated in February, with job openings in the nonfarm payroll sector rising by 275,000, exceeding analysts' forecasts for a gain of 200,000. At the same time, the January jobs data was downwardly revised.

There is also an increase in the unemployment rate in February to 3.9% compared to the previous figure of 3.7%, which was maintained for three months. It should be noted that the rate of wage growth fell to 0.1% on a month-over-month basis.

Brian Price, head of investment management at Commonwealth Financial Network, highlighted a trend toward more restrained spending on the part of consumers. This is reflected in shares of Costco Wholesale (COST.O), which posted a 7.6% decline as its quarterly sales volumes fell short of expectations due to moderate demand for higher-priced goods.

Nevertheless, Price emphasized that overall market sentiment remains optimistic with the anticipation of continued growth in the absence of any negative factors.

He expressed his belief that the market is focused on the continuation of the favorable situation: inflation is expected to be maintained at a moderate level and the Federal Reserve is expected to initiate a policy of easing economic conditions.

Upcoming data for February, which will be released next week and include information on the consumer price index (CPI) and retail sales, will provide additional information that could influence the assessment of the possibility of lowering interest rates.

In a speech on Thursday, Jerome Powell, chairman of the Federal Reserve, shared his view that the central bank is nearing the point where it is confident enough that inflation is falling, allowing it to begin the process of lowering interest rates.

While investors continue to analyze possible profits and keep an eye on monetary policy, they are also beginning to consider a new factor that could significantly impact market conditions this year - the upcoming U.S. presidential election in 2024.

In an address to the nation on Thursday, US President Joe Biden put forward a proposal to raise corporate taxes, while his predecessor and potential Republican Party rival, Donald Trump, earlier in 2017 passed legislation aimed at cutting taxes for companies and the wealthy. Biden also expressed pride in U.S. economic achievements during his presidency.

It is difficult to determine how politicians' proposals and initiatives ahead of the election will affect asset market prices. The winner of the election is likely to face the challenge of dealing with a divided Congress, which could significantly complicate any legislative initiatives.

This uncertainty does not stop analysts from trying to assess how political changes may interact with other key elements influencing market dynamics. Such factors include increasing interest in the business outlook for artificial intelligence and adjusting expectations about when the Federal Reserve might begin easing monetary policy. The S&P 500 Index (.SPX) has made notable gains, up 7.4% YTD and near all-time highs.

Polls show a tight contest between the 81-year-old Biden and 77-year-old Trump. Despite the U.S. economy performing better than most advanced economies, the American people generally express higher confidence in Trump's economic competence in polls.

As part of his speech on Thursday, Biden unveiled an initiative to impose a 21% minimum tax on the profits of corporations whose revenues exceed $1 billion, building on the provisions of the 2022 Clean Energy Act.

In addition, he expressed his intention to reinstate his "billionaires tax" initiative, which would impose a minimum tax of 25% on the income of U.S. citizens whose wealth exceeds $100 million.

Analysts note that the Republicans' success in the elections is likely to entail an extension of the 2017 tax cuts, which could lead to higher inflation. At the same time, the Democrats' victory will result in an increase in tax rates for households and corporations with high income.

The Dow Jones Industrial Average (.DJI) index of industrial companies closed down 68.66 points, or 0.18%, stopping at 38,722.69. The S&P 500 Index (.SPX) fell 33.67 points, or 0.65%, to settle at 5,123.69, while the Nasdaq Composite (.IXIC) fell 188.26 points, or 1.16%, to 16,085.11.

Among the 11 key sectors in the S&P 500, the technology sector (.SPLRCT) posted the largest decline, losing 1.8%. It was followed by the consumer staples sector (.SPLRCS) with a 0.8% drop, where Costco made a significant contribution.

Over the past week, the S&P 500 Index declined 0.26%, the Nasdaq fell 1.17%, and the Dow Jones lost 0.93%.

Meanwhile, real estate stocks (.SPLRCR) were the biggest gainers, rising 1.1%. Behind them are shares of energy companies (.SPNY), which grew by 0.4%.

Shares of Gap (GPS.N) jumped 8.2% as the retailer beat Wall Street analysts' forecasts for fourth-quarter results. That was due to increased demand for a revamped assortment of Old Navy and Gap-branded merchandise during the holiday season, as well as lower volumes of discounted merchandise.

On the New York Stock Exchange, the number of stocks that increased in value outnumbered those that declined by a ratio of 1.25 to 1, with 708 new highs versus 48 new lows.

On the Nasdaq exchange, the number of stocks that increased totaled 2,086, while 2,192 declined, showing a predominance of declining over rising stocks with a ratio of about 1.05 to 1.

The S&P 500 index marked 65 new 52-week highs and recorded no new lows, while the Nasdaq recorded 351 new highs and 83 new lows.

Trading volume on U.S. exchanges reached 12.29 billion shares, which compares with an average of 12.08 billion over the past 20 sessions.

 

[KostiaForexMart]

Wall Street's decline driven by tech sector and Fed rates

The global stock index also showed a decrease on Friday, setting a course for a weekly decline after seven consecutive weeks of gains, while the dollar strengthened, heading for its most significant weekly gain since mid-January as the latest US inflation data fueled new hopes for interest rate cuts.

Data released on Friday showed a slight increase in US import prices in February, as the rise in the cost of petroleum products was partially offset by modest growth in other areas, suggesting an improvement in the inflationary landscape.

Stocks this week faced challenges after US consumer and producer price data indicated that inflation remains persistent, dampening expectations that the Federal Reserve would cut rates by its June meeting.

Market assessments of a Fed rate cut of at least 25 basis points in June stand at 59.2%, down from 59.5% in the previous session and 73.3% a week ago, according to CME's FedWatch Tool.

The central bank is expected to maintain interest rates at its meeting next week, but investors will closely monitor the central bank's economic forecasts, including interest rate projections.

On Wall Street, the Dow Jones Industrial Average (.DJI) fell by 190.89 points, or 0.49%, to 38,714.77, the S&P 500 (.SPX) lost 33.53 points, or 0.65%, to 5,116.95, and the Nasdaq Composite (.IXIC) dropped 155.35 points, or 0.96%, to 15,973.17.

Over the week, the S&P 500 lost 0.13%, the Dow dropped 0.02%, and the Nasdaq decreased by 0.73%.

Additionally, a study by the University of Michigan showed its preliminary consumer sentiment and inflation expectations data barely changed in March, while a separate report indicated that US factory production in February increased more than expected.

Adobe (ADBE.O) shares fell by 13.7% the day after the company forecasted second-quarter revenue below analysts' estimates, citing competition and weak demand for photos, illustrations, and videos integrated with artificial intelligence.

Among other declining stocks, Ulta Beauty (ULTA.O) shares fell by 5.2% after its projected annual profit came in below Wall Street estimates, as rising supply chain costs and intensified promotional activities negatively impacted its profits.

The S&P 500 technology index (.SPLRCT) dropped by 1.3% for the day, leading the downturn among sectors. Shares of Microsoft (MSFT.O) fell by 2.1%, marking one of the index's most significant declines.

The semiconductor index (.SOX) decreased by 0.5% on Friday, registering its most significant weekly percentage drop since the beginning of January. Announcements related to AI at Nvidia's (NVDA.O) GTC developers conference, scheduled for March 18-21, will be closely watched.

The Russell 2000 index of small-cap companies (.RUT) fell by 2.1% for the week.

Friday's volume was the highest of the year on US exchanges, with 18.76 billion shares traded. The average full-session volume over the last 20 trading days was about 12.4 billion.

Although Wall Street's AI-driven growth has stalled, the S&P 500 index has continued to rise by 7.3% since the beginning of the year.

According to data released on Friday, US factory production in February grew more than expected, but the January figure was sharply revised downwards, as production continues to be constrained by higher interest rates.

The dollar index gained 0.05% to 103.43, recovering some of the previous week's decline with a 0.71% increase, while the euro rose 0.06% to $1.0889 for the session. The sterling weakened by 0.13% to $1.273.

Against the Japanese yen, the dollar strengthened by 0.49% to 149.05, despite expectations that the Bank of Japan is expected to end its negative interest rate policy at its meeting next week.

The MSCI global stock index (.MIWD00000PUS) fell by 5.07 points, or 0.66%, to 767.58, heading for its third consecutive daily drop, the longest streak since the beginning of the year, and a 0.48% decrease for the week.

The STOXX 600 index (.STOXX) closed down by 0.32%, while the broader European index FTSEurofirst 300 (.FTEU3) fell by 7.42 points, or 0.37%.

The yield on benchmark 10-year US Treasury bonds rose by 1 basis point to 4.308% after reaching 4.322%, the highest level since February 23. The yield on 10-year bonds this week jumped by 22 b.p., the most significant increase since mid-October.

The yield on 2-year Treasury bonds, which typically moves in step with interest rate expectations, rose by 3.9 basis points to 4.7297% and increased by 24.6 b.p. for the week, marking the biggest jump in two months.

Oil prices fell a day after exceeding the $85 per barrel mark for the first time since November. Oil indices finished the week with a growth of more than 3%. U.S. crude oil decreased by 0.27% to $81.04 per barrel, and Brent crude fell by 0.09% to $85.34 per barrel.

 

[KostiaForexMart]

The main events by the morning: March 26

Bitcoin has returned to the area above $71 thousand. A day earlier, investment guru Jim Roger said that the cryptocurrency would collapse to zero. He does not see any long-term value in it, believing that the crypt will disappear.

The United States has imposed sanctions against Russian operators of CFA and blockchain services. In the list: Atomize, Lighthouse, Distributed Registry Systems, Web3 Tech, B-Crypto, Netexchange, Masterchain.

The Cabinet of Ministers of Russia ordered the sale of 27.5% in the Sakhalin-2 operator company for 95 billion rubles. Gazprom's daughter Sakhalin Project will buy a share, TASS reports.

France may come into direct conflict with Russia in the event of the defeat of the Armed Forces of Ukraine. The LCI channel claims that there are several scenarios for the entry of French troops into the territory of Ukraine, including the deployment of NATO troops in fortified areas and trenches of the Armed Forces of Ukraine, as well as the possible construction of a military plant in Kiev or the deployment of troops in Odessa.

Hamas has confirmed its unwillingness to make concessions. According to Reuters, the Palestinian movement informed the mediators that it would insist on a complete ceasefire in the Gaza Strip, as well as demanding the complete withdrawal of the Israeli military from the region and a «real exchange» of prisoners of war.

The March package of assistance to Ukraine from the United States in the amount of $300 million was used back in November. According to Politico, a representative of the American administration said that these funds are currently «not available for use,» and the approval of assistance was rather a symbolic gesture.

 

[KostiaForexMart]

On the verge of inflation: how the Dow Jones and S&P reacted for the third session in a row

On Tuesday, amid expectations of important economic releases during the short holiday week, US stock markets fell, marking the third consecutive decline for the Dow Jones and Standard & Poor's 500 indexes. Investors are in a wait-and-see mood as they analyze potential changes in Federal Reserve policy.

Tesla (TSLA.O) rose 2.92% on CEO Elon Musk's announcement that he would test self-driving technology for the company's vehicles, available to both new and existing customers in the United States. Over the current week, the stock price has increased by about 4%, although during the year their quotes have decreased by more than 28%.

Market participants are particularly focused on the Personal Consumption Expenditures (PCE) price index, the Federal Reserve's main tool for assessing inflation. It is expected that the latest data on this indicator will be published on Friday, a day when trading on American exchanges will not be held due to the celebration of Good Friday.

It is predicted that in February the inflation index will increase by 0.4%, reaching 2.5% at the annual level. Meanwhile, core inflation, which excludes volatile items such as food and energy, is expected to rise 0.3% for the month, keeping annual growth at 2.8%, according to expert forecasts.

"Friday is key. All attention will be focused on this day, and any events before then will be perceived as background. Therefore, we should not expect significant changes in the market until the data is published," said Stephen Massocca, deputy president of Wedbush Securities. San Francisco.

"It would be extremely risky for the market if there were any speculation that Fed rates have not yet peaked. Any hint from the Fed that interest rates could be raised further could signal an immediate shift away from risk assets."

The U.S. economic sector is growing, with February orders for durable goods exceeding forecasts and equipment investment pointing to the start of a recovery. According to the Conference Board, consumer confidence remained virtually unchanged in March at 104.7.

The Dow Jones Industrial Average lost 31.31 points, down 0.08%, to 39,282.33. The S&P 500 was down 14.61 points (down 0.28%) at 5,203.58, while the Nasdaq Composite was down 68.77 points (down 0.42%) at 16. 315.70.

Last week, all three major US indexes hit new all-time highs after the Federal Reserve confirmed its forecasts for three interest rate cuts this year.

Market expectations for the Fed to cut rates by at least 25 basis points in June continue to rise, now reaching 70.4% probability according to CME's FedWatch tool, up markedly from last week's 59.2%.

Shares of the media and technology group linked to Donald Trump rose 16.1% to close at $57.99 after temporarily hitting $79.38 on the first day of trading following its reverse merger with the company. , specializing in the issue of securities.

McCormick (MKC.N) jumped 10.52% to become the top gainer in the S&P 500, as its first-quarter sales and earnings beat market expectations.

Shares of Seagate Technology (STX.O) also posted strong gains, rising 7.38%, after analysts at Morgan Stanley upgraded the hard drive maker's stock from overweight to overweight.

At the same time, United Parcel Service (UPS.N) shares lost 8.16% following the release of the company's 2026 guidance.

On the New York Stock Exchange, decliners outnumbered advancers by a 1.24-to-1 ratio. A similar trend was seen on the Nasdaq, where decliners outnumbered advancers by a 1.34-to-1 ratio.

Trading volume in US stock markets reached 10.43 billion shares, less than the average volume of 12.23 billion shares over the past 20 sessions. Trading activity is expected to remain moderate throughout the current week, and as the holidays approach, volumes may decline further.

The pan-European stock index STOXX 600 gained 0.24%, while MSCI's index of Asia-Pacific shares ex-Japan closed 0.25% higher at 535.59.

Market attention is focused on the Japanese yen, which remains at its weakest against the dollar since 1990 despite the Bank of Japan raising interest rates last week for the first time in 17 years.

The dollar strengthened 0.1% against the yen to hit 151.56, raising the risk of Japanese intervention to prevent further weakening of its currency. In October 2022, the dollar/yen exchange rate rose to 151.94, followed by a decline due to intervention.

Japanese Finance Minister Shunichi Suzuki on Tuesday expressed readiness to consider options to stabilize the yen, reiterating statements made the day before by the country's top monetary policy official.

The US dollar was marginally weaker, down 0.06% at 7.248 against the offshore Chinese yuan, which strengthened thanks to an unexpectedly high trading range setting. The yuan's fall the previous Friday, after a period of market volatility, had sparked concern among investors, with some speculation that China could loosen controls on its currency, allowing it to fall.

Spot gold rose 0.24% to $2,176.69 an ounce, while U.S. gold futures rose 0.09% to $2,176.80 an ounce. In the cryptocurrency space, Bitcoin lost 1.74% to $69,753.73, while Ethereum fell 1.55% to $3,572.7.

 

[KostiaForexMart]

S&P 500 breaks records: the most successful quarter in the last five years

Amid the latest economic data, the S&P 500 ended the week with positive dynamics, marking its best quarterly result in the last five years. Investors are optimistic about the future, awaiting new information on inflation.

Breakout of leading indices

In addition to the S&P 500, two other key US indices also posted significant gains this quarter. The 10.16% rise for the S&P 500 was driven by growing interest in artificial intelligence stocks and speculation that the Federal Reserve will cut interest rates this year.

Dow Jones on the verge of historic achievement

The Dow Jones index is approaching a significant milestone of 40,000 points, less than 1% away from this goal.

Economic progress and labor market sustainability

The latest data shows the US economy grew faster than expected in the fourth quarter, helped by strong consumer spending. Additionally, the decline in initial unemployment claims underscores the stability in the labor market.

Optimism among experts

"The economy and consumers are doing well as they continue to spend. Unemployment remains low and there are regions where the economy is thriving... There are funds that want to be spent in a variety of ways," shares George Young, portfolio manager at Villere & Company.

Nasdaq reaches new heights

The tech-heavy Nasdaq Composite Index also posted its first record peak since November 2021, opening up new opportunities for investors.

Belief in a "soft landing" of the economy

A key factor in this year's success has been investor confidence in the possibility of a "soft landing" for the economy, which involves lowering inflation without leading to a major recession.

Looking to the future: soft landing is a priority

A BofA Global Research survey conducted in March shows more than two-thirds of asset managers view a soft landing as the most likely scenario for the economy over the next 12 months, while just 11% expect a hard landing.

Fed maintains optimism

The March Federal Reserve meeting, which confirmed expectations of three interest rate cuts during the year while improving the economic outlook, added confidence to investors.

Overcoming rising bond yields

The stock has successfully weathered the rise in Treasury yields that previously weighed on stock prices heading into 2023. The yield on the 10-year Treasury note reached 4.2%, up from 3.86% at the end of last year.

Expanding the Boundaries of Optimism

BlackRock Investment Institute strategists say risk optimism could expand beyond the tech sector thanks to the integration of AI across industries, as well as support from the Federal Reserve and slowing inflation. This is pushing for more investment in US stocks.

Rising share prices reflect confidence

The forward price-to-earnings ratio for the S&P 500 reached 21, a two-year high and reflecting increased investor optimism in the stock market, according to LSEG Datastream.

Wind of change in the stock market

The stock market remains under the influence of large companies that dictated trends in 2023. However, the current year has brought diversity to growth dynamics, especially among the tech giants known as the "Magnificent Seven."

Artificial Intelligence Stars

Nvidia stands out, posting impressive growth of over 80% thanks to its role as a leader in AI chips. Meta Platforms is also showing notable success, increasing its value by 37% and paying dividends for the first time in February.

Tests for titans of technology

At the same time, not all major players are lucky. Apple faces an 11% loss as the company comes under pressure in China and from regulators. Tesla is also experiencing a 29% decline, driven by concerns about demand for electric vehicles.

Redistribution of influence

According to S&P Dow Jones Indices, the Magnificent Seven are responsible for 40% of the S&P 500's year-to-date gain, down significantly from last year, when they contributed more than 60%. This suggests the rally is expanding to other stocks, offsetting the current decline.

A look at inflation ahead of the holiday

Against the backdrop of the upcoming Good Friday celebration and the closure of US stock markets, analysts are eagerly awaiting the publication of the PCE index. The index, the Federal Reserve's preferred measure of inflation, will provide insight into the possible timing and extent of upcoming interest rate cuts.

Minor changes compared to expectations

The Dow Jones Industrial Average gained some ground, gaining 0.12%, while the S&P 500 also rose a modest 0.11%. In contrast, the Nasdaq Composite fell slightly by 0.12%, reflecting the market's mixed reaction to the current economic outlook.

Weekly and monthly achievements

Over the past week, the Dow Jones rose 0.84%, the S&P 500 rose 0.39%, and the Nasdaq rose 0.3%. March gains were notable, with the Dow Jones up 2.08%, the S&P 500 up 3.1% and the Nasdaq up 1.79%. This quarter was marked by significant gains for all three indexes: the Dow by 5.62%, the S&P 500 by 10.16%, and the Nasdaq by 9.11%.

Comment from the Fed confirms caution

Federal Reserve Chairman Christopher Waller noted that despite the disappointing inflation data, the Fed should show restraint in cutting short-term interest rates. However, he did not rule out the possibility of a rate cut later this year, emphasizing the readiness for further regulatory action in response to the economic situation.

Fed Interest Rate Forecasts

Market analysts assign a 64% chance that the Federal Reserve will cut interest rates by 25 basis points by June, based on an analysis of data from CME's FedWatch Tool.

Sectoral achievements and failures

Among key sectors, communications, energy and technology stood out as the best performers in the quarter, while the real estate sector faced losses. This distribution of indicators reflects the changing priorities and interests of investors in the market.

Expanding investment horizons

According to Anthony Saglimbene, chief market strategist at Ameriprise, the observed trends suggest that investors are starting to explore opportunities outside the dominance of big tech companies, anticipating lower interest rates later in the year.

Focus on the winners of the AI era

Investors are also cautiously optimistic about which companies stand to benefit most from the increased use of artificial intelligence, tailoring their investment strategies to upcoming technology trends.

AI boom attracts attention

Nvidia continues to lead the AI push, but excitement around the technology has also spread to other chipmakers such as Super Micro Computer and Arm Holdings. Astera Labs, another player in this arena, impressed the market by doubling its stock price from its initial public offering price in just a week.

Healthcare in Focus

Walgreens Boots shares rose sharply following its quarterly earnings report, where the company noted a 3.19% decline in the value of its investment in medical clinic operator VillageMD.

Strategic moves in retail

Home Depot shares fell slightly after announcing the largest acquisition in the company's history, the purchase of building materials supplier SRS Distribution for $18.25 billion. The move highlights the retailer's strategic efforts to expand its presence in the market.

 

[KostiaForexMart]

The main events by the morning: April 1

Sales of Russian gas for rubles brought the country an income of 2.3 trillion rubles. According to Eurostat and the UN Comtrade platform, Hungary, Italy, Greece and Slovakia became the main buyers of gas from Russia under the new conditions. However, some importing countries (e.g. Germany and Austria) hid information about their purchases of Russian gas.

China has expressed its readiness to hold a dialogue with Taiwan only if the latter recognizes the principle of «one China». This was stated by Chinese Ambassador to Russia Zhang Hanhui. He also noted that China highly appreciates Russia's support in the Taiwan issue. The problems between China and Taiwan began in 2016 after Taipei's refusal to recognize the 1992 Consensus.

China has maintained its leadership in chip imports for 22 years. In 2023, the country acquired chips worth $350 billion. Hong Kong has remained the leader in chip exports for the past 10 years. The largest increase in purchases over the past year has been observed in Albania – almost 4.4 thousand times.

Monetization will appear in Telegram. However, the new advertisements are not yet available in Russia, Ukraine, Palestine and Israel. Administrators will be able to receive 50% of the revenue from advertising in their channels. Payments will only be made in TON.

The Central Bank of Russia stated that there is no better option for storing reserves than the Chinese yuan. The bank also noted the increasing role and liquidity of the Chinese currency at the international level in recent years. Last year, the yuan replaced the US dollar as the most traded currency in Russia.

Microsoft and OpenAI plan to create a Stargate data center with an artificial intelligence supercomputer for $100 billion. Information about this appeared in the publication The Information with reference to three sources close to the project.
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Financial future on the horizon: US stocks rise ahead of consumer price news

On Tuesday, ahead of the release of key inflation data, the Nasdaq and S&P 500 indices showed moderate growth, despite a decline in the financial sector. This happened ahead of the reporting season for leading US banks, which begins on Friday.

The Nasdaq Composite, supported by strength in semiconductors, posted a notable gain, while the S&P 500 gained minimally. The Dow Jones Industrial Average closed almost unchanged.

Investors were focused on Wednesday's consumer price index, which could have a significant impact on the Federal Reserve's interest rate adjustment decisions in light of recent positive economic data, including an impressive labor market report.

Among the large banks whose reports interested the market were JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc, which are included in the S&P banking index and showed a decline in their activity in recent trading.

"Financial companies' first-quarter earnings typically set the pace for the entire season," said Bill Northey, who serves as senior director of investments at U.S. Bank Wealth Management in Billings, Montana. "We see cyclical sectors as a measure of the overall health of the corporate landscape in the United States."

Analysts predict that inflation will gradually decline toward the Federal Reserve's target level of 2%. However, the National Federation of Independent Business on Tuesday reported optimism among small businesses fell to an 11-year low in March, with inflation as the top concern.

"The decline in small business sentiment is a key signal," Green emphasized. "This is a repeat of the trend of recent years, where large companies feel confident, while small businesses experience significant difficulties."

The Dow Jones Industrial Average fell 9.13 points, or 0.02%, to close at 38883.67. The S&P 500 rose 7.52 points, or 0.14%, to finish at 5209.91, while the Nasdaq Composite rose 52.68 points, or 0.32%, to close at 16306.64.

Of the 11 key sectors in the S&P 500, nine posted gains, with real estate posting the biggest gains. The financial services sector showed the least dynamics.

According to the latest forecasts from LSEG, overall first-quarter earnings growth for S&P 500 companies is expected to reach 5% year over year, down from initial expectations of 7.2% at the start of the quarter.

Stocks related to cryptocurrencies and blockchain technology fell, reflecting the decline in the value of Bitcoin. In particular, shares of Coinbase Global and software developer MicroStrategy lost 5.5% and 4.8%, respectively.

Moderna stock stood out, however, rising 6.2% after announcing positive results from an early-stage trial of a customized cancer vaccine developed with Merck.

Alphabet Inc shares also rose 1.1%, moving the company closer to the significant milestone of a $2 trillion market capitalization.

On the New York Stock Exchange, advancers outnumbered decliners by a 1.44-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.33-to-1 ratio.

Oil prices fell for the second day in a row as negotiations to reach a truce in Gaza continue, encountering obstacles from Egyptian and Qatari mediators. On Monday, Brent oil prices fell for the first time in the last five trading sessions, while the price of American oil fell for the first time in the last seven days.

The US dollar is showing stability amid investors' anticipation of the upcoming US inflation data expected on Wednesday. Meanwhile, the Japanese yen remains near its multi-year lows, prompting vigilance among traders about possible moves by Japan to stabilize the currency.

Those expectations bode well for the big banks' first quarterly earnings reports on Friday.

"We are on the verge of important inflation data and financial reports. Some investors may choose to adopt a more conservative strategy ahead of these key events," said Jeff Kleintop, chief global investment strategist at Schwab.

"Despite the stock market's strong first quarter performance, the question remains whether earnings were strong enough to support this development, and whether guidance from business leaders will be able to confirm the more confident growth expectations that the market has already priced in?"

At the beginning of the trading day, the shares showed growth, but then the dynamics weakened, and by the close of trading, some of them were able to partially recover lost positions.

Gene Goldman, chief investment officer at Cetera Investment Management, said: "With current high valuations and questions about the Federal Reserve's rate plans, markets are reflecting the situation with perfect accuracy. Any higher-than-expected CPI reading could make it difficult to be optimistic about a Fed rate cut."

The MSCI global equity index rose 1.32 points, or 0.17%, to 779.36, recovering from an earlier decline of about 0.5%.

Europe's STOXX 600 index fell 0.61% as investors awaited a policy statement from the European Central Bank on Thursday, paying particular attention to any comments from President Christine Lagarde about a possible rate cut in June.

US Treasury yields fell in anticipation of the release of US inflation data.

Expectations for a rate cut in the US have weakened amid continued economic activity. Markets place the likelihood of a 25 basis point rate cut in June at about 56%, down from 61.5% last week, according to analysis from CME Group's FedWatch tool.

The 10-year U.S. Treasury yield fell 6.6 basis points to 4.358%, down from 4.424% at the end of the previous day, while the 30-year yield fell 5.7 basis points to 4.4964%. with 4.553%.

The yield on two-year U.S. Treasury notes, which often reacts to changes in interest rate expectations, eased 5.1 basis points, falling to 4.7384% from 4.789% late Monday.

The foreign exchange market was little changed, with the US dollar index down 0.02% at 104.09, while the euro weakened 0.01% at $1.0857. Against the Japanese yen, the dollar lost 0.03% to settle at 151.74.

Japanese Finance Minister Shunichi Suzuki stressed the country is open to all options to deal with the yen's excessive fluctuations, reiterating its readiness to act in response to the currency's recent sharp decline.

In energy, despite ongoing instability in the Middle East, the US Energy Information Administration (EIA) has adjusted upward its forecasts for US crude oil production for the current and next years, and also raised its forecasts for global and domestic oil prices .

US oil prices fell 1.39%, or $1.20, to $85.23 per barrel. At the same time, Brent crude oil prices fell 1.06%, or $0.96, to trade at $89.42 per barrel.

Analysts said the spot price of gold hit a new record for eight straight sessions, supported by strong buying by central banks and rising geopolitical instability.

The price of spot gold increased by 0.57%, reaching $2,352.23 per ounce. At the same time, gold futures in the US showed an increase of 0.84%, settling at $2,351.40 per ounce.

 

[KostiaForexMart]

CRASH ON WALL STREET: INFLATION VS. RATE CUT

On Wednesday, American stock markets experienced a decline, reaching minimum closing levels against the backdrop of published inflation data, which exceeded experts' expectations. The figures dampened investor optimism that the US Federal Reserve could begin cutting interest rates by the summer.

The publication of the US Department of Labor's report on the consumer price index (CPI), which showed results worse than expected, caused an immediate negative reaction in the markets. Major US stock indexes fell sharply into the red as trading began, highlighting the difficulty of getting inflation back to the Fed's 2% target.

Ryan Detrick, lead market analyst at Carson Group, noted that the surprise inflation data led to a "sell first, ask questions later" strategy. This in turn cast doubt not only on the timing of the first rate cut, but also on the size of the upcoming cut.

Concerns outlined in the minutes of the Fed's March meeting indicate a possible stagnation of inflation towards the target level, which may require the extension of tight monetary policy beyond the expected period.

U.S. Treasury yields jumped while stock indexes felt pressured to decline after reporting higher-than-expected growth in consumer prices in March. This event reduced confidence in how quickly and to what extent the Federal Reserve could cut interest rates.

In the foreign exchange market, the US dollar index strengthened in response to the release of data, and the dollar against the Japanese yen reached its highest level since 1990. Investors are closely monitoring the possible reaction of the Japanese authorities, who may take steps to stabilize the yen.

A report from the U.S. Bureau of Labor Statistics recorded a 0.4% rise in the consumer price index last month, mirroring February's trend, due in large part to increases in gasoline and housing costs. This resulted in an annual growth index of 3.5%, compared with economists' forecasts for 0.3% monthly growth and 3.4% annual growth.

These indicators significantly changed the mood of traders, significantly reducing expectations for the Federal Reserve to cut interest rates in June from 62% to 17%. In addition, the likelihood of a July rate cut was also revised down from 76% to 41%, according to data from CME Group's FedWatch tool.

Michael Hans, chief investment officer at Citizens Private Wealth, emphasizes that the current environment remains uncertain and challenging for the Federal Reserve, which has yet to declare victory over inflation.

"The Fed would prefer to rely on additional data to support its confidence in achieving its 2% inflation target," he says. He said the current situation requires a continuation of a cautious strategy, especially as recent data has prompted a revision of expectations regarding the timing of a potential interest rate cut.

Elevated yields on major US government bonds, which topped the 4.5% threshold and reached their highest since last November, put further pressure on stock prices. Sectors most sensitive to changes in interest rates were particularly affected, with the real estate market recording its largest daily decline since June 2022.

Housing stocks posted their biggest daily decline since Jan. 23, while the small-cap Russell 2000 index posted its biggest daily decline since Feb. 13.

Ryan Detrick noted that "the sectors most exposed to interest rates, including real estate, homebuilding and small-cap companies, experienced significant losses today."

The likelihood of the Fed cutting interest rates by 25 basis points in June fell to 16.5% from 56% just before the report, according to CME Group's FedWatch tool.

The Dow Jones Industrial Average lost 422.16 points, down 1.09%, to 38,461.51. The S&P 500 fell 49.27 points (down 0.95%) to 5,160.64 and the Nasdaq composite fell 136.28 points (down 0.84%) to 16,170.36.

Among the eleven key sectors of the S&P 500 index, all but energy ended the trading day in the red, with real estate posting the biggest decline.

Investors' eyes are now on Thursday's upcoming producer price report, which will provide a clearer picture of inflation in March, as well as the unofficial start of quarterly earnings season.

A new round of reporting begins on Friday when financial giants such as JPMorgan Chase & Co, Citigroup Inc, and Wells Fargo & Co report their financial results.

Analysts expect overall first-quarter S&P 500 earnings to rise 5.0% year-over-year, a notable decline from the 7.2% growth forecast at the start of January, according to LSEG.

Megacorporations in the growth sector were mostly down, but Nvidia Inc was the exception, rising 2.0%.

US shares of Alibaba also saw a 2.2% gain after Jack Ma, the company's co-founder, addressed a memo to employees in which he supported plans to restructure the Internet giant. It's a rare message from a businessman who has stayed out of the public eye in recent years.

On the New York Stock Exchange (NYSE), decliners far outnumbered advancers by a ratio of 5.93 to 1. A similar trend was seen on the Nasdaq, where for every gainer, 3.58 falling stocks.

MSCI's global equity index fell 6.91 points, or 0.89%, to 772.32.

While Europe's STOXX 600 index ended modestly up 0.15%, investors' eyes are on the upcoming European Central Bank meeting on Thursday. Forecasts say the bank is likely to keep its current interest rate unchanged, despite earlier hints of a possible rate cut in June.

In the government bond sector, the 10-year US Treasury yield surged above 10 basis points to reach its highest since mid-November following the inflation data. The 10-year U.S. Treasury yield jumped 18 basis points to 4.546% and the 30-year Treasury yield jumped 12.8 basis points to 4.6273%.

The 2-year yield, closely linked to interest rate expectations, rose 22.2 basis points to 4.9688%, hitting its highest since mid-November.

In the foreign exchange market, the US dollar strengthened its position, rising 1.04% to 105.17, while the euro fell 1.04% to $1.0742. Against the Japanese yen, the US dollar rose 0.77% to 152.94.

Oil prices also saw gains, with U.S. crude rising 1.15%, or 98 cents, to $86.21 a barrel, while Brent rose 1.19%, or $1.06, to $90. .48 dollars per barrel.

Gold lost value as the dollar strengthened and Treasury yields rose following an update on inflation data. The spot gold price fell 0.91% to $2,331.12 an ounce, while U.S. gold futures fell 0.58% to $2,329.90 an ounce.

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