Economic Indicators & Central Banks:
- Asian stocks edged up, driven by the technology sector, while the US Dollar remained firm ahead of the US inflation report and Fed policy decision.
- China’s CPI gains held above zero in May while factory-gate prices remained stuck in deflation, signalling ongoing weak demand.
- UK GDP stagnated in April. Monthly GDP numbers came in a tad better than anticipated, with activity stagnating, rather than contracting -0.1% m/m, as Bloomberg consensus forecasts had predicted. The recovery remains uneven though.
- The FOMC began day 1 of its 2-day meeting with the decision and the new quarterly forecasts (SEP) at 21:00 GMT following by Chair Powell’s press conference at 21:30 GMT. The Fed is universally expected to maintain a steady rate stance, leaving all of the focus on the new forecasts, Chair Powell’s press conference, and the policy statement. It is widely expected that the “dovish” dot plot from March that showed three cuts (though it was a close call for two) will be revised toward a more hawkish stance.
Asian & European Open:
- Treasuries steadied after rising on a solid $39 billion sale, which reflected speculation that inflation reading will help make the case for the Fed to cut rates this year.
- The NASDAQ rebounded and advanced 0.88% into the close to another record at 17,343. Similarly the S&P500 rose 0.27% to 5375, also a new record (27th of the year).
- A surge in Apple shares (7%) supported. The Dow slumped -0.3%, hurt by financials and industrials that overshadowed a gain in IT.
- China Evergrande New Energy Vehicle Group plunged 20% after warning of losing assets.
Financial Markets Performance:
- The USDIndex had a good first half, rising to a high of 105.46 before fading to 105.24. However, it’s above the 105 level for a second straight session (first time since May 13,14) and the highest since early May.
- The EURUSD was down for a fourth session at 1.0737 amid political turmoil in Europe.
- OIL prices extended gains for a third session, with UKOIL futures up 0.5% to $82.36 a barrel and USOIL up 0.7% to $78.45 a barrel. Industry data pointed to shrinking US crude stockpiles ahead of a report from the IEA on the market outlook.
- Gold prices edged 0.1% lower to $2,313.72 per ounce.
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Andria Pichidi
Market Analyst
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