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Markets Update: Federal Reserve Chair Powell indicates that there is no urgency to implement rate cuts. The dollar remains close to a one-year high, while the euro faces challenges due to policy differences. Asian stocks are expected to conclude a challenging week on a more stable note. Investors are cautious about the yen as Japan warns about foreign exchange movements.
Global Markets Roundup: 15 November 2024
FESX1! | Z1! | NI225 | NQ1! | ES1! | EURUSD | USDJPY | DXY | GOLD | CL1! | ZC1! | ZS1! HG1!
The US dollar was set for a significant weekly increase on Friday, hovering close to levels not seen in a year. This was driven by a more hawkish stance from the Federal Reserve chair, which led to a rise in short-term Treasury yields, causing Wall Street and European stock market futures to decline. Asian markets were looking to close the week on a more stable note, supported by positive Chinese retail sales data for October, although other economic indicators fell short of expectations. Federal Reserve Chair Jerome Powell's comments overnight suggested that there was no urgency for rate cuts, given the ongoing economic growth, strong job market, and inflation above the 2% target. This tempered expectations for a rate cut in the following month. Futures for Fed funds dropped, indicating only a 71 basis point cut by the end of 2025. The likelihood of a rate cut next month has decreased, with only a 61% probability priced in, down from 82.5% in the previous session. This boosted the US dollar's performance, particularly against the euro, as concerns over more aggressive policy easing in Europe weighed on the single currency, already trading at one-year lows.
On Friday, Nasdaq futures NQ1! saw a 0.4% decline, while S&P 500 futures ES1!, slipped by 0.3%. EUROSTOXX 50 futures FESX1!, also dropped by 0.4%. The MSCI index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose by 0.4%, but ended the week 4.1% lower, marking its most significant weekly decline since June 2023. The regional healthcare index (MIAPJHC00PUS) performed poorly with a 0.7% decrease, following the nomination of Robert F. Kennedy Jr., a prominent vaccine skeptic, by U.S. President-elect Donald Trump to lead the top U.S. health agency. In contrast, Tokyo's Nikkei index (NI225) rose by 0.7% due to a weakening yen, which boosted the prospects for Japanese exporters. However, it closed the week down by 1.7%. Chinese stocks recovered slightly from earlier losses after official figures revealed that retail sales increased by a higher-than-anticipated 4.8% in October. However, industrial output growth fell short of expectations, and the drop in property investment intensified. China's major stocks were marginally down by 0.2%, while Hong Kong's Hang Seng index HSI surged by 0.5%. In the realm of U.S. policy, producer price data indicated a slightly stronger core measure even before Powell's remarks, causing concerns about the future pace of monetary easing. Short-term Treasury yields surged overnight and remained elevated on Friday. The two-year yields (US2YT=RR) stabilized at 4.358%, after rising by 6 basis points overnight to end at 4.357%.
In the foreign exchange markets, the dollar DXYÂ is poised to achieve a significant weekly increase of 1.7% against its main counterparts. Over the past five days, the dollar has strengthened against the yen, reaching a new high of 156.36 USDJPY, the highest level since July. Despite this, those betting against the yen remained cautious as Japan's finance ministry continued to warn against excessive currency fluctuations. The Bank of Japan also disclosed that Governor Kazuo Ueda is scheduled to deliver a speech on Monday, which will be closely monitored for any indications regarding the timing of the next interest rate hike. The euro EURUSDÂ sustained substantial losses at $1.0541 and is on track for a significant weekly decline of 1.7%. The minutes from the latest European Central Bank meeting suggested that the rate cut last month was likely a precautionary measure. Although there is a prevailing dovish sentiment towards the ECB in the markets, with a notable 36% probability that it might intensify its easing measures in December by implementing a half-point adjustment to mitigate growth risks. EURUSDÂ | USDJPY | AUDUSD | DXY | NZDUSD
In commodities, the strong performance of the dollar caused a decline in commodity prices this week, leading to a 4.4% decrease in gold prices to $2,565.18. This marks a significant monthly loss of 6.5% so far. Brent crude futures dropped by 0.9% to $71.91 per barrel, while U.S. West Texas Intermediate crude futures fell by the same percentage to $68.08. On Friday, copper futures dropped to approximately $4.37 per pound as investors kept a close eye on the last day of China's National People's Congress meeting, anticipating the announcement of fiscal stimulus measures.
In agricultural commodities, the primary wheat contract on the Chicago Board of Trade, represented by ZW1!, increased by 0.4% to $5.32-1/4 per bushel after dropping to $5.28 on Thursday, marking its lowest point since August 27. It was on track for a weekly decrease of 7.4%. Meanwhile, CBOT soybeans, denoted by ZS1!, saw a 0.4% rise to $9.91 per bushel, although they were down by 3.8% for the week. Corn, represented by ZC1!, remained steady at $4.19 per bushel and experienced a 2.8% decline for the week. In Thursday's trading session, arabica coffee for March delivery KC2! closed 8.2 cents higher, or 3%, at $2.794 per lb, reaching its highest level since September 2011 at $2.85. Meanwhile, January robusta coffee RC2! settled up $145, or 3.1%, at $4,777 per tonne, marking a one-month peak. BMI, a division of Fitch Solutions, has raised its 2025 average price forecast for arabica coffee futures KC2! from $1.90 to $2.15 per lb, making it the third-highest annual average price on record. London cocoa for March delivery C2! surged by 446 pounds, or 7.1%, to 6,769 pounds per tonne, hitting a four-month high. New York cocoa for March delivery CC2! also saw an increase, rising by $535 to $8,506 per tonne. March raw sugar SB1! closed 0.39 cents higher, or 1.8%, at 21.56 cents per lb, whereas December white sugar SF1! settled up $7.10, or 1.3%, at $545.30 per tonne. BRN1! | CL1! | GOLD | HG1! | KC1! | RC1! | CC1! | LEI
Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team