Earning season in the US began with a downturn. China’s Economy Slowing Down :: InvestMacro

by just forex

The US Producer Price Index, which shows the rate of inflation among factories, rose 1.1% from last month while it was expected to rise by 0.8%. On an annual basis, the index reached a record high of 11.3%. Meanwhile, Fed officials, Rolle and Bullard said yesterday that they favor a 75 basis point hike at the US central bank meeting in July, making a more aggressive 100 basis point move less likely. Federal funds futures now indicate a 31% chance of a 100 basis point increase and a 69% chance of a 75 basis point increase. But analysts still expect the dollar to rise as it benefits from a higher rate of interest rate hike compared to other global central banks.

Technical stocks rebounded from their lows as Treasury yields fell amid a rebound in the US Dollar Index. But the banking sector showed weakness yesterday due to the reports. JPMorgan said it would temporarily suspend share buybacks after its second-quarter earnings report missed estimates, sending shares down more than 3%. Morgan Stanley also announced a decline in profits in the second quarter due to poor results from its investment banking business.

US indices were mixed yesterday. By the end of trading, the Dow Jones (US30) was down 0.46%, while the S&P 500 (US500) lost 0.30%. The Nasdaq Technology Index (US100) rose 0.03% yesterday.

Stock markets in Europe were down yesterday. The German DAX (DE30) fell 1.86% yesterday, the French CAC 40 (FR40) lost 1.41%, the Spanish IBEX 35 (ES35) shed 1.77%, and the British FTSE 100 (UK100) closed 1.63% lower.

EUR/USD traded below 1 yesterday for the first time in 20 years after Italian Prime Minister Mario Draghi’s party in the coalition government failed to support a vote of confidence in Parliament and his resignation announcement. However, the Italian president refused to resign. Inflation data will be released today in Italy. Analysts expect consumer prices to rise another 1.2%. But many experts tend to believe that the euro is not as weak as the dollar’s strength due to the difference in interest rates between the US Federal Reserve and the European Central Bank. At the moment, a drop in the price of the EUR/USD to the level of 0.9 is the most likely scenario.

Oil prices are still very volatile. Oil dropped more than $7 a barrel yesterday, but by the end of the session, oil had stabilized away from the wave of declines and closed at the opening level. Analysts’ opinions are mixed. On the other hand, tighter monetary policy by the US and the planned release of reserves by the US and its allies put downward pressure on oil prices. On the other hand, OPEC+ countries produce much less oil than demand, which causes shortages that lead to upward pressure on prices. Sanctions on Russia are playing a role in favor of growth.

Most of the Asian markets rose yesterday. Japan’s Nikkei 225 (JP225) is up 0.62%, Hong Kong’s Hang Seng (HK50) is down 0.22%, and Australia’s S&P/ASX 200 (AU200) is up 0.44% on the day.

Data released on Friday showed that China’s economy contracted sharply in the second quarter. At the same time, annual growth has also slowed sharply, highlighting the massive loss of activity due to the widespread COVID shutdowns that have rocked industrial production and consumer spending. China’s GDP fell 2.6% in the second quarter compared to the previous quarter. On an annual basis, GDP increased by a modest 0.4% in the April-June period, missing expectations of 1.0% growth. In the first half of the year, GDP grew by 2.5%, well below the government’s target of 5.5% for this year.

S&P 500 (F) (US500) 3,790.38 11.40 (−0.30%)

Dow Jones (US 30) 30630.17 −142.62 (−0.46%)

DAX (DE40) 12,519.66 −236.66 (−1.86%)

FTSE 100 (UK100) 7,039.81 116.56 (−1.63%)

US dollar index 108.66 +0.70 (+0.65%)

Important events for today:

  • – Chinese GDP (Quarterly) at 05:00 (GMT +3);
  • – Chinese retail sales (m / m) at 05:00 (GMT + 3);
  • – Chinese industrial production (m / m) at 05:00 (GMT + 3);
  • – Unemployment rate in China (month / month) at 05:00 (GMT + 3);
  • – Italian CPI for the Eurozone (monthly) at 11:00 (GMT +3);
  • – Canadian Retail Sales (m/m) at 15:30 (GMT +3);
  • – US Retail Sales (month / month) at 15:30 (GMT + 3);
  • – US Empire State New York (monthly) at 15:30 (GMT + 3);
  • – US Industrial Production (m / m) at 16:15 (GMT +3);
  • – US Michigan Consumer Confidence (MoM) at 17:00 (GMT +3).

by just forex

This article reflects a personal opinion and should not be construed as investment advice and/or a continuing offer and/or solicitation to carry out financial transactions and/or guarantee and/or anticipation of future events.

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