The Reserve Bank of Australia will continue to raise interest rates. US reporting season has been disappointing :: InvestMacro

by just forex

US stock indices closed on Monday in negative territory. At the close of trading on the stock exchange, the Dow Jones (US30) lost 0.69%, and the S&P 500 (US500) lost 0.84%. The Nasdaq Tech Index (US100) is down 0.81%.

Apple shares fell 2% after reports that the company will slow hiring and spending, becoming the next tech giant to take such a step with fears of an economic slowdown in the sector. IBM, a maker of information technology equipment and services, beat expectations for quarterly earnings on Monday but warned that a strong dollar would negatively affect the company’s results. The Fed’s hawkish activity and heightened geopolitical tensions have sent the dollar up against a basket of currencies over the past year, prompting companies with large international operations to temper their forecasts. A strong dollar consumes the profits of companies with intensive international operations and converts foreign currencies into dollars.

Companies like Johnson & Johnson (JNJ), Lockheed Martin (LMT) and Netflix (NFLX) report today.

Treasury Secretary Janet Yellen said Tuesday that the United States will impose tough measures on countries disrupting the international economic system. “Russia has weaponized economic integration,” she said, calling on all responsible nations to unite against Russia’s war in Ukraine. The United States is pushing to expand trade relations with South Korea and other trusted allies to increase supply chain flexibility and prevent potential manipulation by geopolitical rivals.

Most stock markets in Europe rose on Monday. Germany’s DAX (DE30) rose 0.74% yesterday, France’s CAC 40 (FR40) rose 0.94%, Spain’s IBEX 35 (ES35) rose 0.22%, and Britain’s FTSE 100 (UK100) rose 0.90%.

The European Central Bank is walking a tightrope in its planning of the anti-fragmentation tool, which will be presented after the meeting of the Board of Governors on July 21. Doubts in Italy about Mario Draghi’s government, along with Germany’s highest inflation since the 1970s, increased monetary tightening in the United States, the end of the European Central Bank’s net bond purchases, and uncertainty over the war in Ukraine – are all adding to the eurozone’s vulnerability. With Draghi facing a new vote of confidence in Parliament on July 20, investors are concerned that if a new government is not formed on time, Rome may not meet the conditions for funding the next generation of the European Union. This will lead to widening margins in the bond market among the stronger and weaker members of the monetary union. This could cause the euro to fall even more on foreign exchanges, another factor fueling inflation.

At the market open today, Asian stocks were mostly lower. Japan’s Nikkei 225 (JP225) is up 0.74% from the opening bell, Hong Kong’s Hang Seng (HK50) is down 1.15%, while Australia’s S&P/ASX 200 (AU200) is down 0.66%.

Bank of Japan Governor Haruhiko Kuroda is more determined than ever to resist political and market pressures in pursuit of sustainable inflation. The Bank of Japan is not in a mood to ditch the stimulus. BoJ officials see some potential signs of sustainable inflation that need to be encouraged, not eliminated. This leaves the Bank of Japan alone among the major central banks trying to keep interest rates near zero and limit bond yields.

The Reserve Bank of Australia intends to do whatever is necessary regarding inflation. The minutes of the RBA’s July meeting showed that more steps should be taken to normalize monetary conditions in Australia in the coming months. Bank officials are considering raising interest rates by 25 or 50 basis points. Higher interest rates would also help in achieving a more sustainable balance between supply and demand for goods and services. Inflation is expected to peak later in 2022 and then decline to 2-3% in 2023.

S&P 500 (F) (US500) 3830.85 −32.31 (−0.84%)

Dow Jones (US 30) 31,072.61 −215.65 (−0.69%)

DAX (DE40) 12959.81 +95.09 (+0.74%)

FTSE 100 (UK100) 7,223.24 +64.23 (+0.90%)

US dollar index 107.43 −0.63 (−0.58%)

Important events for today:

  • – Reserve Bank of Australia meeting minutes (m/m) at 04:30 (GMT +3);
  • – UK Average Gain Index (m/m) at 09:00 (GMT +3);
  • – change the number of claimants in the UK (month / month) at 09:00 (GMT + 3);
  • – UK unemployment rate (month / month) at 09:00 (GMT + 3);
  • – Eurozone consumer price index (m / m) at 12:00 (GMT + 3);
  • – US Building Permits (m / m) at 15:30 (GMT + 3);
  • The Governor of the Bank of England speaks at 20:45 (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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