News & Analysis

Overnight on Wall Street: Thursday 11/07/19

July 11, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

It was a busy European and US session. The focus was on the Fed’s testimony and the FOMC minutes to gauge the interest rate outlook after last week’s buoyant nonfarm payrolls results.

Testimony– Semiannual Monetary Policy Report to the Congress

  • There is a risk that weak inflation will be even more persistent than we currently anticipate. 
  • In light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion.

FOMC Minutes – June Meeting

  • Participants judged that uncertainties and downside risks surrounding the economic outlook had increased significantly over the recent week. 
  • Several participants noted that a near-term cut in the target range for the federal funds rate could help cushion the effects of possible future adverse shocks to the economy and, hence, was appropriate policy from a risk-management perspective.

The US sharemarkets rose on the signals of a July rate cut by the Fed. Wall Street hit new records:

  • S&P500 rose to the 3,000 milestones for the first time before retreating slightly to finish the day at 2,993.
  • Nasdaq Composite closed at a record high at 8,202.53.

Currency Markets

In the forex markets, attention was on the US dollar which was sent to the downside after the testimony is releases. The greenback recovered slightly after the FOMC minutes. All in all, major currencies were firmer against the US dollar.

The British Pound found some upside traction on the release of UK macro data. The Manufacturing and Industrial Production rose in May compared but missed estimates. The GDP figures supported the local currency. The UK economy expanded by 0.3% in May and the trade deficit dropped from £-12.761B to £-11.524B.

The GBPUSD edged higher on the mixed data and the Fed’s comments at 1.25 US cents.

GBPUSD (Hourly Chart)


Source: GO MT4

Commodities

Oil prices found support on Iran tensions on rumours of the US to strike Iranian targets in Syria, and another bullish oil report with a more-than-expected draw in the US crude oil inventories.

WTI and Brent Crude are trading weeks higher in the vicinity of $60 and $66.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

The Fed’s comments revived the demand for the yellow metal which rose to $1,419.

XAUUSD (Hourly Chart)


Source: Bloomberg Terminal

Cryptocurrencies

Bitcoin dropped after the Fed Chair comments:

“I just think it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering”

Before retreated from this week’s high, but is still trading above the $12,000 mark. Other cryptocurrencies were also seen to trade on the downside.

Key Upcoming Events Ahead

Credit Card Spending, and Electronic Card Retail Sales (New Zealand)
Foreign Stock and Bond Investment (Japan)
Consumer Inflation Expectations and Investment Lending for Homes, Home Loans (Australia)
Harmonized Index of Consumer Prices (Germany)
Jobless Claims, Consumer Price Index, and Monthly Budget Statement (US)

Friday, 12 July 2019
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
000.2870.056000
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
0000000.262
Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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