Fed Rate Cut Euphoria Lifts Market Sentiment

Posted on August 26, 2024 by RTT Staff Writer

Rate cut hopes fueled by emphatic hints by Fed Chair Jerome Powell on Friday supported market sentiment across markets. Anxiety ahead of PCE-based inflation data from the U.S. due on Friday however limited gains.

Wall Street Futures are trading in positive territory. European benchmarks are also trading mixed. Asian stock indexes finished trading on a mostly positive note.

Dollar Index edged up. Bond yields mostly hardened. Crude oil prices surged ahead amidst production outages in Libya and concerns about the Gaza conflict. Gold prices also rallied amidst growing rate cut expectations as well as safe haven demand. Cryptocurrencies are trading mixed.

Here is a snapshot of the major world markets at this hour.

Stock Indexes:

DJIA (US30) at 41,234.00, up 0.14%
S&P 500 (US500) at 5,641.20, up 0.12%
Germany’s DAX at 18,616.15, down 0.10%
U.K.’s FTSE 100 at 8,327.78, up 0.48%
France’s CAC 40 at 7,595.31, up 0.24%
Euro Stoxx 50 at 4,908.35, down 0.02%
Japan’s Nikkei 225 at 38,058.00, down 0.94%
Australia’s S&P ASX 200 at 8,084.50, up 0.76%
China’s Shanghai Composite at 2,855.52, up 0.04%
Hong Kong’s Hang Seng at 17,798.73, up 1.06%

Currencies:

EUR/USD at 1.1165, down 0.22%
GBP/USD at 1.3194, down 0.12%
USD/JPY at 144.16, down 0.15%
AUD/USD at 0.6769, down 0.33%
USD/CAD at 1.3503, down 0.03%
Dollar Index at 100.83, up 0.11%

Ten-Year Govt Bond Yields:

U.S. at 3.811%, up 0.13%
Germany at 2.2615%, up 1.73%
France at 2.969%, up 1.33%
U.K. at 3.9140%, down 0.76%
Japan at 0.887%, up 0.68%

Commodities:

Brent Oil Futures (Nov) at $80.08, up 2.47%.
Crude Oil WTI Futures (Oct) at $77.05, up 2.97%.
Gold Futures (Dec) at $2,558.85, up 0.49%.

Cryptocurrencies:

Bitcoin at $63,901.67, down 0.00%
Ethereum at $2,739.67, down 0.42%
BNB at $564.00, down 1.81%
Solana at $160.45, up 1.98%
XRP at $0.5961, down 0.89%.

Futures Little Changed Following Recent Strength On Wall Street

Posted on August 26, 2024 by RTT Staff Writer

After turning in a strong performance last Friday, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures up by just 0.1 percent.

Uncertainty about the near-term outlook for the markets may keep some traders on the sidelines after last week’s strong gains lifted the Dow and the S&P 500 back within striking distance of the record highs set in mid-July.

The major averages have more than offset the steep drop seen early this month, as optimism about interest rate cuts by the Federal Reserve has overshadowed concerns about the economic outlook.

Comments from Fed Chair Jerome Powell last Friday all but confirmed the central bank will cut rates next month, although there remains some uncertainty about how quickly rates will be lowered.

According to CME Group’s FedWatch Tool, there is a 65.5 percent chance of a quarter point rate cut at the September 17-18 meeting and a 34.5 percent chance of a half point rate cut.

On the U.S. economic front, the Commerce Department released a report showing a sharp increase by new orders for U.S. manufactured durable goods in the month of July.

The Commerce Department said durable goods orders spiked by 9.9 percent in July after tumbling by a revised 6.9 percent in June.

Economists had expected durable goods orders to jump by 4.0 percent compared to the 6.7 percent plunge that had been reported for the previous month.

The substantial rebound by durable goods orders came as orders for transportation equipment skyrocketed by 34.8 percent in July after plummeting by 20.6 percent in June.

Excluding the surge in orders for transportation equipment, durable goods orders dipped by 0.2 percent in July after inching up by 0.1 percent in June. Ex-transportation orders were expected to come in unchanged.

Following the pullback seen over the course of Thursday’s session, stocks showed a strong move back to the upside during trading on Friday. The major averages all moved sharply higher, with the Dow and the S&P 500 reaching their best closing levels since reaching record highs in mid-July.

The major averages gave back ground after an early rally but showed another notable advance late in the session. The Dow jumped 462.30 points or 1.1 percent to 41,175.08, the Nasdaq surged 258.44 points or 1.5 percent to 17,877.79 and the S&P shot up 63.97 points or 1.2 percent to 5,634.61.

With the strong upward move on the day, the major averages all closed sharply higher for the week. The Dow shot up by 1.3 percent, the Nasdaq jumped by 1.4 percent and the S&P 500 surged by 1.5 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index fell by 0.7 percent, while Hong Kong’s Hang Seng Index jumped by 1.1 percent.

The major European markets have also turned mixed on the day, with the U.K. markets closed for a holiday. While the French CAC 40 Index is up by 0.3 percent, the German DAX Index is down by 0.1 percent.

In commodities trading, crude oil futures are soaring $2.20 to $77.03 a barrel after surging $1.82 to $74.83 a barrel last Friday. Meanwhile, after jumping $29.10 to $2,522.60 an ounce in the previous session, gold futures are climbing $13.50 to $2,559.80 an ounce.

On the currency front, the U.S. dollar is trading at 144.12 yen versus the 144.37 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1161 compared to last Friday’s $1.1192.

U.S. Durable Goods Orders Rebound As Orders For Transportation Equipment Skyrocket

Posted on August 26, 2024 by RTT Staff Writer

With orders for transportation equipment showing a substantial rebound, the Commerce Department released a report on Monday showing a sharp increase by new orders for U.S. manufactured durable goods in the month of July.

The Commerce Department said durable goods orders spiked by 9.9 percent in July after tumbling by a revised 6.9 percent in June.

Economists had expected durable goods orders to jump by 4.0 percent compared to the 6.7 percent plunge that had been reported for the previous month.

The significant rebound by durable goods orders came as orders for transportation equipment skyrocketed by 34.8 percent in July after plummeting by 20.6 percent in June.

Excluding the surge in orders for transportation equipment, durable goods orders slipped by 0.2 percent in July after inching up by 0.1 percent in June. Ex-transportation orders were expected to come in unchanged.

The dip by ex-transportation orders reflected decreases by orders for primary metals, computers and electronic products and electrical equipment, appliances and components.

“The rebound in durable goods orders in July was stronger than expected, but the news was not as upbeat as the headline number suggests as most of the upside surprise came from outsized growth in nondefense aircraft orders,” said Nationwide Economist Daniel Vielhaber.

“Outside of that, equipment spending remained subdued as corporate spending plans continue to work around the significant headwinds posed by elevated interest rates and weak domestic and international demand,” he added. “In fact, there were no significant areas of strength when looking beyond commercial aircrafts.”

The report said orders for non-defense capital goods excluding aircraft, a key indicator of business spending, also edged down by 0.1 percent in July after rising by 0.5 percent in June.

Shipments in the same category, which is the source data for equipment investment in GDP, fell by 0.4 percent in July after coming in unchanged in June.

“Both core goods and shipments … contracted and signal weakness in real business equipment spending in the first month of Q3,” said Vielhaber. “We expect this trend to continue going forward and for equipment spending to hold back nonresidential investment when the Q3 real GDP data are released.”

Dollar Tumbled Last Week As Powell Spotlights Rate Cut

Posted on August 26, 2024 by RTT Staff Writer

A categorically dovish shift in the Fed Chair Jerome Powell’s monetary policy hints exacerbated the Dollar’s plunge against major currencies during the week ended August 23. The U.S. Dollar plummeted against the euro, the British pound, the Australian dollar, the Japanese yen, the Canadian dollar, the Swiss franc as well as the Swedish krona during the week ended August 23, 2024. The Dollar Index also recorded heavy losses.

Jerome Powell, in his speech at the Jackson Hole economic symposium on Friday acknowledged that the time had come for policy to adjust, triggering a massive decline in the greenback’s fortunes.

The Dollar Index, a measure of the Dollar’s strength against a basket of 6 currencies dropped 1.7 percent during the week ended August 23. From the level of 102.40 recorded at close on August 16, the index descended steadily, to close at 100.68. The Index recorded the week’s high of 102.48 on Monday and the week’s low of 100.60 on Friday.

In his Jackson Hole speech, Jerome Powell also indicated that the Fed’s focus has shifted to the downside risks to employment rather than inflation. The shift in focus for the Fed which has a dual mandate of maximum employment and stable prices came amidst a large downgrade to the labor market data. The Bureau of Labor Statistics had on Wednesday revised down the non-farm payrolls for the year ended March 2024 by more than 800 thousand after contrasting it with the Quarterly Census of Employment and Wages. The weakness in the labor market, which is seen as increasing the headroom available to the Fed to ease rates also dampened the dollar.

Minutes of the July FOMC released on Wednesday also contributed to the dollar’s weakness. According to the minutes, the vast majority observed that if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting which was scheduled for September. The participants also viewed the incoming data as enhancing their confidence that inflation was moving toward the Committee’s objective. The FOMC participants also acknowledged that the risks to the employment goal had increased and that the risks to the inflation goal had decreased.

The labor data downgrade, the rate cut hints in the FOMC minutes, and the emphatically dovish tone in Jerome Powell’s Jackson Hole speech reinforced expectations of a Fed rate cut in September. The CME FedWatch tool that tracks the expectations of interest rate traders on Friday showed the probability of a 50-basis points rate cut in September to 36 percent, up from 24 percent a week earlier and 11 percent a month earlier.

The dollar’s weakness lifted the EUR/USD pair to a high of 1.1201 on Friday from the week’s low of 1.1023 recorded on Monday. The pair added 1.47 percent during the week, closing at 1.1190 on Friday versus 1.1028 a week earlier. Data released during the week had shown the region’s inflation in July rising in line with the preliminary estimate. An unexpected decline in manufacturing PMI, a better-than-expected services PMI reading, and an unexpected worsening in the consumer confidence indicator also swayed sentiment for the euro during the past week.

The GBP/USD pair jumped 2.05 percent during the week ended August 23, lifting the sterling to $1.3209 from $1.2944 a week earlier. The pair climbed from the low of 1.2932 touched on Monday to the 2-year high of 1.3232 on Friday amidst not-so-dovish hints from Bank of England Governor Andrew Bailey at the Jackson Hole symposium. Stronger-than-expected PMI readings and the market perception that Bank of England would be slow in cutting interest rates also supported the sterling.

The Australian Dollar jumped 1.89 percent against the U.S. Dollar during the week ended August 23. The pair jumped from the low of 0.6661 recorded on Monday to 0.6799 on Friday, but eventually closed at 0.6792. The pair was at 0.6666 a week earlier. The Aussie’s moves came amidst dovish Fed hints that contrasted sharply with hawkish tone in the minutes of the Reserve Bank of Australia’s monetary policy meeting released during the week.

The USD/JPY pair slipped 2.18 percent during the past week amidst the growing monetary policy divergence between the Fed that hinted at easing and Bank of Japan that warned of further hikes. The pair dropped to 144.37, from 147.58 a week earlier. The weekly trading range was a bit wider between a high of 148.06 recorded on Monday and 144.05 on Friday. The uptick in PMI readings, the steady headline inflation, and the spike in core inflation, all seen as increasing the headroom available to the Bank of Japan to raise interest rates, further supported the yen’s climb.

Despite the Fed Chair’s overwhelming acknowledgment of the potential rate cut, lingering geopolitical tensions in the Middle East and the larger-than-expected rebound in U.S. durable goods orders lifted the Dollar Index 0.13 percent higher on Monday. It is currently at 100.85. Though markets appear to have positioned for a broader dollar weakness ahead of the September rate cut, the PCE-based inflation readings due on Friday and the non-farm payrolls data due a week later are expected to be pivotal for currency markets.

The EUR/USD pair has decreased to 1.1155 whereas the GBP/USD pair has dropped to 1.3190. The AUD/USD pair has slipped to 0.6775. The USD/JPY pair also edged down to 144.25 even as markets brace for the potential widening in the monetary policy divergence between the Federal Reserve and Bank of Japan.

Oil Prices Surge More Than 3% on Libya Crude Production Glitch

Posted on August 26, 2024 by Skerdian Meta

Oil prices have been quite volatile recently, surging $10 higher and reversing lower, while in the last few days, we’re seeing another surge, with WTI crude trading at $77.50s. This time the bullish momentum is being driven by tensions, as Libya announces a reduction of Oil production and exports due to disputes among different political fractions, while the recent Israel-Lebanon tensions have also played their part. Continue reading “Oil Prices Surge More Than 3% on Libya Crude Production Glitch” →

Dow Climbs To New Record Intraday High But Nasdaq Pulls Back Sharply

Posted on August 26, 2024 by RTT Staff Writer

After posting strong gains last Friday, the major U.S. stock indexes have moved in starkly opposite directions during trading on Monday. While the Dow has climbed to a new record intraday high, the tech-heavy Nasdaq has pulled back sharply.

Currently, the Dow is just off its highs of the session, up 198.18 points or 0.5 percent at 41,373.26, while the S&P 500 is down 15.29 points or 0.3 percent at 5,619.32 and the Nasdaq is down 196.04 points or 1.1 percent at 17,681.75.

The continued advance by the blue index comes amid strong gains by Dow Inc. (DOW), American Express (AXP) and Caterpillar (CAT).

On the other hand, substantial weakness among semiconductor stocks is weighing on the Nasdaq, with the Philadelphia Semiconductor Index tumbling by 2.2 percent.

Within the semiconductor sector, AI darling Nvidia (NVDA) has slumped by 2.6 percent ahead of the release of its fiscal second quarter results after the close of trading on Wednesday.

Computer hardware stocks have also shown a notable move to the downside, dragging the NYSE Arca Computer Hardware Index down by 1.4 percent.

Meanwhile, steel stocks are seeing considerable strength on the day, as reflected by the 1.3 percent gain being posted by the NYSE Arca Steel Index.

Energy stocks are also turning in a strong performance as the price of crude oil has surged amid geopolitical concerns after Israel and Hezbollah traded a barrage of strikes across the Lebanon border.

On the U.S. economic front, the Commerce Department released a report showing a sharp increase by new orders for U.S. manufactured durable goods in the month of July.

The Commerce Department said durable goods orders spiked by 9.9 percent in July after tumbling by a revised 6.9 percent in June.

Economists had expected durable goods orders to jump by 4.0 percent compared to the 6.7 percent plunge that had been reported for the previous month.

The substantial rebound by durable goods orders came as orders for transportation equipment skyrocketed by 34.8 percent in July after plummeting by 20.6 percent in June.

In the bond market, treasuries are seeing modest strength, extending the upward move seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.9 basis points at 3.788 percent.

Bullish Momentum Builds for XRP Price After SEC Clearance: A Breakout Imminent?

Posted on August 26, 2024 by Sophia Cruz

XRP, the cryptocurrency associated with Ripple, is witnessing a surge in bullish momentum following a significant legal victory against the U.S. Securities and Exchange Commission (SEC). The SEC recently dropped charges against Ripple executives Brad Garlinghouse and Chris Larsen, a move seen as a pivotal win for Ripple and the broader crypto community. This legal development has injected renewed optimism into the market, with XRP’s price poised for a potential breakout.

Bullish Momentum Builds for XRP Price After SEC Clearance: A Breakout Imminent?

Since the announcement, XRP has shown signs of recovery, rallying from its previous lows. The market sentiment has shifted positively, driven by investor confidence that Ripple’s legal woes are nearing an end. Analysts are now closely watching XRP’s price action, as technical indicators suggest a bullish breakout could be imminent. XRP has been trading within a tight range, and a decisive move above key resistance levels could pave the way for a substantial upward rally.

Technical analysts point out that XRP is currently testing critical support and resistance zones. A break above the $0.60 resistance level could trigger a significant buying spree, potentially pushing the price towards $0.70 and beyond. The Relative Strength Index (RSI) indicates that XRP is gaining momentum, suggesting that buying pressure is building up. XRP could see a sustained rally in the coming weeks if this trend continues.

Moreover, the broader cryptocurrency market’s outlook appears favorable, with Bitcoin and Ethereum also showing signs of strength. This positive sentiment will likely spill over into altcoins like XRP, further fueling its upward momentum. However, traders are advised to remain cautious, as the market remains volatile, and any unexpected news or regulatory changes could impact the current trend.

In addition to the SEC’s decision, Ripple’s recent partnership with major financial institutions and ongoing efforts to expand its global footprint is expected to bolster XRP’s utility and adoption. These factors, combined with the positive legal news, create a favorable environment for XRP to gain traction and possibly break out of its current price range.

As the market awaits further developments, XRP holders are optimistic that the cryptocurrency is on the verge of a breakout. With bullish sentiment building and key technical indicators aligning, XRP could soon experience a significant upward movement, marking a potential turning point in its market trajectory.

Asian Markets Volatile As Key Inflation Data Looms

Posted on August 26, 2024 by Sophia Cruz

In today’s trading, most Asian stock markets showed signs of caution, while both the dollar and bond yields fell ahead of upcoming inflation data. Investors are optimistic that the data could prompt interest rate cuts in the US and Europe.

Asian Markets Volatile As Key Inflation Data Looms

In addition, comments from US Federal Reserve Chairman Jerome Powell indicated that the time has come to begin cutting interest rates, suggesting a potential move by the central bank as early as next month.

Powell’s remarks provided an additional boost to investors, helping to alleviate the market turmoil seen in August. However, analysts cautioned to remain vigilant for any unexpected data that could undermine the optimistic outlook.

Oil prices climbed due to escalating tensions in the Middle East, and Nvidia’s forthcoming earnings report is highly anticipated. Oil prices increased by 0.7% as concerns grew over potential supply disruptions amid rising geopolitical tensions between Israel and Hezbollah.

Traders remained on edge over the situation after Israel conducted airstrikes in Lebanon on Sunday, claiming to have destroyed “thousands” of Hezbollah rocket launchers and prevented a major attack.

In response, Hezbollah stated that it had launched its own drone and rocket assault.

Meanwhile, Hong Kong’s Hang Seng index is up by 1.1% reaching 17,798.73 while the Shanghai Composite remained flat at 2,855.52.

Tokyo’s Nikkei 225, on the other hand, lost 0.7% closing at 38,110.22. Tokyo stocks were pressured by a strengthening yen, which surged on Friday following remarks from Fed Reserve Chair and a signal from Bank of Japan Governor Kazuo Ueda that another rate hike could be on the table if inflation and economic conditions meet expectations.

USDJPY Claims Some of Last Week’s Losses After Mixed Durables

Posted on August 26, 2024 by Skerdian Meta

The USD/JPY trend has shifted since July, with the currency pair moving lower last week after a brief retracement higher. This decline confirms its negative bias and the resumption of the downtrend. The shift is largely due to diverging monetary policies from the Federal Reserve and the Bank of Japan, as highlighted by Fed Chair Jerome Powell’s remarks at the Jackson Hole Symposium and BOJ Governor Kazuo Ueda’s address to Japan’s National Diet. Continue reading “USDJPY Claims Some of Last Week’s Losses After Mixed Durables” →

Cybersecurity Investigation Lands Telegram Founder in Jail

Posted on August 26, 2024 by Timothy St. John

On Saturday, Telegram’s founder, Pavel Durov, was arrested by French authorities outside Paris. An ongoing cybersecurity investigation has determined that Telegram may have permitted criminal activity on the platform.

The company is accused of failing to cooperate with authorities in dealing with a variety of criminal activities, and the Russian billionaire Durov has been taken into custody as a result.

Telegram fired back to say that the company and its owner are not responsible for any abuse of the law that may have occurred on the platform. They further stated that they are awaiting the issue to be resolved quickly.

The investigation is in the preliminary stages, so further findings may exonerate Telegram and its founder, but they could also uncover serious legal missteps. Telegram could be faced with fines and restrictions as a result that may affect how it operates within France as well as the rest of the world.

Any time a major government body imposes fines on a social media platform in one country, that calls the problem to the attention of other governments. The platform may then choose to change its global operations in order to avoid further trouble outside of that one country.

In Telegram’s case, one of the main issues is that the company might not be providing adequate moderation on its platform. In other words, there is a question of due diligence on the part of the company’s management to identify and curtail criminal activity, as well as to bring that activity to the attention of the proper authorities and to work with said authorities to stop criminal activity.

Impact on Telegram Services

Telegram just recently launched new features that use the proprietary Toncoin (TON) cryptocurrency token to give content creators more ways to earn money. This is expected to boost traffic to the platform and make it more viable as a business platform.

Toncoin is currently down by 1.37% today to $5.50 (TON/USD). Telegram will likely take whatever steps are necessary to protect the value of their coin, and any ongoing, lengthy legal investigation is liable to hurt Toncoin’s value.

Telegram is deeply dedicated to using cryptocurrency for payment as a secure, low cost, and quick method of payment. As one of the largest social platforms currently operating, and as one of the most significant crypto supporters, Telegram’s business will directly affect the crypto market.