Paul Walton
Moderating inflation data boosts Indices, Commodities
Lower-than-expected inflation data, along with weaker personal consumption price data and a disappointing consumer sentiment index, provided an additional boost for stocks this morning, as this lessened fears of another rate hike. Wall Street rebounded and the broader commodity sector did well. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Lithium price slides on supply and demand concerns
A new type of Lithium-ion battery and the end of Chinese support for the Electric Vehicle (EV) industry could weaken global demand for Lithium. At the same time 8.5 million tons of lithium, equivalent to 10% of the current world reserve, were recently found in a deposit in Iran. The price of Lithium Carbonate, the essential raw material, halved in anticipation of lower demand and increased supply. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Oil up again, Indices flat on rate uncertainty
Stocks were generally higher at midday, but lack any strong impetus to move higher. Consumer spending grew less than expected in the fourth quarter, reflecting apprehension over the direction of the economy. That, combined slower GDP growth, continues to fuel Wall Street’s argument that the Fed “must” pivot its policy in the months ahead to end rate rises, and start rate cuts. However, Labor market data out today illustrate have a very tight jobs market, which continues to feed wage inflation. No easy answers … For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Major indices stabilize, absent news, real economy still strong
Real economic data is beginning to reflect the benefit of moderating US long-term interest rates in housing demand and equity prices. Recent housing market data suggests that consumers are adjusting to a modestly higher rate environment, and still have enough confidence in the economy to make new home purchases. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Markets tread water, with Oil and Gold higher
The health of banks remain in focus on Wall Street, as traders monitor Congressional hearings on the recent bank failures. Wall Street seems to accept that pain is an inevitable product of the Federal Reserve’s monetary tightening designed to break the back of inflation. Financial markets were marginally lower, awaiting new data points on inflation, rates or the health of the banking sector. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Precious moments: Did Gold just remind financial markets’ what it’s there for?
Gold has attempted to breach the $2,000 mark over the past two weeks as bond yields sank and banks failed. Was this a reminder of the Metal’s safe-haven status? While the Federal Reserve will continue to reduce the size of its balance sheet, selling bonds or at least not rolling them over at maturity, it added $394 billion, or 5% of its balance sheet holdings over the past three weeks as a lender of last resort to calm markets given banking failures. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Stock Indices Gain on Moderating Bank Failure Fears
Fears of more failures in US regional banks were allayed after Silicon Valley Bank was purchased by First Citizens BancShares, Inc., easing contagion fears. There’s a cost to the bank failures – many of which were the product of poor decisions. But there’s a bigger cost to be paid by the erosion of confidence in the nation’s banking system. Investors hope that the recent actions by regulators have come a long way toward reinstating confidence in the banking system, although we still likely have some bumpy times ahead. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Dollar and Bonds Gain, Stock Indices Flat on More Bank Fears
Financial markets remain concerned about Deutsche Bank even after assurances from authorities, with a flight to safety evident in US bonds and the Dollar. Deutsche Bank shares are down around 12% this week, after their credit default swaps spiked unexpectedly today (an indicator of stress). While no story has accompanied the move it nonetheless spooked markets. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Vincent’s View: Strong economy, weak stock market?
Vincent Deluard argues that the resilience of the economy and the tightness of the labor market is bad news for a stock market whose rich valuations rely on low rates and record margins. Earnings downgrades and missed forecasts could trigger stocks to move lower.
Suderman Says: Will announcing a peak in rates be a mistake?
Arlan Suderman notes that financial markets continued to rally after yesterday’s 25 basis point rate hike, as the central bank suggested an end to rate hikes is near by removing a line from its statement about "ongoing increases." Federal Chair Jerome Powell did his job, keeping Federal Open Market Committee (FOMC) members on the same page, while speaking with confidence regarding the economy and the banking sector. Will announcing a peak in rates be a mistake?
Precious moments: Gold rallied towards $2,000 on rate rise, markets favor its safe haven status
Rhona O'Connell notes that Gold edged higher before and during yesterday’s FOMC meeting, closing on the $2,000 per ounce level last seen in august 2020, and 14% up year-to-date. Gold will end the year at $2,070 per ounce in the view of O'Connell, StoneX Head of Commodity Market Analysis for EMEA & Asia.