Greetings, traders! Welcome back to our daily Market Analysis. Today, we have gathered the top news and interesting fundamental analysis for your consideration. Let's dive in and stay informed!
Key News:
UK - CPI (YoY) (Jun)
Eurozone - CPI (YoY) (Jun)
USA - Building Permits (Jun)
USA - Crude Oil Inventories
Market Sentiment Boosted by Strong Earnings and Economic Data, Gold Prices Soar to Six-Week High
Tuesday's trading session brought a wave of optimism among investors, with the S&P 500 surging to new heights, thanks to impressive quarterly results from prominent Wall Street banks and other major corporations.
The S&P 500 index demonstrated significant strength, recording a notable 0.8% increase, while the Dow Jones Industrial Average saw an even more remarkable surge of 1%, adding a substantial 359 points to the index. The Nasdaq also showcased its resilience, posting a solid 0.9% upward movement.
Moreover, in response to the prevailing positive sentiment, gold prices experienced a surge, reaching a near six-week high. Investors appear to be reacting favorably to the combination of strong corporate earnings and encouraging economic data, fueling the upward momentum across various sectors in the market.
NASDAQ indices daily chart
Dow Jones indices daily chart
S&P500 indices daily chart
Bank of America Corp (BAC) emerged as a standout performer, driving a surge in banking stocks with an impressive rise of over 4%. The bank's second-quarter earnings exceeded analyst estimates, mainly attributed to the significant boost in loan income due to higher interest rates. This strong performance has solidified Bank of America's position as a key player in the financial sector and has garnered positive attention from investors.
Bank of America stock daily chart
Morgan Stanley (NYSE: MS) Shines with Impressive Q2 Results
Morgan Stanley (MS) proved to be another success story, witnessing a remarkable rally of 5% after reporting second-quarter results that surpassed estimates on both the top and bottom lines. The strong performance of its wealth management business effectively balanced out the trading business's weakness, which experienced a decline in equity and fixed-income revenue. This outstanding performance has garnered positive attention from investors and reinforces Morgan Stanley's position as a top-performing financial institution.
Morgan Stanley stock H4 chart
Tuesday's stock market session witnessed a slight downturn, influenced by US retail sales data that caused initial volatility but eventually settled. The June retail sales figures were notably weaker than expected, creating some concern, but the impact was partially offset by the revision of May's numbers, resulting in a mixed market sentiment. In response to a slowdown in consumer and producer price gains in June, the dollar experienced a significant decline. The market remains cautious as investors analyze the economic indicators to gauge the direction of future trends.
US Retail Sales
The recent developments in the US economy have led to increased expectations that the Federal Reserve will put a halt to its rate hikes after the anticipated 25 basis-point increase at the July 25-26 meeting.
Fed funds futures traders are projecting an additional 33 basis points of tightening later in the year, with the benchmark rate expected to peak at 5.40% in November.
On Tuesday, data revealed an unexpected drop in production at US factories in June. However, the second quarter showed a rebound, especially in motor vehicle output, which accelerated after two consecutive quarterly declines.
Traders are now closely monitoring inflation releases from various regions, including the eurozone, Britain, and Japan, to gain further insights into whether inflation is cooling globally. These indicators will play a crucial role in shaping market sentiment and monetary policy expectations moving forward.
US Dollar Currency Index daily chart
As a result of the recent economic developments, the dollar index showed some volatility, last up 0.04% on the day at 99.924. However, it had previously fallen to 99.549, marking the lowest level since April 2022. These fluctuations indicate the significant impact of the latest data on the dollar's performance in the foreign exchange market.
Against the Japanese yen, the dollar managed to gain 0.10%, reaching 138.83. This recovery came after the drop to 137.245 experienced on the previous Friday, which was the lowest level since May 17. The currency's rebound against the yen reflects the influence of the evolving economic landscape on currency pair movements.
As traders continue to assess economic indicators and central bank policies, the dollar's performance is likely to remain subject to fluctuations in the forex market. Investors are closely monitoring data releases and inflation figures from major economies to determine potential shifts in monetary policies and overall market sentiment.
USD/JPY daily chart
Euro Holds Steady Amid ECB's Caution on Inflation
On the flip side, the euro maintained its stability, trading at $1.1229, following an earlier climb to $1.1276, reaching its highest level since February 2022.
European Central Bank (ECB) governing council member Klaas Knot's comments on Tuesday revealed the bank's vigilant approach towards inflation. Knot emphasized that the ECB would closely observe any indications of inflation cooling down in the coming months, ensuring a cautious stance on implementing rate hikes. This cautious approach from the ECB contributed to the euro's steady performance in the foreign exchange market.
With investors closely monitoring central bank communication and economic indicators, the euro's movements are subject to shifts in market sentiment and policy expectations. As the global economic landscape continues to evolve, market participants will continue to assess data releases and central bank statements to gauge the euro's direction in the forex market.
EUR/USD daily chart
Market expectations are leaning towards the European Central Bank (ECB) implementing a 25 basis points interest rate increase in the upcoming week.
On the other hand, the British pound experienced a marginal decline of 0.22%, settling at $1.3046 after reaching $1.3144 on Thursday, which marked the currency's highest level since April 2022. This volatility in the pound's performance reflects the market's sensitivity to economic indicators and interest rate expectations.
These currency fluctuations underscore the significant impact of various factors on the global foreign exchange market. Traders and investors closely monitor inflation concerns and central bank communications, as these elements play a crucial role in shaping market sentiment and currency movements. As the economic landscape continues to evolve, market participants will continue to assess data releases and policy signals to navigate the currency market's changing dynamics.
GBP/USD daily chart
The Reserve Bank of Australia (RBA) is currently engaged in a balanced debate among policymakers, evaluating the effectiveness of existing restrictive measures and considering potential future actions. The central question revolves around the appropriateness of the current conditions and whether additional measures could yield positive or negative outcomes. Although the market is confident in the likelihood of another rate hike by the RBA this year, the exact timing remains uncertain. As demonstrated throughout this year, expectations can shift rapidly, making it challenging for investors to predict future developments with certainty.
In the realm of precious metals, gold prices are once again exhibiting a gradual upward trend after experiencing a brief pullback in recent sessions. Initially facing resistance near $1,960, the price underwent a minor retracement but found support around $1,940. The ongoing support from lower yields and a weakened dollar continues to significantly contribute to gold's positive performance, as evidenced by the market movements observed yesterday. Investors are closely monitoring these factors as they continue to impact the precious metal's trajectory in the market.
XAU/USD daily chart
In response to the recent developments, gold has surged past the significant $1,960 threshold, attaining a nearly six-week high. Yields and the dollar have displayed fluctuations subsequent to the retail sales data release, influencing gold's performance in turn. Nevertheless, the market has not yet exhibited a clear and definitive direction for the precious metal.
The crucial factor to observe now is whether gold can maintain its position above the critical $1,960 level, which it is currently approaching for testing. A successful hold above this mark could be interpreted as a bullish confirmation signal. In such a scenario, the next potential challenge for gold's price might be reaching the $1,980 level. Investors are closely monitoring these price movements and are poised to respond to any further signals indicating the precious metal's trajectory.
Key News:
UK - CPI (YoY) (Jun)
Eurozone - CPI (YoY) (Jun)
USA - Building Permits (Jun)
USA - Crude Oil Inventories
Market Sentiment Boosted by Strong Earnings and Economic Data, Gold Prices Soar to Six-Week High
Tuesday's trading session brought a wave of optimism among investors, with the S&P 500 surging to new heights, thanks to impressive quarterly results from prominent Wall Street banks and other major corporations.
The S&P 500 index demonstrated significant strength, recording a notable 0.8% increase, while the Dow Jones Industrial Average saw an even more remarkable surge of 1%, adding a substantial 359 points to the index. The Nasdaq also showcased its resilience, posting a solid 0.9% upward movement.
Moreover, in response to the prevailing positive sentiment, gold prices experienced a surge, reaching a near six-week high. Investors appear to be reacting favorably to the combination of strong corporate earnings and encouraging economic data, fueling the upward momentum across various sectors in the market.
Bank of America Corp (BAC) emerged as a standout performer, driving a surge in banking stocks with an impressive rise of over 4%. The bank's second-quarter earnings exceeded analyst estimates, mainly attributed to the significant boost in loan income due to higher interest rates. This strong performance has solidified Bank of America's position as a key player in the financial sector and has garnered positive attention from investors.
Morgan Stanley (NYSE: MS) Shines with Impressive Q2 Results
Morgan Stanley (MS) proved to be another success story, witnessing a remarkable rally of 5% after reporting second-quarter results that surpassed estimates on both the top and bottom lines. The strong performance of its wealth management business effectively balanced out the trading business's weakness, which experienced a decline in equity and fixed-income revenue. This outstanding performance has garnered positive attention from investors and reinforces Morgan Stanley's position as a top-performing financial institution.
Tuesday's stock market session witnessed a slight downturn, influenced by US retail sales data that caused initial volatility but eventually settled. The June retail sales figures were notably weaker than expected, creating some concern, but the impact was partially offset by the revision of May's numbers, resulting in a mixed market sentiment. In response to a slowdown in consumer and producer price gains in June, the dollar experienced a significant decline. The market remains cautious as investors analyze the economic indicators to gauge the direction of future trends.
The recent developments in the US economy have led to increased expectations that the Federal Reserve will put a halt to its rate hikes after the anticipated 25 basis-point increase at the July 25-26 meeting.
Fed funds futures traders are projecting an additional 33 basis points of tightening later in the year, with the benchmark rate expected to peak at 5.40% in November.
On Tuesday, data revealed an unexpected drop in production at US factories in June. However, the second quarter showed a rebound, especially in motor vehicle output, which accelerated after two consecutive quarterly declines.
Traders are now closely monitoring inflation releases from various regions, including the eurozone, Britain, and Japan, to gain further insights into whether inflation is cooling globally. These indicators will play a crucial role in shaping market sentiment and monetary policy expectations moving forward.
As a result of the recent economic developments, the dollar index showed some volatility, last up 0.04% on the day at 99.924. However, it had previously fallen to 99.549, marking the lowest level since April 2022. These fluctuations indicate the significant impact of the latest data on the dollar's performance in the foreign exchange market.
Against the Japanese yen, the dollar managed to gain 0.10%, reaching 138.83. This recovery came after the drop to 137.245 experienced on the previous Friday, which was the lowest level since May 17. The currency's rebound against the yen reflects the influence of the evolving economic landscape on currency pair movements.
As traders continue to assess economic indicators and central bank policies, the dollar's performance is likely to remain subject to fluctuations in the forex market. Investors are closely monitoring data releases and inflation figures from major economies to determine potential shifts in monetary policies and overall market sentiment.
Euro Holds Steady Amid ECB's Caution on Inflation
On the flip side, the euro maintained its stability, trading at $1.1229, following an earlier climb to $1.1276, reaching its highest level since February 2022.
European Central Bank (ECB) governing council member Klaas Knot's comments on Tuesday revealed the bank's vigilant approach towards inflation. Knot emphasized that the ECB would closely observe any indications of inflation cooling down in the coming months, ensuring a cautious stance on implementing rate hikes. This cautious approach from the ECB contributed to the euro's steady performance in the foreign exchange market.
With investors closely monitoring central bank communication and economic indicators, the euro's movements are subject to shifts in market sentiment and policy expectations. As the global economic landscape continues to evolve, market participants will continue to assess data releases and central bank statements to gauge the euro's direction in the forex market.
Market expectations are leaning towards the European Central Bank (ECB) implementing a 25 basis points interest rate increase in the upcoming week.
On the other hand, the British pound experienced a marginal decline of 0.22%, settling at $1.3046 after reaching $1.3144 on Thursday, which marked the currency's highest level since April 2022. This volatility in the pound's performance reflects the market's sensitivity to economic indicators and interest rate expectations.
These currency fluctuations underscore the significant impact of various factors on the global foreign exchange market. Traders and investors closely monitor inflation concerns and central bank communications, as these elements play a crucial role in shaping market sentiment and currency movements. As the economic landscape continues to evolve, market participants will continue to assess data releases and policy signals to navigate the currency market's changing dynamics.
The Reserve Bank of Australia (RBA) is currently engaged in a balanced debate among policymakers, evaluating the effectiveness of existing restrictive measures and considering potential future actions. The central question revolves around the appropriateness of the current conditions and whether additional measures could yield positive or negative outcomes. Although the market is confident in the likelihood of another rate hike by the RBA this year, the exact timing remains uncertain. As demonstrated throughout this year, expectations can shift rapidly, making it challenging for investors to predict future developments with certainty.
In the realm of precious metals, gold prices are once again exhibiting a gradual upward trend after experiencing a brief pullback in recent sessions. Initially facing resistance near $1,960, the price underwent a minor retracement but found support around $1,940. The ongoing support from lower yields and a weakened dollar continues to significantly contribute to gold's positive performance, as evidenced by the market movements observed yesterday. Investors are closely monitoring these factors as they continue to impact the precious metal's trajectory in the market.
In response to the recent developments, gold has surged past the significant $1,960 threshold, attaining a nearly six-week high. Yields and the dollar have displayed fluctuations subsequent to the retail sales data release, influencing gold's performance in turn. Nevertheless, the market has not yet exhibited a clear and definitive direction for the precious metal.
The crucial factor to observe now is whether gold can maintain its position above the critical $1,960 level, which it is currently approaching for testing. A successful hold above this mark could be interpreted as a bullish confirmation signal. In such a scenario, the next potential challenge for gold's price might be reaching the $1,980 level. Investors are closely monitoring these price movements and are poised to respond to any further signals indicating the precious metal's trajectory.
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