Stay ahead of the financial market with the DIFX Buzz report, which highlights the current market news and movements to help you make informed trading decisions.
Read the Data
Let’s take a quick look at some market data:
Incoming Interest Rates
❖ Investors will be keen to gauge how dovish Fed Chair Powell’s language will be when he speaks at Jackson Hole.
❖ The current sentiment reflects that of a soft landing, with cooling inflationary pressures and robust growth in the economy.
❖ Currently, a September rate hike is not being priced in and investors are focusing on when the Fed plans to cut rates in 2024.
❖ Investors should listen to Jerome Powell’s speech on Friday for any signals as to how long rates will be kept high.
US Recession Dwindles
❖ Recession fears are falling after robust economic data and better-than-expected earnings reports.
❖ Inflation is cooling faster than expected with no signs of negative impact on output in the economy.
❖ Due to the solid performance of the US economy, the Fed can look to keep rates higher for longer without too much risk of a recession.
❖ As recession fears dwindle, we may see economists forecast the Fed cut rates later on in the year.
China Continues to Struggle
❖ As China struggles to recover post-pandemic, they unexpectedly cut the 1-year lending facility rate.
❖ Investors are concerned about whether that is enough to bolster the economy and are betting that more rate cuts will be introduced in the near term.
❖ The real estate market is adding to the weakness in the overall market with major companies in the property sector hanging by a thread.
❖ CPI and PPI are currently undergoing deflation.
❖ New loans are at the lowest in 2 years and home price growth is in negative territory.
❖ Cutting rates will increase capital for investors and boost the real estate market which will, in turn, support inflation.
Inflation Hits Turkey
❖ The key central bank policy rate in Turkey is 17.5%.
❖ Inflation in the country is reaching extremely high as it nears almost 50%.
❖ These inflation figures are unsustainable for the Turkish economy and the governor of the Turkish central bank has vowed to increase rates at a “steady” pace.
❖ There will be a rate increase on Thursday and investors are poised to see how large the rate hike will be.
Look into Markets
Let’s see what happened in markets this week:
Equities
❖ Nvidia which gained 6% last week, outshining its peers, is poised to have a solid week as it will report earnings on Wednesday.
❖ HSBC has raised its price target for Nvidia to $780.
❖ The chip maker has gained more value since the rise of generative AI, and the rest of the tech sector has capitalized on this hype
❖ This earnings report will be key to the equities market as it reflects the AI industry as a whole.
Commodities
❖ Gold is sliding as US bond yields are nearing historic highs.
❖ Unease in China is supporting the Dollar, putting pressure on the value of Gold.
❖ Inflationary pressures are easing while the economy is performing well, and economists are projecting that this will encourage the Fed to hold rates higher for longer.
❖ Oil is consolidating as the market expresses concerns over China’s recovery.
Forex
❖ The Dollar is slightly lower at the start of the week after five weeks of bullish moves.
❖ There isn’t much movement in the Dollar due to investors awaiting signals from Jackson Hole.
❖ Fed Chair Powell is expected to provide some clues as to how the Fed plans to navigate interest rates toward the end of the year.
❖ The South African Rand is trading higher on Tuesday as the BRICS summit kicks off.
Crypto
❖ Bitcoin suffered a series of liquidations last week, leading to the asset’s price falling to $26,030.
❖ Bitcoin broke out of a bullish trend it had been following since the beginning of the year.
❖ The soft-landing narrative, which indicates to the Fed that they can maintain higher rates for an extended period, exerted selling pressure on Bitcoin.
❖ Ethereum is presently trading at $1662 on Tuesday following bearish movements in the crypto market.
