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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/.
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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.
Suderman Says: Rates up as expected, but peak in sight?
Arlan Suderman says that markets bounced on news of an anticipated 25 basis point rate hike, but the Fed will no doubt be criticized by some market observers for its caution if inflation takes hold. The central bank suggested an end to rate hikes is near by removing a line from its statement about "ongoing increases."
Suderman Says: To raise rates or not, the Fed walks a tightrope
Suderman Says that this may be one of the most pivotal meetings of Jerome Powell’s tenure as Chairman of the Federal Reserve. The Federal Open Market Committee (FOMC) will discuss whether to stay the course with its monetary tightening at a time when confidence in the nation’s banking system is being tested. On the other hand, policymakers don’t want to repeat mistakes made in the 1980’s when they cut interest rates too soon, allowing inflation to get a tighter grip on the economy that then required even larger rate hikes to get it under control.
Suderman Says: Markets stabilize despite Bank stocks and interest rate uncertainty
Suderman Says that lingering uneasiness over bank solvency and this week’s Federal Reserve meeting worried traders overnight as Wall Street remains in an overall “risk-off” mode. Banking stocks largely led the way lower on fears of a broader contagion risk within the sector.
Baseline: Indonesia’s export bans reinforce local industry, limits exports
Natalie Scott-Gray highlights Indonesia's ‘grand strategy’ to support its domestic refining industries, limiting the export of unprocessed raw materials – most notably nickel – and increasing the shipment of refined products which benefit local industry.
Petroleum Post: Oil faces choppy trading ahead, long-term bullish
The oil market has been extremely volatile, tracking a volatile equity market. Crude oil was down 5% today, with WTI at $66.45. WTI prices have dropped to their lowest price since December 2021, losing over $14 per barrel in 2 weeks. A long-term bull run is still on the cards. However, current market dynamics point to continued downward pressure on prices.
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Suderman Says: Risk-on thanks to sliding Bank stocks and interest rate uncertainty
Suderman says that equity markets fell again today, with bank shares of First Republic and Credit Suisse leading the way lower. Investor focus remains on interest rates and the outside markets, especially now with the Fed meeting next week and expectations for rate hikes scaled back.
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Baseline: Peru announces reopening of key mining corridor, adding copper exports to world supply
Natalie Scott-Gray discusses the importance of Peru’s reopening of key mining corridor after a period of significant political volatility: the countries mines are responsible for 12% of global copper output, or 2.8 million tons in 2023; in addition, Peru produces significant lead, zinc, tin, and silver.
European rate rises and bank bailouts calm global markets
Suderman says that the European Central Bank hiked its benchmark interest rate by 50 basis points as expected this morning but gave no signals about future moves. US economic data remains resilient. Markets welcomed continued efforts to control inflation, and another bank bailout (but bigger). How the Fed responds with rate rises is a key focus.
Baseline: Russia increasingly excluded from global Aluminium markets
Natalie Scott-Gray discusses risks of Russian growing exclusion from global Aluminium markets, specifically Glencore’s decision to cut ties in 2024, and President Biden’s policy focus.
Markets at a turning point on rate expectations and the threat of endemic inflation
Arlan Suderman discusses his belief that the greater threat to our economy is for inflation to become deeply engrained, if the Fed backs off its focus on this problem, setting in motion a series of events that ends up creating long-term pain for everyone.
Baseline: Base metal price gains moderate as demand outlook sours
Natalie Scott-Gray discusses how a fundamental weakness in demand has caused a year-to-date retrenchment in the base metal index. Some explanations include souring macro demand conditions in the US, and weaker than expected economic forecasts from China after its annual ‘Two Sessions’ meetings (annual plenary sessions of the National People's Congress and of the Chinese People's Political Consultative Conference.)
Moderating rate hikes silver lining of bank failures?
Arlan Suderman notes that calm is restored on Wall Street for now, as worries about bank failure contagion ease. Banks failures brought a silver lining: diminished expectations for rate rises. However, consumer price inflation day is still a problem, just as the Fed’s freedom to raise rates might be limited. Volatility and bond yields moderated, but for how long?