Last week, the international market was volatile, with the Federal Reserve and Bank of England holding their ground, and the Bank of Japan ending its negative interest rate cycle.
In terms of the market, the US stock market rose overall, with the Dow Jones Industrial Average up 1.97%, the Nasdaq up 2.85%, and the S&P 500 index up 2.29%. The performance of the three major European stock indexes was divided, with the FTSE 100 index in the UK rising 2.63%, the DAX 30 index in Germany rising 1.50%, and the CAC 40 index in France falling 0.15%.
There are many highlights this week, and Federal Reserve Chairman Powell will make another appearance; The personal consumption expenditure (PCE) index in February may affect the prospect of interest rate cuts in June; International gold prices have risen and fallen, intensifying market divergence. Multiple key data from Europe have been released, and the market is paying attention to the performance of inflation and consumer indices.
Can inflationary pressures in the United States be alleviated
The Federal Reserve held its interest rate meeting last week and maintained interest rates unchanged for the fifth consecutive time. Although inflationary pressures have recently escalated, the latest interest rate chart shows that the Federal Open Market Committee (FOMC) expects to cut interest rates three times this year. This week, several Federal Reserve officials will give speeches, and Powell will participate in discussions at the macro and monetary policy meeting held by the Federal Reserve in San Francisco on Friday. The latest statements on economic and monetary policy are worth paying attention to.
Because the Federal Reserve needs further evidence of slowing inflation before lowering interest rates, future data will receive more attention. As the preferred inflation indicator for FOMC, the February PCE price index became the biggest focus. After the release of the Consumer Price Index (CPI) and Producer Price Index (PPI) in February, the market expects the core PCE to grow by 0.3%, a decrease of 0.1 percentage points from January, but still higher than the sustainability decline of 0.2%. At the same time, affected by inflation, actual consumer spending may fall for the second consecutive month on month.
In addition, the Consumer Confidence Index, University of Michigan Consumer Survey, and Chicago Purchasing Managers Index (PMI) data are crucial for market assessment of the economic situation at the end of the first quarter. Mortgage interest rates fell in early February, which has boosted existing home sales, and it is expected that new home sales will continue to rebound in February.
In terms of financial reports, companies worth paying attention to this week include Wei Haomei, Carnival, Jeffrey, and Walgreens, among others. Chinese concept stock Zhihu will also disclose its performance.
It is worth mentioning that the media group under former US President Trump is expected to complete its IPO this week after completing its merger with Special Purpose Acquisition Corporation (SPAC) - Digital World Acquisition Corp, with the code DJT. Considering Reddit's performance on the New York Stock Exchange last week, its listing may bring timely rain to Trump, who is currently facing a huge legal bill of $450 million.
Crude oil and gold
International oil prices slightly rose last week, and investors are concerned about the prospects of the situation in Gaza. At the same time, there are reports that the United States has urged Ukraine to stop attacking Russia's energy infrastructure. The WTI crude oil near month contract rose 0.06% per week to $80.43 per barrel, while the Brent crude oil near month contract rose 0.11% per week to $85.43 per barrel,
US Secretary of State Antony Blinken said last week that the talks in Qatar will focus on a six week truce agreement that will allow the release of 40 Israeli hostages in exchange for hundreds of Palestinians held in Israeli prisons.
Manish Raj, Managing Director of Velandera Energy Partners, stated that oil prices have remained stable at around $80 and there has been no further progress. "This is because global market inventories are generally sufficient, and the timing of interest rates is somewhat ambiguous for the Federal Reserve."
The international gold price fell after hitting $2200 last week, and the market continues to speculate on the prospects of the Federal Reserve's policy. The COMEX gold futures contract for April delivery on the New York Mercantile Exchange rose 0.35% on the week to $2160.50 per ounce.
Phillip Streible, Chief Market Strategist at Blue Line Futures, said, "As long as our real interest rates are low and the central bank continues to buy, while retail demand and political risk hedging, the depth of the (gold) pullback is limited." He added that the gold price needs to remain above support of around $2145 to $2150 to continue its bullish outlook.
However, Dao Ming Securities stated in the report that "the situation with gold has deteriorated, and CTA is now the 'largest long'. The positioning of macro trading is consistent with the pricing of the interest rate market, and purchases have decreased after large-scale buying activities in the past few months."
In the physical market, jewelry sales in India have been slightly sluggish in the past week due to record prices hitting consumers, but demand in China remains stable.
Can the European economy stabilize
"We will see an increasing likelihood of the first rate cut by the European Central Bank in the coming months, and June's actions are more likely than the next meeting of the European Central Bank in April."
Nigel's view is consistent with recent guidance from ECB President Lagarde and some other interest rate makers. But he also warned against prematurely lowering borrowing costs and not assuming that a series of interest rate cuts will follow the first step. "For the rest of this year, this is not yet an established agreement," he said.
In terms of data, the March inflation data for Spain, Belgium, France, and Italy will be closely monitored. The sluggish Eurozone economy has recently shown signs of recovery, and the upcoming business survey will indicate whether this recovery is strengthening, including Germany's GfK April Consumer Confidence Index, Eurozone March Business and Consumer Index, and France's March Consumer Confidence Index.
The Bank of England maintains interest rates unchanged, stating that the conditions for lowering interest rates are "moving in the right direction.". According to data released by the UK Office for National Statistics last week, the CPI in February increased by 3.4% year-on-year, significantly lower than the 4% in the previous month and the lowest level in two and a half years, which is expected to advance the interest rate cut by the Bank of England.
The pricing of currency market derivatives shows that investors are fully considering the interest rate cut in August, and there is also a high possibility of taking action in June. The timing of the rate cut will depend on whether the data shows that the UK economy remains strong and the degree of inflation decline.
Highlights of this week