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Global Market – Gold, ECB Meeting & U.S. Fed – Powell ‘s testimony

Global Market – Gold, ECB meeting & U.S. Fed – Powell ‘s testimony

This week we will focus on ECB meeting outcome, ECB kept interest rate unchanged and commentary is important to watch out for.  U.S. Fed chair Jerome Powell testimony this week provided further cues on interest rate trajectory and we would be focus on gold which is currently trading at above $2150.

ECB Meeting outcome on 7-Mar-24

ECB kept rates unchanged at 4.50% for fourth straight time as ECB expect softer inflation and stable economic growth, ECB guides for rate cut in June 2024 meeting. 

“We clearly need more evidence, more detail,” she told reporters Thursday in Frankfurt. “We know that this data will come in the next few months. We will know a little more in April, but we will know a lot more in June.”

Christine Lagarde Signals ECB Cut in June with 2% Inflation in Sight

European Central Bank President Christine Lagarde indicated policymakers may be in a position to lower interest rates in June as fresh projections showed inflation hitting the 2% target in 2025.

U.S. Fed Chair Jerome Powell’s Senate Testimony

Powell reiterated that it’s likely the Fed will cut interest rates this year. “We’re waiting to become more confident that inflation is moving sustainably at 2%,” he said. “When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction.” He also said the Fed is well aware of the risk of cutting too late.

Gold Climbs to Record on Mix of Fed Pivot and Geopolitical Risks

Gold touched an all-time high as fund buying combined with speculation over a Federal Reserve pivot and geopolitical and financial risks underpinned a rally in the precious metal.

Equichain Wealth Advisors: Market View & Opinion

Last week, we have turned neutral to cautious with balance view last week, this week’s comment by U.S. Fed chair Jerome Powell in a testimony to U.S. Congress and ECB ‘s guidance on expectation of first rate cut in June has provided positive trigger to risk-on sentiment.

We will use any correction to add / deploy fund and recent trend looks positive.  Market not expecting any change in rate in this month, but guidance on rate cut in coming months or likely by May 2024 meeting could provide much needed trigger and rally.

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Global Market – Gold, ECB Meeting & U.S. Fed – Powell ‘s Testimony.pdf
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Global Market – Gold, Cryptocurrency & U.S. Govt averts shutdown

Global Market – Gold, Cryptocurrency & US averts shutdown

Last week, we have discussed how global market continues to trade at recent high on hope of interest rate peaked out and hope of economic stability.  This week we will focus on Gold which has now trading around $2050 & BITCOIN which is now above $60000 almost after two years.  We will also discuss China’s continues effort to boost economy.

Congress Approves Interim Funds to Avert U.S. Government Shutdown

The Senate passed the bill on a 77-13 vote on Thursday night, hours after the House acted on it.

Fed Officials emphasize Data to Guide Pace of Interest-Rate Cuts

Three Federal Reserve officials said the pace of interest-rate cuts will depend on incoming economic data, suggesting the path to lower borrowing costs may look different than in previous rate-cutting cycles.

U.S. Fed’s Preferred Inflation Metric Increases by Most in A Year

The Federal Reserve’s preferred gauge of underlying inflation rose in January at the fastest pace in nearly a year, helping explain policymakers’ patient approach to start cutting interest rates.

Bitcoin Scales $60,000 As ETF Demand Puts Record High in Sight

A wild 24 hours for the cryptocurrency market saw Bitcoin jump as much as 13% on Wednesday to $63,968 — its first trip above $60,000 since November 2021. Along the way, leading US digital-asset exchange Coinbase suffered outages as traffic surged before eventually restoring services.

Gold trading above $2050

Gold has been trading around $2000 level for some time now, gold price would rally if interest rate decline or any economic uncertainty.  Gold is considered as safe heaving and asset class which comes into focus in case of any economic uncertainty.  

Japanese Currency Official Warns Against Unstable FX At G-20

Japan kept up its drumbeat of warnings against currency volatility, with a top finance ministry official saying that foreign exchange rates should reflect fundamentals, and authorities in Tokyo are watching moves closely.

Equichain Wealth Advisors: Market View & Opinion

We remain cautious on Japan ‘s change in monitory policy which was -0.10 interest rate since 2016.  Japanese currency official warning against unstable FX at G-20 needs to see with cautious.

Global market and risk-on sentiment remains very much strong; however, we have been cautious for past weeks, but market momentum seems to be very strong.  Incoming economic data due next week could provide further cues as we remain neutral with balance view.   Recent up move in Gold & Bitcoin is interesting to watch as incoming economic data needs to be watched carefully ahead US Fed meeting on 20-Mar-24.

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Global Market – Gold, Cryptocurrency & US averts shutdown.pdf
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Global Market – US Market at record high – DOW30 above 39000 & S&P500 above 5000

Global Market – US Market at record high – DOW30 above 39000 and S&P500 above 5000

This week we will discuss US market which are trading at record high, US FOMC meeting minutes released this week and how China continue to provide support to its economy which continue to struggle despite opening up in last January.

NVIDIA after its fantastic earnings lead the rally in tech stocks.  US FOMC meeting minutes released this week failed to provide any timing of rate cut, yet not negative reaction by market and market took this outcome with a stable view.  

Fed Minutes Suggest Officials Are Seeking Smallest Balance Sheet Possible

Federal Reserve policymakers are gearing up for a bigger discussion about the central bank’s balance sheet, but for now its clear officials are keen to make it as small as possible.

U.S. Jobless Claims Decline to Lowest Level in A Month

Initial claims decreased by 12,000 to 201,000 in the week ending Feb. 17, according to Labor Department data released on Thursday. The figure was lower than all economists’ estimates in a Bloomberg survey.

Top Fed Officials Bolster Case for Patient Stance on Rate Cuts

Three top Federal Reserve officials hammered home the message Thursday that the US central bank is still on track to cut interest rates this year — just not anytime soon.

China’s Central Bank Tries to Catch Markets Off Guard with Surprise Easing

A record cut to a key lending rate earlier this week announced by the People’s Bank of China was just the latest unexpected move since Governor Pan Gongsheng took office last summer. At a press briefing last month, he shocked with an outsized cut to banks’ reserve requirement ratio.

Equichain Wealth Advisors: Market View & Opinion

We are certainly cautious as rally seen in market globally seems to be running ahead of its on positive expectation and events will follow later on.  Risk-On sentiment continue to provide much needed boost as economy remains strong.  

In such time we would continue to maintain balance approach with investment around 65% to 75% while keeping cash level anywhere between 25% to 35%.  We do fear that market may be venerable to any negative news which could increase volatility in near term. 

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Global Market – US Market at record high.pdf
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Global Market – Key events 5 to 9 Feb 2024

Global Market – Key events for 5th to 9th February 2024

This week we will focus on China’s economy, how Powell ‘s interview to “60 Minutes” and also discuss BOJ shift in policy change from negative interest rate.  This week has been relatively quite and focus has been on corporate earnings.

China’s Consumer Prices Drop at Fastest Pace Since 2009

China’s consumer prices fell last month at the fastest pace since the global financial crisis as the world’s second-largest economy struggles to shake off persistent deflation pressures.

Germany’s Industrial Downturn Stretches into A Seventh Month

German industrial output extended its slump to a seventh month in December, underlining the struggles gripping Europe’s largest economy.

China Tightens Some Trading Restrictions for Domestic and Offshore Investors

China is tightening trading restrictions on domestic institutional investors as well as some offshore units as authorities fight to stem a deepening stock rout, according to people familiar with the matter.

Powell Tells ‘60 Minutes’ Fed Is Wary of Cutting Rates Too Soon

Federal Reserve Chair Jerome Powell said Americans may have to wait beyond March for the central bank to cut interest rates as officials look for more economic data to confirm that inflation is headed down to 2%.

Trillions Of Yen Pile Up at Negative Rates in Bets on BOJ Shift

Japan’s biggest commercial banks are letting money accumulate in negative interest-rate accounts at the central bank — another sign that the world’s last sub-zero rate policy is coming close to the end.

Equichain Wealth Advisors: Market View & Opinion

In last few weeks in our coverage of global market, we have been focusing mainly on three countries and their central banks.  U.S., Japan & China.

We would like to highlight that market is optimistic and currently trading near its high as interest rate going down in US could be positive for risk-on sentiment, China’s effort to boost economy is also positive but the real concern in BOJ moving away from negative interest rate policy.

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Global Market – Key events this week 5 to 9 Feb 2024.pdf
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Global Market – Key events for 22 to 26 January 2024

Global Market – Key events for 22 to 26 January 2024

This week, we will focus on US Q4 2023 GDP data, ECB interest rate decision & China’s steps to boost economic recovery.  Central banks meeting starts with BOJ & ECB meeting this week.  We would like to focus on stocks whether news this week would have any impact global trend.

BOJ Keeps Negative Rate for Now as It Prepares Ground for Hike

The BOJ maintained its -0.1% short-term rate and kept yield curve control parameters intact at the end of a two-day meeting, according to its statement Tuesday. 

Red Sea Turmoil Sends Economic Shockwaves Far and Wide

Two months of missile, drone and hijacking attacks against civilian ships in the Red Sea have caused the biggest diversion of international trade in decades, pushing up costs for shippers as far away as Asia and North America.

China To Cut Bank Reserve Ratio in Bid to Boost Growth, Markets

The 0.5 percentage-point cut to the ratio, or the amount of cash that banks have to keep in reserve, on February 5 will provide 1 trillion yuan ($139 billion) in long-term liquidity to the market, Pan said during a briefing with the press Wednesday.

Fed Raises Rate on Emergency Loan Program to Stop Arbitrage

The Federal Reserve raised the rate on loans to banks issued under an emergency lending program launched last year, after borrowing surged in recent weeks as institutions took advantage of the attractive financing terms.

ECB To Hold Interest Rates as Lagarde Beats Back Cut Bets

The European Central Bank is set to keep borrowing costs on hold for a third meeting while stepping up efforts to convince investors that interest-rate cuts aren’t imminent.

US GDP Grew 3.3% Last Quarter, Capping Unexpectedly Strong Year

Gross domestic product increased at a 3.3% annualized rate, according to the government’s preliminary estimate out Thursday. For all of 2023, the economy expanded 2.5%.

Equichain Wealth Advisors: Market View & Opinion

Bank of Japan is now preparing to hike interest rate, China is providing support for economic recovery, ECB guides for rate cut & while US last quarter GDP growth came above estimate ahead of US Fed meeting on 31-Jan-24.  We seen extreme mix picture of global economy which makes us cautious as year end rally seen in December 2023 could see trend reversal post US Fed meeting outcome.

Earnings season so far has remain mix and fail to provide fresh triggers for market.  We are currently focusing to reduce exposure at higher level and wait for better entry opportunity on correction.  Next big trigger could come when interest rate in US & Europe comes down and we see some economic slowdown before we see interest rate heading downward.

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Global Market – Key events this week 22 to 26 Jan 2024.pdf
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Global Market – Key events this week – 14 to 19 January 2024

Global Market – Key events this week – 14th to 19th January 2024

This week we will cover we will cover how China’s stock sell-off and oil squeeze at start of 2023 is seen at surplus.  Red sea crisis event could impact food supply and impact inflation.  U.S. economic data released this week came above market estimate as jobless claim declined.  How key risk indicator reacted this week.

China’s $6.3 Trillion Stock Selloff Is Getting Uglier by The Day

Chinese stocks just capped another dismal week, with a gauge of mainland firms listed in Hong Kong languishing at the bottom of global equity index rankings for the year so far.

Oil Squeeze Of 2023 Turns to Surplus In Warning For Market Bulls

A year ago, crude traders and forecasters anticipated that the fourth quarter would be the strongest point of 2023, with China’s post-pandemic demand recovery pushing prices up to $100 a barrel. More recently, the Organization of Petroleum Exporting Countries has been predicting a record deficit of 3 million barrels a day.

Red Sea Unrest Is Bad News for The World’s Fragile Food Supply

Chaos in the Red Sea is starting to disrupt shipments of produce from coffee to fruit — and threatening to halt a slowdown in food inflation that brought some relief to strained consumers.

U.S. Jobless Claims Plunge To 187,000, Lowest Since September 2022

Initial claims decreased by 16,000 to 187,000 in the week ending Jan. 13, according to Labor Department data released on Thursday. The figure was below all estimates in a Bloomberg survey of economists.

ECB To Pick Right Moment for First Rate Cut, Economists Say

Almost three-quarters of respondents in a Bloomberg survey are confident policymakers will neither wait too long nor act too early — after they were widely accused of tardiness in responding to the continent’s once-in-a-generation price shock.

US 10-year bond yield @ 4.16% & Dollar Index @ 103.10

Key risk indicator in last week has seen risk-off sentiment as US 10-year bond yield rises from 3.94% a week earlier to 4.16% this week, rise of more than 20-bps.  Dollar Index is currently trading above 103 level was trading around 102 level.

Equichain Wealth Advisors: Market View & Opinion

Global cues were positive till last week on December 2023 on optimism of interest to cool-off sooner than expected but global cues in first three weeks of January 2024 does not provide any support to this trend.

We see next two week will be important and as BOJ meeting outcome on 23-Jan-24, ECB meeting outcome on 25-Jan-24, US Fed meeting outcome on 31-Jan-24 & BOE meeting outcome on 1-Feb-24.  Commentary of all these central banks could provide further cues.

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Global Market – Key events this week 14 to 19 Jan 2024.pdf
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Global Market – Key event for 8 to 12 Jan 2024

Global Market – Key events this week – 8th to 12th January 2024

This week we will cover various events this week and but these events does not have any major impact
on global cues.  China continues to their longest streak of deflation since 2009, threatening a deflationary spiral that may require more government support to reverse.

Brent Oil Hits $80 After Airstrikes Target Yemen’s Houthis

President Joe Biden said strikes had been conducted against a number of targets used by the Iran-backed group, with US officials saying radar sites and missile launchers were hit. A tanker industry group said military forces in the region were advising ships to avoid a key chokepoint near Yemen.

China’s Worst Deflation Streak in 14 Years Puts Pressure on PBOC

China’s consumer prices marked their longest streak of declines since 2009, threatening a deflationary spiral that may require more government support to reverse. Its export growth engine is also faltering.

Bitcoin ETF Trades Top $4.6 Billion in ‘Ground-Breaking’ Day

Over $4.6 billion worth of shares traded between the almost a dozen US spot Bitcoin exchange-traded funds on Thursday. The Grayscale Bitcoin Trust, which converted into an ETF, saw about $2.3 billion in volume, according to data compiled by Bloomberg. Meantime, BlackRock’s iShares Bitcoin Trust—IBIT— saw over $1 billion change hands.

U.S. Mortgage Rates Climb for Second Straight Week, Hitting 6.66%

Borrowing costs have risen slightly as traders grapple with questions around the Federal Reserve’s future path. US inflation accelerated in December, tempering expectations about possible rate cuts from the central bank.

Iran Captures Oil Tanker Off Oman in Deepening Mideast Turmoil

A tanker previously seized by the US for carrying illicit Iranian oil was captured by Tehran off the coast of Oman, heightening tensions in the world’s most important trade lane for global crude supply.

Equichain Wealth Advisors: Market View & Opinion

Market news and events this week does not have any major impact on equity while crude oil has seen spike on Friday as Brent crude oil approaches $80.  China’s is facing deflation and China’s CPI continues to mark longest streak of deflation since 2009.  Rising geo-political tension in Red-sea remain uncertainty in global market.

With recent development and geo-political event unfolding we will remain watchful and these events could trigger risk-off sentiment and provide much needed correction in global market.   Global market continues to trade near its recent high and remain venerable to any potential negative triggers.

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Global Market – Key events this week 8 to 12 Jan 2024.pdf
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Global Market – In focus – U.S. Economic & Geo-political tension

Global Market – In focus – U.S. Economic data & Geo-political tension

This week will on U.S. economic data and geopolitical tension as corporate earnings will start from next week.  So next week we will review corporate earnings of global companies and its impact on global as well as Indian market.

Now let us focus on the data released this week.  Most of the jobs data indicate strong economy, JOLTS Jobs opening came in-line with estimate while average hourly earnings were up by 0.40% Vs estimate of 0.30%.  Non-farm employment change came at 216k Vs estimate of 168k.

Market trend remains unclear as rally seen in December 2023 was on narrative of interest rate could starting declining earlier then estimate.  Strong economic data would mean the rate could stay at higher level for some more time.  US FOMC meeting minutes released this week also failed to provide clear trend and incoming data would be important to watch out for.

Geo-political tension – Red Sea Crisis

Freight costs, including surcharges, have increased by over 500% amid the Red Sea crisis as shipping companies were forced to take the longer route via Cape of Good Hope, according to the Federation of Indian Export Organizations.

Equichain Wealth Advisors: Market View & Opinion

US Market in December 2023 rallied from 3.81% to 4.94% on major indices will now need positive trigger from corporate earnings.

We would focus on corporate earnings where major US Banks are due to announce their earnings next week.  As we have seen economic data is U.S. continues to be strong will result in positive surprise in corporate earnings.

 
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Global Market – In focus – U.S. Economic data & Geo-political tension.pdf
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Global Market – Rewind 2023 – Part 2

Global Market – Review of 2023 – Part 2

We have covered from January 2023 to May 2023 in a flash back 2023.  In today’s article we will cover from June 2023 to December 2023 and how rally in last 1 – 2 months has changed global market narrative.

June 2023

• U.S. suspends debt ceiling limit till next U.S. Presidential election, till 1-Jan-25.  
• Non-defense discretionary spending would be “roughly flat” at current year levels in 2024, “when factoring in agreed upon appropriations adjustments,” according to White House officials.
• ECB hikes rate by 25-bps to 4.00%.  ECB guides for continuation of rate hike to bring long term inflation at 2% and to keep interest rate higher as long as necessary.
• BOE – Bank of England raises rates by 50-bps to 5.00%, highest level since 2008.

July 2023

• U.S. CPI & Core CPI inflation data for June 2023 came in July 2023 was below market estimate.  Inflation rise in June 2023 was lowest growth since April 2021.
• Key risk indicator – Dollar Index was trading @ 100.80 & US 10-year bond yield @ 3.83%

August 2023

• Fitch downgrades U.S. ratings to AA+ from AAA.  Rating downgrade expects fiscal deterioration over next three years.
• BOE raises rates by 25-bps to 5.25%.  China cuts RRR rate in a bid to support economy.
• Jackson hole symposium – U.S. Fed chair Jerome Powell indicated interest rate to remain higher.

September 2023

• U.S. & China’s economic data – indicates mix picture.  Top two economic indicates opposite trends and interest rate policy by the respective central banks.
• Brent oil rose above $90 a barrel for the first time since November as the largest OPEC+ producers extended their supply cuts to year-end.
• U.S. Fed keeps rate unchanged on 20-Sep-23, indicates rate hike cycle may be done but signaled rate to remain higher for longer period of time.

October 2023

• ISRAEL-HAMAS war started in first week of October 2023 over the weekend, providing trigger to risk-off sentiment and resulting in surge in crude oil & Gold.
• US bond yield was trading at highest level since 2007.  US 30-year bond yield above 5% while 10-year bond yield around 5%.

November 2023

• Bank of Japan continue to maintain interest rate at -0.10% and US Fed keeps interest rate unchanged in first week of November 2023.
• In Diwali special article – we have focused on SAMVAT 2080 could belong to Gold, Oil, Inflation & Interest rate globally.
• US Fed meeting minutes – “Proceed Carefully” – indicating pause by US Fed and one more rate hike which was expected earlier is now ruled out after recent US FOMC meeting minutes.

December 2023

• Global sentiment has turned positive after US Fed meeting minutes.  
• Global market rallied in range of 3% to 7% in the month of November 2023 and setting the trend for December 2023 on positive note.

Equichain Wealth Advisors: Market View & Opinion

Global market closed the year 2023 on high note and the key reversal came from November 2023 and clear trend emerge post US Fed meeting minutes which highlighted – “Proceed Carefully”.  Now if we look back and compare to Jackson Hole Symposium event in August 2023, which indicated interest rate to remain higher for longer period of time.

We strongly believe that positive news from global central banks has been factored and now the focus will shift to corporate earnings.

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Global Market – Rewind 2023 – Part 1.pdf
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Global Market – Rewind 2023 – Part 1

Global Market – Review of 2023

Today we will focus on few important events and article covered in 2023.  We will start with our first article for 2023, we focus on gold which was seen in a win-win situation at start of 2023.  We will cover key global events in last 12 months of 2023

January 2023

• China re-opens its economic from 8-Jan-23 after strict COVID restriction for past 3-years.  EURO zone inflation back to single digit @ 9.2%.
• Gold @ $1867 in January 2023 in a win-win situation?  After 2023, we can say Gold as asset class which has seen positive result for 2023 till date.

February 2023

• US Fed hikes rate by 25-bps to 4.50% to 4.75% on 1-Feb-23 and guided for more rate hike in 2023.
• Bank Of England raises rates by 50-bps to 4.00%, this brings interest rate by BOE to highest level since 2008.
• Russia plans to cut oil output by 500,000 bpd from March 2023.  German yield @ 2.34% highest level seen since 2008.

March 2023

• Silicon Valley Bank: first of few banks to fall his year, regulator shuts down SVB financial group and appoint FDIC.
• US regional bank (FRC) First Republic Bank – Big U.S. banks bail-out by depositing $30 billion.
• ECB hikes rate by 50-bps to 3.50%, highest interest rate since October 2008 and refrain from giving future guidance on interest rate.

April 2023

• OPEC+ nations announce surprise production cut from 1-May-23.  Production cut announced by OPEC + nations starting from 1-May-23 till end of the year is at 1.6 million barrels per day.  
• Corporate earnings for IT major in US help to improve sentiment.  META was up by 13.93% in April 2023 – reacting to its result.
• MICROSOFT & ALPHABET – manage to beat market estimate and improve market sentiment.

May 2023

• US Fed raises rates by 25-bps in meeting held on 3-May-23.  Policy statement soften the rate guidance indicating likely pause after May 2023 meeting outcome.
• US Fed on debt ceiling limit: no one should assume the fed can protect the economy from a failure to pay bills on time, economic consequences ‘highly uncertain’ if no debt deal.

Equichain Wealth Advisors: Market View & Opinion

In today’s article we have covered key events and central banks policy change, where we have seen many flip-flops and now when we look back at the events and how we have seen market then and now when global market is trading at life-time high, we might feel at the missed opportunity.

In next week, last article for 2023 – we will cover from June 2023 to December 2023 and we expect global indices to close 2023 at highest level.

Click on the attachment to read the full report:
Global Market – Rewind 2023 – Part 1.pdf
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