22/08/2024 Daily Reports
Gold steadied around $2,510 per ounce on Thursday, remaining near record highs as markets digested the Fed’s dovish stance highlighted in the recent FOMC minutes. Most policymakers indicated that if economic data met expectations, easing policy in September would be appropriate. This dovish outlook was reinforced by a significant downward revision of US nonfarm payrolls, raising concerns about the labor market’s ability to withstand restrictive interest rates.
The revision, along with weaker payroll numbers in July, bolstered expectations for aggressive rate cuts, with traders pricing in 100 basis points of reductions by year-end. Investors are now focused on Fed Chair Powell’s upcoming speech for further guidance on interest rate policy. Meanwhile, ongoing geopolitical tensions in the Middle East continued to lend support to the bullish trend in gold.
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Asian stocks pulled back from session highs as investors turned cautious ahead of key events from the Federal Reserve and Bank of Japan that could influence global interest rates.
The MSCI Asia Pacific Index erased early gains, with benchmarks in Japan and Hong Kong trimming advances while Chinese equities declined
US stock futures also slipped, reflecting investor hesitation before Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium.
Meanwhile, Chinese tech stocks received a boost from Xiaomi’s strong earnings, but overall market sentiment remained subdued.
Traders are closely watching upcoming central bank signals for guidance on future rate cuts.
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Global markets are gearing up for a potential easing cycle as the Fed hints at interest rate cuts. Lower U.S. rates have led to dollar selling, driving it to one-year lows against the euro and sterling. The market is pricing in significant rate cuts in the U.S., Europe, and the UK.
PMI data from the U.S. and Europe will be key in assessing economic momentum. A weaker dollar could boost global growth, supporting emerging markets and commodities. Metals are recovering amid hopes of Chinese market support, while oil prices remain low due to demand concerns. Japan’s factory activity shrank slightly in August, while the service sector showed growth
Oil fell for a fifth day in a row on demand jitters on Thursday, stocks were subdued in Asia, and the dollar hovered near one-year lows as Federal Reserve minutes signalled that U.S. interest rate cuts are set to begin in a few weeks’ time. The minutes validated bets on a rate cut next month and said the “vast majority” of policymakers felt that if data came in as expected, a September cut was likely to be appropriate.
The Federal Reserve may have finally locked in a September interest rate cut, its first since March 2020—at least according to most economists and professional investors.
To be more specific, the “vast majority” of Fed officials said it will “likely” be appropriate to cut interest rates in
September, the minutes from July’s Federal Open Market Committee (FOMC) meeting showed Wednesday.
