Trading Review: Ongoing Reports, Trends, Indices, Stocks, Bonds, Forex and Commodities and Analyst Recommendations
Falling oil prices: The price of Brent oil, the global benchmark index, has been cut close to 10% to about $ 102 a barrel, WTI oil is losing 9% and falling below $ 100 a barrel. Among other things, while global markets fear a recession that will lead to sharp declines in demand.
City predict today that the price of brent may drop to $ 65 a barrel by the end of the year.
Meanwhile, European stock markets closed sharply lower. German Dax and British Potsy cut 2.9% and French Kak shed 2.7%. The pan-European Eurostox 50 retreated 2.6%.
The declines in the Nasdaq have weakened and the index has now retreated by 0.5%. Dark 0.3% advanced, Meta Platforms (Facebook) Rises 1.7%, Alphabet (Google) Strengthens 0.7%, Amazon.com Adds 1.3% and Microsoft Weakened 0.6%.
The short trading week on Wall Street opened with declines, after yesterday there was no trading on the occasion of US Independence Day. The Dow Jones index retreated 1.5%, the Nasdaq index fell 1.7% and the S&P 500 fell 1.6%.
The 10-year US government bond yield falls by about nine basis points to 2.81%.
In the commodity arena, oil is down sharply: Brent oil loses 5% and trades around $ 107 a barrel and WTI oil retreats 4.5% and trades around $ 104 a barrel.
All Dow Jones stocks are red at this time, except for Walmart which is up 0.1%.
Investors expect the minutes of the Fed’s last interest rate meeting to be published on Wednesday, as well as the June job data to be released on Friday.
Stock Tesla 1% drop in early trading after billionaire electric car giant Elon Musk reported deliveries of 255,000 cars in the second quarter of the year over the weekend – a drop of about 18% compared to the peak of deliveries in the first quarter. This is the first time in seven quarters that the number of Tesla car dedications has dropped compared to the previous quarter. In the corresponding quarter last year, Tesla delivered about 200,000 cars, so it is worth noting that even if it did not reach its own peak – this is an increase of 26.5% compared to last year.
The company slightly missed market forecasts for the quarter for the delivery of 256,000 vehicles, after the forecast was significantly cut in early April with the closure of Tesla’s plant in Shanghai, as it was initially estimated at 300,000 deliveries. Tesla ended the first quarter of the year with a delivery of 310,000 vehicles, an all-time record for it but even then it missed market forecasts expecting the delivery of 317,000 cars.
The negative trend in European trade continues. Major stock indices are now falling by up to 1.1%. Slight declines are recorded in trading on Wall Street indices.
The euro fell today to a historic low against the dollar, amid an EU energy crisis and forecasts of an impending recession. One euro is worth $ 1.03, a drop of about 1.2% and the lowest rate since 2002. Now, the previously imaginary scenario that the euro will degenerate into equality with the dollar (Euro-Dollar Parity) now seems much closer to coming true. Analysts explain that this is due to a number of factors, including the general escape to the dollar that is currently taking place due to the uncertainty in the markets. But some international investment houses are already charting a vision in which the euro and the dollar are equal, noting that reaching this position is only a matter of time.
A change of direction in European trade. Major stock indices are now down as much as 0.8%. Slight declines are recorded in trading on Wall Street indices. This, apparently against the background of reports of a renewed outbreak of the corona in a number of provinces in China.
In Australia, the central bank raised the interest rate by 0.5% to 1.35%, in line with economists’ expectations.
Stefan Monier, chief investment officer of Swiss bank Lombard Odier, notes that “these days stock markets are suffering from declines as investors price the growing likelihood of a US recession. We at Bloombard Odeir estimate that there is a 70% chance of a slight slowdown in the US economy in 2023, and that the Fed will raise interest rates to 3.5% -3.75%. There is a 30% chance of a more severe recession, where the Fed will have to raise interest rates to 4% -5% percent to fight inflation There is very little time left for the Fed’s monetary policy to balance the economic slowdown, as it contains inflation, and the Fed has only 4 meetings left by the end of the year to do so. Neutral in terms of equities, and maintain an asymmetric return profile through an options strategy.
The day of trading on the European stock exchanges opened with a positive trend. Major stock indices are rising by up to 0.6%.
The yield on 10-year US government bonds rises by 3 basis points to about 2.94%.
In Tokyo, trading closed with a 1% increase in the Nikkei index.
Germany, until recently one of the world’s leading exporters, recorded a trade deficit in May for the first time in more than 30 years. Its volume of imports exceeded exports by about a billion euros, another sign of the economic difficulties facing Europe’s largest economy. The surprising index, released only yesterday (Monday), stems from a significant jump in Germany’s energy import costs, due to the global price increase created by the war in Ukraine and its consequences, as well as a small decline in German exports amid supply difficulties, rising prices and global slowdown.
Asian stock markets are trading in a positive trend today. Trading in futures contracts on US stock indices is up slightly.
The Japanese Nikkei index is up 0.6% and in Hong Kong the Heng Seng index is climbing at a similar rate. The cosmic index in Seoul is up 1.1% while in Shanghai there are slight declines.
The yield on 10-year US government bonds rises by 5 basis points to about 2.96%.
Crude oil contracts are currently trading in a positive trend. The price of a barrel of Brent oil is $ 113.6 and US oil contracts are around $ 110.3 a barrel. Gold climbs to $ 1,812 an ounce.
The trend in the crypto market is also positive. Bitcoin is up 2% to $ 20,200 and Etherium is up 2.5% to around $ 1,150.
Christian Knolling, chief economist at Deutsche Bank, notes in a review that “the global economy is currently experiencing negative momentum. “The latest economic data on business security in the United States and Europe has disappointed, as consumer confidence has continued to deteriorate in light of high inflation and the erosion in consumer purchasing power. With low growth approaching zero, the probability of a recession has also risen.”
The main reason we are now anticipating a moderate recession in the United States, when forecasts for future growth are low, is the continuing high inflation and the Fed’s determination to fight it (Fed Chairman Powell: The Fed’s commitment to fighting inflation is unconditional). When all we seem to be talking about these days is inflation, especially in the run-up to the midterm elections, monetary policy makers are likely to stick to their plan. We expect the Fed to provide most of the monetary contraction that markets are pricing by the end of the year in order for the Fed to finally get ahead of the curve. “Growth may be a victim to some extent, although the soft landing scenario is the preferred option.”
A technical downturn in the first half of 2023 (2 consecutive quarters of negative growth) may cause the Fed to stop in order to fuel the economy again. “Arrived earlier this year when analysts began to cut their earnings forecasts. Given the moderate recession in the US already priced by markets, we see further declines as an opportunity to rebalance portfolios and later also add risk when there is a stabilization in market volatility,” Nolting writes.