[av_revolutionslider id=’32’ av_uid=’av-a1kbp3p’]
25 Apr 2022
- Fed Chairman Jerome Powell called the labour market overheated and outlined his most aggressive approach yet to tame inflation, likely supporting two or more half-percentage point interest rate hikes. He said a 50 basis point increase will be on the table at the May meeting. Powell said this on Thursday at a panel hosted by the IMF.
- During the week, however, other Fed officials made their presence known again. The chatter of a hike of as much as 75 basis points started when St. Louis Fed President James Bullard said that he wouldn’t rule one out. San Francisco President Mary Daly added some fuel to the fire, saying she would be talking to colleagues about whether an increment of 25, 50, or even 75 basis points was needed.
- Cleveland Fed President and FOMC member Loretta Mester said during an interview with CNBC on Friday that the Fed is currently in the process of recalibrating monetary policy and the main goal is to get inflation under control while maintaining growth and a healthy labour market. She said it would be appropriate to get rates to 2.5% by the end of the year. However, she did not think that a 0.75% rate hike was necessary.
- The French presidential election ended as expected with Emmanuel Macron’s victory, so there is no political turnaround. This could bring at least some reassurance to the markets, but given that this scenario was expected, the impact on the markets is unlikely to be significant.
- Wall Street banks as well as some international banks have backed Elon Musk’s efforts to buy Twitter. Morgan Stanley, Musk’s adviser, has committed the largest chunk of money: about $5.5 billion. A total of $25.5 billion will be formed by various types of debt from a dozen banks across Wall Street and the rest of the world. But the banks can’t wait forever. Musk has about 75 days to execute the deal.
Indices
Stock markets in the US started the week with a rise, but the Fed chief’s statement eventually led to a sell-off on Thursday and Friday. As a result, US equities posted their fourth consecutive weekly decline and the S&P 500 index posted its worst daily drop since March. Netflix’s more than 35% drop dragged down the entire communications services sector, with only the consumer staples sector eventually finishing in the lead.
Stocks in Europe continued to be pressured by developments in Ukraine, with concerns over the French presidential election adding to the pressure at the end of the week. Also, increased hawkishness among ECB policymakers did not have a positive effect on stocks.
 |
US30 -1,85% |
|
US100 -3,83% |
|
US500 -2,75% |
 |
GER40 -0,18% |
Commodities
Oil was weighed down last week by investors’ concerns about slowing economic growth, rising interest rates, and lockdowns in China. Demand curbs are expected despite Europe’s plans to limit Russian oil imports.
Gold notched its first week of losses after two weeks of gains despite Monday’s rise. The price of the yellow metal is reacting to rising US bond yields and possible strengthening of the US dollar after the US central bank took an increasingly hawkish stance on interest rates. Continued geopolitical uncertainty, on the other hand, may help gold, making it quite difficult to predict a clear direction for the gold price today.
 |
Gold -2,62% |
 |
Silver -7,23% |
 |
BRENT -8,26% |
 |
NATGAS -11,40% |
Forex
In the currencies market, the USD was the clear winner last week, strengthening against most currencies thanks to the statements of Jerome Powell and his colleagues. The US dollar index reached its two-year high and continued its rise on Monday.
The loser of the week, on the other hand, was the British pound, which weakened mainly due to worse-than-expected economic data. The Gfk consumer sentiment hit its worst level since 2008 and retail sales were weaker than forecast. The GBPUSD pair thus hit an 18-month low.
 |
EUR/USD +0,05% |
 |
USD/JPY +1,76% |
 |
GBP/USD -1,56% |
 |
USD/CAD +1,05% |
Macro
Preliminary data on the US Composite PMI Output Index (down from 57.7 to 55.1), which tracks the manufacturing and service sectors, point to a slowdown in business activity growth, which is, however, still strong. Services PMI fell from 58 to 54.7. Manufacturing activity and demand in both manufacturing and services remain strong, but firms are having to cope with rapidly rising labour costs.
Eurozone PMI Composite Output Index unexpectedly climbed to 55.8 in April from 54.9 in March. Business activity picked up thanks to faster growth in the services sector, but the risk of supply constraints and the conflict in Ukraine may put a damper on this positive development.
What to watch out for this week
- Equity investors will be anxiously awaiting the results of tech giants Apple, Microsoft, Amazon, and Alphabet this week. After Tesla surprised with its unexpectedly good results and Netflix, on the other hand, fell due to a drop in subscribers, expectations are rather cautious. In addition to the big four, Visa and Mastercard, Meta Platforms, Pepsico and Coca-Cola are also reporting their results.
- In the US, figures on new home sales, durable goods orders, pending home sales, and trade balance will be released, but the most interesting will probably be the preliminary GDP figure for the first quarter of this year, planned for release on Thursday. It is expected to fall sharply from 6.9% to 1.1%. Friday will be followed by the PCE index, which is an important inflation indicator for the Fed. The print is likely to influence future interest rate decisions. FOMC members won’t be commenting this week due to the pre-meeting blackout period, but analysts like to present their forecasts. A 0.5% hike in May is widely expected, but some analysts are already expecting a 0.75% hike at the next FOMC meetings.
- Also in Europe, preliminary GDP data for the first quarter is expected to be released at the end of the week, along with the annual inflation. Expected inflation of 7.4% is much higher than the European Central Bank’s target and ECB President Christine Lagarde has already mentioned the possibility of ending bond purchases in the third quarter and raising rates before the end of the year. However, the situation in Ukraine and the disrupted supply chains due to Covid-19 may yet change these plans.
- We will hear more about the BoJ’s monetary policy on Thursday and Canada will also announce its GDP on Friday. The batch of data will then conclude on Saturday with China’s manufacturing PMI.
[includephp file=”wp-content/themes/ftmo-com/calendar.php”]
Error: Your Requested widget "FTMO Start Challenge " is not in the widget list.
- [do_widget_area av_blog]
- [do_widget_area av_everywhere]
- [do_widget id="categories-6"]
- [do_widget id="categories-4"]
- [do_widget id="categories-7"]
- [do_widget id="newsbox-3"]
- [do_widget id="recent-posts-4"]
- [do_widget_area av_footer_1]
- [do_widget id="text-8"]
- [do_widget id="text-13"]
- [do_widget id="text-14"]
- [do_widget id="text-12"]
- [do_widget id="text-16"]
- [do_widget id="text-18"]
- [do_widget id="text-20"]
- [do_widget id="text-23"]
- [do_widget_area av_footer_2]
- [do_widget id="nav_menu-19"]
- [do_widget id="nav_menu-26"]
- [do_widget id="nav_menu-20"]
- [do_widget id="nav_menu-21"]
- [do_widget id="nav_menu-22"]
- [do_widget id="nav_menu-23"]
- [do_widget id="nav_menu-24"]
- [do_widget id="nav_menu-25"]
- [do_widget_area av_footer_3]
- [do_widget id="nav_menu-4"]
- [do_widget id="nav_menu-27"]
- [do_widget id="nav_menu-10"]
- [do_widget id="nav_menu-11"]
- [do_widget id="nav_menu-9"]
- [do_widget id="nav_menu-13"]
- [do_widget id="nav_menu-15"]
- [do_widget id="nav_menu-17"]
- [do_widget_area av_footer_4]
- [do_widget id="nav_menu-5"]
- [do_widget id="nav_menu-28"]
- [do_widget id="nav_menu-8"]
- [do_widget id="nav_menu-7"]
- [do_widget id="nav_menu-6"]
- [do_widget id="nav_menu-14"]
- [do_widget id="nav_menu-16"]
- [do_widget id="nav_menu-18"]
- [do_widget_area av_pages]
- [do_widget_area eckb_articles_sidebar]
- [do_widget_area eckb_articles_sidebar_2]
- [do_widget_area eckb_articles_sidebar_3]
- [do_widget_area footer-ftmo-left]
- [do_widget id="text-10"]
- [do_widget id="text-11"]
- [do_widget id="text-9"]
- [do_widget id="text-15"]
- [do_widget id="text-17"]
- [do_widget id="text-19"]
- [do_widget id="text-21"]
- [do_widget id="text-24"]
- [do_widget_area footer-ftmo-right]
- [do_widget_area post-loop-footer-author]
- [do_widget id="text-2"]
- [do_widget id="text-4"]
- [do_widget id="text-3"]
- [do_widget id="text-5"]
- [do_widget id="text-6"]
- [do_widget id="text-7"]
- [do_widget id="text-22"]
- [do_widget id="text-25"]
- [do_widget_area tet]
- [do_widget id="nav_menu-2"]
- [do_widget_area widgets_for_shortcodes]
- [do_widget_area wp_inactive_widgets]
- [do_widget id="custom_html-18"]
- [do_widget id="recent-comments-2"]
Disclaimer
All information provided on this site is intended solely for the study purposes related to trading on financial markets and does not serve in any way as a specific investment recommendation, business recommendation, investment opportunity, analysis or similar general recommendation regarding the trading of investment instruments. The content, in its entirety or parts, is the sole opinion of FTMO and is intended for educational purposes only. The historical results and/or track record does not imply that the same progress is replicable and does not guarantee profits or future profitable trading records or any promises whatsoever. Trading in financial markets is a high-risk activity and it is advised not to risk more than one can afford to lose!
