News & Analysis

Overnight on Wall Street: Thursday 22/08/19

Agustus 22, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

The FOMC minutes and the earnings report were the main events in the US session yesterday.  Wall Street edged higher on upbeat earnings results which lifted shares of retailers and maintained the gains after the FOMC minutes as markets took note of the members’ debate of a more significant rate cut.

“A couple of participants indicated that they would have preferred a 50 basis point cut in the federal funds rate at this meeting rather than a 25 basis point reduction. They favored a stronger action to better address the stubbornly low inflation rates of the past several years, recognizing that the apparent low sensitivity of inflation to levels of resource utilization meant that a notably stronger real economy might be required to speed the return of inflation to the Committee’s inflation objective.”

All major US equities indices rose on Wednesday:

  • Dow Jones Industrial Average ended 240 points higher at 26,202.73.
  • S&P 500 rose by 23 points at 2,924.
  • Nasdaq Composite added 72 points to 8,020.

All eyes on the Jackson Hole and the Fed Chair’s tricky balance at the symposium.

Currency Markets

In the FX market, major currencies were weaker against the greenback. The FOMC minutes were mostly shrugged off in the currency markets.

On the economic front, the inflation data for Canada was in the spotlight. The Consumer Price Index on a yearly basis in July remained unchanged at 2% but came higher than market expectation of 1.7%.

The USDCAD dropped below the 1.33 level and is currently trading at 1.3288.

USDCAD (Hourly Chart)


Source: GO MT4

Commodities

The current market headwinds are undoubtedly a cause of concern for commodities like crude oil. The risks are heavily weighing on the markets, and despite the larger-than-expected draw of crude oil inventories reported by API and EIA, oil prices are tilted to the downside.

The supply side is definitely the positive narrative for the oil market, but rather than pointing to an upward rally, it is temporarily putting a bottom under oil prices.

As of writing, WTI and Brent Crude were trading higher in the vicinity of $55 and $59 region.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

As risk sentiment improves, the yellow metal struggles to find safe-haven flows. However, XAUUSD remains in a tight range above the $1,500 level as traders await for the next catalyst to drive the price action.

Cryptocurrencies

Bitcoin, the flagship cryptocurrency suffered a sharp loss overnight and lost more than 8%. It fell below the $10,000 mark before rebounding slightly. As of writing, it is currently trading at $10,080.

Key Upcoming Events Ahead

Commonwealth Bank Services and Manufacturing PMI (Australia)
Foreign Bond & Stocks Investment and All Industry Activity Index (Japan)
Jackson Hole Symposium (US)
Industrial Production (Switzerland)
Markit Manufacturing and Services PMI (Germany)
Markit Manufacturing & Services PMI and ECB Monetary Policy Meeting Accounts (Eurozone)
Jobless Claims, Markit Manufacturing and Services PMI (US)

Friday, 23 August 2019
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
1.062 0 0.022 0.045 0.043 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0

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