Market News Gold trading reminder: Powell's "hawkishness" supports the dollar's surge, and the gold price falls below the 200-day moving average to 1800?
Gold trading reminder: Powell's "hawkishness" supports the dollar's surge, and the gold price falls below the 200-day moving average to 1800?
Powell reiterated that the Fed may raise interest rates by 50 basis points each in June and July. Investors bet that the Fed will insist on aggressive interest rate hikes, and then flocked to buy the dollar, helping the dollar to refresh a nearly two-decade high on Thursday, although U.S. stocks extended The decline and the tense geopolitical situation still attract bargain-hunting buying to provide support for the price of gold, but the price of gold has fallen below the 200-day moving average, and the market outlook may still further test the support near the 1800 mark.
2022-05-13
8099
During the Asian session on Friday (May 13), spot gold bottomed out and rebounded, hitting a new low of $1,810.07 per ounce in more than three months, as Powell reiterated that the Fed may raise interest rates by 50 basis points each in June and July, investors betting Note that the Federal Reserve will insist on aggressive interest rate hikes, and then flock to buy the dollar, helping the dollar to refresh a nearly 20-year high on Thursday. Although the US stock market continued to decline and the geopolitical situation was tense, it still attracted bargain-hunting buying to provide support for gold prices, but The price of gold has fallen below the 200-day moving average, and the market outlook is still likely to further test the support near the 1800 mark.
Bart Melek, head of commodity strategy at TD Securities, said: “The dollar is rising, and things in the U.S. may look unfavorable, which is hitting gold. Also, the market is realizing that it could see quite aggressive rate hikes. However, with the industrials Gold has performed relatively well compared to precious metals," Melek said, adding that demand for the former could be affected in a recessionary environment.
On this trading day, we will continue to pay attention to the news related to the situation in Russia and Ukraine and the new crown epidemic, and pay attention to the initial value of the University of Michigan consumer confidence index in the United States in May and the speech of the Federal Reserve officials.
[Powell's re-election confirmed by the Senate will continue to lead the Fed to fight the highest inflation in 40 years]
The U.S. Senate on Thursday approved Powell for a second four-year term at the helm of the Federal Reserve, paving the way for him to lead the central bank against the highest inflation in 40 years.
Powell was renominated by U.S. President Joe Biden with bipartisan support in the Senate, with 80 senators in favor and only 19 against.
Most opponents are Republicans, although some Democrats have joined, including Robert Menendez and Elizabeth Warren. Menendez said Powell wasn't doing enough to promote diversity in the Fed's leadership, while Warren said he wasn't doing enough to supervise banks.
Still, the final vote was a nod to Powell's handling of the COVID-19 crisis and the brief but historic deep recession of 2020 during his first term. For him, he faces what could be the biggest rate hike since former Federal Reserve Chairman Volcker in the early 1980s.
Powell, who has been on the Fed's board of governors since 2012, was first named Fed chairman by Trump, but Trump quickly turned against him for his string of rate hikes. Trump has even considered trying to oust Powell, but Republicans and Democrats alike have rallied to his defense, a Fed chairman who has won widespread praise for defending the central bank's independence amid the turmoil.
[Powell reiterated that the Fed may raise interest rates by 50 basis points each in June and July]
Federal Reserve Chairman Jerome Powell reiterated that raising rates by half a percentage point at the next two meetings may be appropriate, although the central bank stands ready to change its course based on the data it receives.
Powell, asked in an interview on PBS if he had ruled out a 75 basis point rate hike, reiterated his May 4 press conference - "If the economy performs as expected, then in the next two An additional 50 basis points at the meeting would be appropriate."
“But I would say that we have a range of expectations for the economy,” Powell said in a transcript of the interview released on Thursday. “If it is better than we expected, then we are prepared to add less. If it is worse than we expected, then we Just be prepared to add more”
[San Francisco Fed President: Strong U.S. economy can endure two more 50 basis point rate hikes]
San Francisco Fed President Daly backed a 0.5 percentage point rate hike at each of the next two Fed meetings and said she would like to see financial conditions tighten further.
"A 50 basis point upward revision is pretty reasonable in my opinion, and now I have no reason to think the economy will stall just because of this in the next two meetings," Daly said. She also said the market's speculation of a 75 basis point rate hike was "not the main consideration."
In addition, Daly also said that he hopes to see financial conditions continue to tighten, which will help restore balance between supply and demand. Rates should rise to neutral levels by the end of the year, when the benchmark rate is forecast to be around 2.5%.
Ahead of the Fed's next meeting in June, the Fed may consider a larger rate hike of 75 basis points instead of 50 basis points if inflation data is high again, ActivTrades senior analyst Ricardo Evangelista said in a note.
"Against this backdrop, the strength of gold's role as a safe haven and hedge against inflation may still be capped by the strength of the dollar," he said.
[U.S. jobless claims rise, but job market remains tight]
U.S. jobless claims unexpectedly rose last week to hit their highest level in three months, but labor market conditions were little changed on the back of strong demand for workers.
The U.S. Labor Department report released Thursday also showed jobless claims were at their lowest level in more than 52 years as of the end of April. Businesses scramble to fill a record number of job vacancies and raise wages, keeping inflation high.
"The basic message that the labor market is very tight has not changed, with employers reluctant to fire existing workers in the face of extreme labor shortages," said Conrad DeQuadros, senior economic adviser at Brean Capital.
Initial jobless claims rose 1,000 to a seasonally adjusted 203,000 for the week ended May 7, the highest level since mid-February. The previous week's figures were revised to 2,000 more than initially estimated. Economists polled by Reuters had forecast initial claims of 195,000 last week.
Initial jobless claims have been largely unchanged since hitting a more than 53-year low of 166,000 in March. Economists blamed a second straight increase in jobless claims on a volatile residue in data around the annual holidays with variable dates such as Easter, Passover and school spring break. Large increases in claims in California, Virginia and Illinois outweighed a drop of 9,811 in New York.
Continuing claims for unemployment benefits fell 44,000 to 1.343 million in the week ended April 30, the lowest level since January 1970
[The U.S. dollar soared for six consecutive positives, hitting a new high in the past 20 years]
The U.S. dollar refreshed a near 20-year high of 104.93 on Thursday and closed at 104.75, an increase of about 0.7%. The market continued to worry that the actions of major central banks to curb high inflation will curb global economic growth, which makes the dollar more safe-haven appeal.
U.S. jobless claims unexpectedly rose last week and the producer price index for final demand rose 0.5% in April as gains in energy product prices slowed. That marked a sharp slowdown from March's 1.6% gain. The U.S. core PPI recorded an annual rate of 8.8% in April, compared with an estimate of 8.9%, and 9.2% in March.
Erik Bregar, director of foreign exchange and precious metals risk management at Silver Gold Bull Inc., said: "The latest PPI numbers were mixed and slightly below expectations, but there is still a lot to worry about overall...if there is another S&P sell-off, it will be broad-based Support the dollar."
Investors have been trying to assess how aggressive the central bank’s policy path will be since the Fed last week raised its benchmark overnight rate by 50 basis points, the most in 22 years. Markets fully priced in another rate hike of at least 50 basis points at the June meeting, according to CME's FedWatch tool.
Risk assets have been under pressure for much of this year, with the S&P 500 on the verge of confirming a bear market, a 20% drop from its record high.
Investors have been drawn to safe-haven assets such as the U.S. dollar, with growing concerns about the Fed's ability to tame inflation without causing a recession, as well as the impact of the war in Ukraine and rising new infections in the Asian powerhouse to dampen demand. Lingering fears of a stagflationary environment of slow growth and high prices also dented investor risk appetite.
U.S. Treasury Secretary Janet Yellen said she believes the Fed can reduce inflation without causing a recession because the U.S. job market and household balance sheets are strong, the cost of debt is low and the banking sector is strong. The U.S. Senate on Thursday approved Powell's second four-year term as chairman.
"(The Fed) has a big, big credibility problem, it's always been there, but it's worse now," Bregar said. "The inflation genie has been taken out of the bottle, and now nothing else matters."
Edward Moya, senior analyst at Oanda, said: "You're seeing gold trading near dangerous technical levels right now. $1,800 an ounce doesn't look far away."
Moya warned that if the sell-off in gold continues to gain momentum, it could return to the era of a one-day drop of $100 in gold prices.
Moya added that earlier concerns about persistently high inflation had turned into fears of a potential slowdown in global growth, sending investors into the safe-haven dollar. "It makes it easy to trade the dollar, which is gold's nemesis," he said.
[EU starts considering delaying sanctions on Russian oil as Hungary sticks to its stance]
Some EU countries have said it may be time to consider delaying the ban on Russian oil so they can move forward with the rest of the proposed sanctions package if the bloc cannot get Hungary to back the embargo.
EU foreign ministers will meet in Brussels on Monday, EU diplomats said, with countries still hoping to agree on a full package of sanctions, including a phased oil embargo, before then.
The idea of delaying the Russian oil embargo is gaining more support, diplomats added. Hungary is concerned that the embargo on Russian oil could do too much damage to the Hungarian economy; but other diplomats said other countries fear that lifting the policy now would be a sign of weakness.
Hungarian Prime Minister Viktor Orban has said that the oil ban needs to be discussed at a summit of EU leaders. The next summit is scheduled for the end of May.
European Commission President von der Leyen had planned to schedule a video call with Orban and regional leaders earlier this week to discuss possible compromises. But the conference call has been postponed and has not been rescheduled.
The EU's proposal aims to gradually embargo Russian crude oil over the next six months and to embargo refined products by early January next year. The EU has allowed Hungary and Slovakia to delay compliance with sanctions until the end of 2024, and the Czech Republic until June of the same year because of their heavy reliance on Russian crude.
Hungary reinforced its public stance on Wednesday, saying it would only withdraw its threat against the embargo if it exempted its pipeline crude imports
[U.S. producer price growth slows in April]
In a report on Thursday, the U.S. Labor Department said the producer price index for final demand (PPI) rose 0.5% in April as gains in energy product prices slowed. That marked a sharp slowdown from March's 1.6% gain. April PPI growth was in line with economists' expectations.
Energy prices rose 1.7% in April after surging 6.4% in March. Food prices climbed 1.5%. As a result, commodity prices rose 1.3% after jumping 2.4% in March. Prices for services were flat after jumping 1.2% in March. But energy prices have accelerated since then, while demand is recovering from goods to services, suggesting monthly PPI will pick up in May.
In the 12 months to April, the PPI jumped 11.0%, after rising 11.5% year-on-year in March.
"While inflation still looks strong, there are some signs that it may have peaked," said JPMorgan economist Daniel Silver.
Producer prices excluding food, energy and trade services climbed 0.6% in April after rising 0.9% in March. In the 12 months through April, core PPI rose 6.9%, after rising 7.1% in March. Core PPI is trending similarly to core CPI
Based on CPI and PPI data, economists estimate that the core PCE price index rose about 0.2% in April, after rising 0.3% for two straight months. That would push the year-on-year gain to 4.7% from 5.2% in March
[US stocks continued to fall, S&P 500 hit a new low in more than a year, close to a technical bear market]
U.S. stocks ended slightly lower on Thursday, tugging back and forth between flat sessions, as signs of peaking inflation mingled with concerns that inflation could remain elevated, prompting more aggressive tightening by the Federal Reserve.
The three major U.S. stock indexes all fluctuated up and down the previous day's closing points. The S&P 500 index hit a record high on January 3, and it is now just a stone's throw away from confirming that it has entered a bear market.
At the close, the S&P and the Dow closed slightly lower, but the S&P 500 hit its lowest level since March 2021.
Stock indexes have been volatile in recent sessions, often reversing an initial rally or sell-off at the close.
"Such a 2 percent swing of this magnitude is extremely rare, and such a big move in such a short period of time shows that investor psychology is very fragile," said Ryan Detrick, chief market strategist at LPL Financial. "Continued concerns about inflation, Inflation appears to have peaked, but remains stubbornly high and continues to worry investors, pushing the S&P to the brink of a bear market."
Large-cap companies leading the market and thriving in a low-interest-rate environment from the pandemic were the biggest drags, with Apple and Microsoft among the biggest drags.
Detrick added that the move "is widely expected to pave the way for the Fed to continue its fight against 40-year high inflation, with more rate hikes likely this year."
Geopolitical tensions over Russia's war in Ukraine have risen, with Finland announcing it will apply to join NATO, with Sweden expected to follow suit and the Kremlin vowing to retaliate.
The conflict, which Russian President Vladimir Putin has dubbed a "special military operation," has put pressure on global energy and food supplies and fueled inflation.
As of the close, the Dow Jones Industrial Average fell 103.81 points, or 0.33%, to 31730.3; the S&P 500 fell 5.1 points, or 0.13%, to 3930.08; the Nasdaq rose 6.73 points, or 0.06%, to 11370.96 .
[Putin: Western sanctions against Russia have devastated their own economy and triggered a global crisis]
Russian President Vladimir Putin said at a meeting on Russian economic issues on the 12th that Western sanctions against Russia not only devastated its own economy, but also triggered a global crisis in many ways.
Putin emphasized that due to the macroeconomic policies introduced in recent years, as well as the systematic decision-making to strengthen economic sovereignty, technology and food security, Russia has been able to respond to external challenges with firmness and certainty.
He pointed out that according to preliminary estimates by experts, Russia will usher in a bumper year this year, and the grain output may reach 130 million tons, including 87 million tons of wheat. In addition, Russia's inflation is gradually slowing down, the budget capacity is improving, and the ruble exchange rate is also strengthening against the background of foreign trade surplus.
Macquarie: S&P 500 may continue to fall, unprofitable tech stocks will be hit hard
Cryptocurrencies are a leading indicator of pessimism, Mobius Capital Partners co-founder Mobius said in an interview. He believes the S&P 500 "may be headed lower" because "it looks like a lot of people are starting to give up hope."
"We're not at a bottom, but we're probably in the beginning stages of a bottom. Bottoming requires everyone to give up hope," added Mapus.
He suggested focusing on emerging market exporters, especially those who pay their costs in local currencies but sell to the U.S., citing palm oil exporters as an example.
Macquarie said unprofitable tech stocks will be hit hard. He said the past few years have seen a lot of IPOs of companies that don't make money but have "hope and promise" of future profitability.
[Citi says U.S. stocks are starting to break out of bubble territory, urging investors to be cautious]
U.S. stocks have begun to emerge from bubble territory, but returns from current levels will remain subdued as risks mount from tighter monetary policy and a tech slump, Citigroup strategists said.
"As the U.S. emerges from bubble territory, U.S. equity risks need to be vigilant," strategists including Dirk Willer wrote in a note. They expect poor returns from current levels and recommend favoring value stocks at lower valuations over growth stocks.
U.S. stocks entered bubble territory in October 2020, with much of the bubble centered on unprofitable U.S. tech companies, the strategists said. Other global assets, including U.S. real estate, did not trigger a bubble warning, Citi said.
"When a major stock market bubble subsides, it's likely to be a drag on most equities around the world, not just the one that's bursting," Citi strategists said. "That means a potential fading of the U.S. market bubble will be a headwind for the broader equity market."
Stocks valued on future earnings growth, especially technology stocks, have led the decline in global equities over the past few weeks. Expensive growth stocks took a hit as the Federal Reserve began raising interest rates to stem a spike in inflation, as higher rates mean the present value of future profits falls. Technology stocks have been among the best-performing sectors of the market for years, and the market moves now mark a shift in investor sentiment.
On the whole, the geopolitical situation and epidemic concerns and the decline of the stock market still provide safe-haven support for the gold price, but the support for the US dollar is stronger, and the expectation of aggressive interest rate hikes by the Federal Reserve remains high. downside risk. Timely short-term does not rule out the possibility of a moderate rebound, but the rebound is expected to be limited. Before recovering the 200-day moving average, the gold price still has the possibility of testing the risk of the 1800 mark.
Gold prices will remain under downward pressure, economists at TD Securities expect. There are plenty of complacent gold bulls out there. “The liquidity vacuum is dragging all assets lower, with outflows from gold as a safe-haven asset despite a strong rebound in U.S. Treasuries. Massive selling flow continues to weigh on liquidity as CTA trend followers join in on liquidation Gold. Gold prices are struggling to sustain an uptrend right now under the pressure of this sell-off.”
At GMT+8 11:03, spot gold is now at $1,824.12 per ounce.
Bart Melek, head of commodity strategy at TD Securities, said: “The dollar is rising, and things in the U.S. may look unfavorable, which is hitting gold. Also, the market is realizing that it could see quite aggressive rate hikes. However, with the industrials Gold has performed relatively well compared to precious metals," Melek said, adding that demand for the former could be affected in a recessionary environment.
On this trading day, we will continue to pay attention to the news related to the situation in Russia and Ukraine and the new crown epidemic, and pay attention to the initial value of the University of Michigan consumer confidence index in the United States in May and the speech of the Federal Reserve officials.
The fundamentals are mainly bearish
[Powell's re-election confirmed by the Senate will continue to lead the Fed to fight the highest inflation in 40 years]
The U.S. Senate on Thursday approved Powell for a second four-year term at the helm of the Federal Reserve, paving the way for him to lead the central bank against the highest inflation in 40 years.
Powell was renominated by U.S. President Joe Biden with bipartisan support in the Senate, with 80 senators in favor and only 19 against.
Most opponents are Republicans, although some Democrats have joined, including Robert Menendez and Elizabeth Warren. Menendez said Powell wasn't doing enough to promote diversity in the Fed's leadership, while Warren said he wasn't doing enough to supervise banks.
Still, the final vote was a nod to Powell's handling of the COVID-19 crisis and the brief but historic deep recession of 2020 during his first term. For him, he faces what could be the biggest rate hike since former Federal Reserve Chairman Volcker in the early 1980s.
Powell, who has been on the Fed's board of governors since 2012, was first named Fed chairman by Trump, but Trump quickly turned against him for his string of rate hikes. Trump has even considered trying to oust Powell, but Republicans and Democrats alike have rallied to his defense, a Fed chairman who has won widespread praise for defending the central bank's independence amid the turmoil.
[Powell reiterated that the Fed may raise interest rates by 50 basis points each in June and July]
Federal Reserve Chairman Jerome Powell reiterated that raising rates by half a percentage point at the next two meetings may be appropriate, although the central bank stands ready to change its course based on the data it receives.
Powell, asked in an interview on PBS if he had ruled out a 75 basis point rate hike, reiterated his May 4 press conference - "If the economy performs as expected, then in the next two An additional 50 basis points at the meeting would be appropriate."
“But I would say that we have a range of expectations for the economy,” Powell said in a transcript of the interview released on Thursday. “If it is better than we expected, then we are prepared to add less. If it is worse than we expected, then we Just be prepared to add more”
[San Francisco Fed President: Strong U.S. economy can endure two more 50 basis point rate hikes]
San Francisco Fed President Daly backed a 0.5 percentage point rate hike at each of the next two Fed meetings and said she would like to see financial conditions tighten further.
"A 50 basis point upward revision is pretty reasonable in my opinion, and now I have no reason to think the economy will stall just because of this in the next two meetings," Daly said. She also said the market's speculation of a 75 basis point rate hike was "not the main consideration."
In addition, Daly also said that he hopes to see financial conditions continue to tighten, which will help restore balance between supply and demand. Rates should rise to neutral levels by the end of the year, when the benchmark rate is forecast to be around 2.5%.
Ahead of the Fed's next meeting in June, the Fed may consider a larger rate hike of 75 basis points instead of 50 basis points if inflation data is high again, ActivTrades senior analyst Ricardo Evangelista said in a note.
"Against this backdrop, the strength of gold's role as a safe haven and hedge against inflation may still be capped by the strength of the dollar," he said.
[U.S. jobless claims rise, but job market remains tight]
U.S. jobless claims unexpectedly rose last week to hit their highest level in three months, but labor market conditions were little changed on the back of strong demand for workers.
The U.S. Labor Department report released Thursday also showed jobless claims were at their lowest level in more than 52 years as of the end of April. Businesses scramble to fill a record number of job vacancies and raise wages, keeping inflation high.
"The basic message that the labor market is very tight has not changed, with employers reluctant to fire existing workers in the face of extreme labor shortages," said Conrad DeQuadros, senior economic adviser at Brean Capital.
Initial jobless claims rose 1,000 to a seasonally adjusted 203,000 for the week ended May 7, the highest level since mid-February. The previous week's figures were revised to 2,000 more than initially estimated. Economists polled by Reuters had forecast initial claims of 195,000 last week.
Initial jobless claims have been largely unchanged since hitting a more than 53-year low of 166,000 in March. Economists blamed a second straight increase in jobless claims on a volatile residue in data around the annual holidays with variable dates such as Easter, Passover and school spring break. Large increases in claims in California, Virginia and Illinois outweighed a drop of 9,811 in New York.
Continuing claims for unemployment benefits fell 44,000 to 1.343 million in the week ended April 30, the lowest level since January 1970
[The U.S. dollar soared for six consecutive positives, hitting a new high in the past 20 years]
The U.S. dollar refreshed a near 20-year high of 104.93 on Thursday and closed at 104.75, an increase of about 0.7%. The market continued to worry that the actions of major central banks to curb high inflation will curb global economic growth, which makes the dollar more safe-haven appeal.
U.S. jobless claims unexpectedly rose last week and the producer price index for final demand rose 0.5% in April as gains in energy product prices slowed. That marked a sharp slowdown from March's 1.6% gain. The U.S. core PPI recorded an annual rate of 8.8% in April, compared with an estimate of 8.9%, and 9.2% in March.
Erik Bregar, director of foreign exchange and precious metals risk management at Silver Gold Bull Inc., said: "The latest PPI numbers were mixed and slightly below expectations, but there is still a lot to worry about overall...if there is another S&P sell-off, it will be broad-based Support the dollar."
Investors have been trying to assess how aggressive the central bank’s policy path will be since the Fed last week raised its benchmark overnight rate by 50 basis points, the most in 22 years. Markets fully priced in another rate hike of at least 50 basis points at the June meeting, according to CME's FedWatch tool.
Risk assets have been under pressure for much of this year, with the S&P 500 on the verge of confirming a bear market, a 20% drop from its record high.
Investors have been drawn to safe-haven assets such as the U.S. dollar, with growing concerns about the Fed's ability to tame inflation without causing a recession, as well as the impact of the war in Ukraine and rising new infections in the Asian powerhouse to dampen demand. Lingering fears of a stagflationary environment of slow growth and high prices also dented investor risk appetite.
U.S. Treasury Secretary Janet Yellen said she believes the Fed can reduce inflation without causing a recession because the U.S. job market and household balance sheets are strong, the cost of debt is low and the banking sector is strong. The U.S. Senate on Thursday approved Powell's second four-year term as chairman.
"(The Fed) has a big, big credibility problem, it's always been there, but it's worse now," Bregar said. "The inflation genie has been taken out of the bottle, and now nothing else matters."
Edward Moya, senior analyst at Oanda, said: "You're seeing gold trading near dangerous technical levels right now. $1,800 an ounce doesn't look far away."
Moya warned that if the sell-off in gold continues to gain momentum, it could return to the era of a one-day drop of $100 in gold prices.
Moya added that earlier concerns about persistently high inflation had turned into fears of a potential slowdown in global growth, sending investors into the safe-haven dollar. "It makes it easy to trade the dollar, which is gold's nemesis," he said.
[EU starts considering delaying sanctions on Russian oil as Hungary sticks to its stance]
Some EU countries have said it may be time to consider delaying the ban on Russian oil so they can move forward with the rest of the proposed sanctions package if the bloc cannot get Hungary to back the embargo.
EU foreign ministers will meet in Brussels on Monday, EU diplomats said, with countries still hoping to agree on a full package of sanctions, including a phased oil embargo, before then.
The idea of delaying the Russian oil embargo is gaining more support, diplomats added. Hungary is concerned that the embargo on Russian oil could do too much damage to the Hungarian economy; but other diplomats said other countries fear that lifting the policy now would be a sign of weakness.
Hungarian Prime Minister Viktor Orban has said that the oil ban needs to be discussed at a summit of EU leaders. The next summit is scheduled for the end of May.
European Commission President von der Leyen had planned to schedule a video call with Orban and regional leaders earlier this week to discuss possible compromises. But the conference call has been postponed and has not been rescheduled.
The EU's proposal aims to gradually embargo Russian crude oil over the next six months and to embargo refined products by early January next year. The EU has allowed Hungary and Slovakia to delay compliance with sanctions until the end of 2024, and the Czech Republic until June of the same year because of their heavy reliance on Russian crude.
Hungary reinforced its public stance on Wednesday, saying it would only withdraw its threat against the embargo if it exempted its pipeline crude imports
Fundamentals are mostly bullish
[U.S. producer price growth slows in April]
In a report on Thursday, the U.S. Labor Department said the producer price index for final demand (PPI) rose 0.5% in April as gains in energy product prices slowed. That marked a sharp slowdown from March's 1.6% gain. April PPI growth was in line with economists' expectations.
Energy prices rose 1.7% in April after surging 6.4% in March. Food prices climbed 1.5%. As a result, commodity prices rose 1.3% after jumping 2.4% in March. Prices for services were flat after jumping 1.2% in March. But energy prices have accelerated since then, while demand is recovering from goods to services, suggesting monthly PPI will pick up in May.
In the 12 months to April, the PPI jumped 11.0%, after rising 11.5% year-on-year in March.
"While inflation still looks strong, there are some signs that it may have peaked," said JPMorgan economist Daniel Silver.
Producer prices excluding food, energy and trade services climbed 0.6% in April after rising 0.9% in March. In the 12 months through April, core PPI rose 6.9%, after rising 7.1% in March. Core PPI is trending similarly to core CPI
Based on CPI and PPI data, economists estimate that the core PCE price index rose about 0.2% in April, after rising 0.3% for two straight months. That would push the year-on-year gain to 4.7% from 5.2% in March
[US stocks continued to fall, S&P 500 hit a new low in more than a year, close to a technical bear market]
U.S. stocks ended slightly lower on Thursday, tugging back and forth between flat sessions, as signs of peaking inflation mingled with concerns that inflation could remain elevated, prompting more aggressive tightening by the Federal Reserve.
The three major U.S. stock indexes all fluctuated up and down the previous day's closing points. The S&P 500 index hit a record high on January 3, and it is now just a stone's throw away from confirming that it has entered a bear market.
At the close, the S&P and the Dow closed slightly lower, but the S&P 500 hit its lowest level since March 2021.
Stock indexes have been volatile in recent sessions, often reversing an initial rally or sell-off at the close.
"Such a 2 percent swing of this magnitude is extremely rare, and such a big move in such a short period of time shows that investor psychology is very fragile," said Ryan Detrick, chief market strategist at LPL Financial. "Continued concerns about inflation, Inflation appears to have peaked, but remains stubbornly high and continues to worry investors, pushing the S&P to the brink of a bear market."
Large-cap companies leading the market and thriving in a low-interest-rate environment from the pandemic were the biggest drags, with Apple and Microsoft among the biggest drags.
Detrick added that the move "is widely expected to pave the way for the Fed to continue its fight against 40-year high inflation, with more rate hikes likely this year."
Geopolitical tensions over Russia's war in Ukraine have risen, with Finland announcing it will apply to join NATO, with Sweden expected to follow suit and the Kremlin vowing to retaliate.
The conflict, which Russian President Vladimir Putin has dubbed a "special military operation," has put pressure on global energy and food supplies and fueled inflation.
As of the close, the Dow Jones Industrial Average fell 103.81 points, or 0.33%, to 31730.3; the S&P 500 fell 5.1 points, or 0.13%, to 3930.08; the Nasdaq rose 6.73 points, or 0.06%, to 11370.96 .
[Putin: Western sanctions against Russia have devastated their own economy and triggered a global crisis]
Russian President Vladimir Putin said at a meeting on Russian economic issues on the 12th that Western sanctions against Russia not only devastated its own economy, but also triggered a global crisis in many ways.
Putin emphasized that due to the macroeconomic policies introduced in recent years, as well as the systematic decision-making to strengthen economic sovereignty, technology and food security, Russia has been able to respond to external challenges with firmness and certainty.
He pointed out that according to preliminary estimates by experts, Russia will usher in a bumper year this year, and the grain output may reach 130 million tons, including 87 million tons of wheat. In addition, Russia's inflation is gradually slowing down, the budget capacity is improving, and the ruble exchange rate is also strengthening against the background of foreign trade surplus.
Macquarie: S&P 500 may continue to fall, unprofitable tech stocks will be hit hard
Cryptocurrencies are a leading indicator of pessimism, Mobius Capital Partners co-founder Mobius said in an interview. He believes the S&P 500 "may be headed lower" because "it looks like a lot of people are starting to give up hope."
"We're not at a bottom, but we're probably in the beginning stages of a bottom. Bottoming requires everyone to give up hope," added Mapus.
He suggested focusing on emerging market exporters, especially those who pay their costs in local currencies but sell to the U.S., citing palm oil exporters as an example.
Macquarie said unprofitable tech stocks will be hit hard. He said the past few years have seen a lot of IPOs of companies that don't make money but have "hope and promise" of future profitability.
[Citi says U.S. stocks are starting to break out of bubble territory, urging investors to be cautious]
U.S. stocks have begun to emerge from bubble territory, but returns from current levels will remain subdued as risks mount from tighter monetary policy and a tech slump, Citigroup strategists said.
"As the U.S. emerges from bubble territory, U.S. equity risks need to be vigilant," strategists including Dirk Willer wrote in a note. They expect poor returns from current levels and recommend favoring value stocks at lower valuations over growth stocks.
U.S. stocks entered bubble territory in October 2020, with much of the bubble centered on unprofitable U.S. tech companies, the strategists said. Other global assets, including U.S. real estate, did not trigger a bubble warning, Citi said.
"When a major stock market bubble subsides, it's likely to be a drag on most equities around the world, not just the one that's bursting," Citi strategists said. "That means a potential fading of the U.S. market bubble will be a headwind for the broader equity market."
Stocks valued on future earnings growth, especially technology stocks, have led the decline in global equities over the past few weeks. Expensive growth stocks took a hit as the Federal Reserve began raising interest rates to stem a spike in inflation, as higher rates mean the present value of future profits falls. Technology stocks have been among the best-performing sectors of the market for years, and the market moves now mark a shift in investor sentiment.
On the whole, the geopolitical situation and epidemic concerns and the decline of the stock market still provide safe-haven support for the gold price, but the support for the US dollar is stronger, and the expectation of aggressive interest rate hikes by the Federal Reserve remains high. downside risk. Timely short-term does not rule out the possibility of a moderate rebound, but the rebound is expected to be limited. Before recovering the 200-day moving average, the gold price still has the possibility of testing the risk of the 1800 mark.
Gold prices will remain under downward pressure, economists at TD Securities expect. There are plenty of complacent gold bulls out there. “The liquidity vacuum is dragging all assets lower, with outflows from gold as a safe-haven asset despite a strong rebound in U.S. Treasuries. Massive selling flow continues to weigh on liquidity as CTA trend followers join in on liquidation Gold. Gold prices are struggling to sustain an uptrend right now under the pressure of this sell-off.”
At GMT+8 11:03, spot gold is now at $1,824.12 per ounce.
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