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[Market Morning] The European Central Bank Confirms the Rate Hike in July, the Dollar Index Up to the 103 Point
U.S. stocks fell sharply before the U.S. CPI was announced. The three major U.S. stock indexes fell at least nearly 2%, the largest decline in three weeks, and the Dow fell more than 600 points. Meta fell more than 6%, and its sector led the decline in S&P. Tesla, which had risen more than 5% in the session, closed down. Zhonggao fell, Station B fell by nearly 15%, and Weilai fell by more than 7%. The pan-European stock index hit its biggest drop in two weeks and a new two-week low, and power giant EDF rose more than 6%. The 10-year U.S. bond yield hit a new high in nearly a month, the German bond yield hit a new eight-year high, and rose by more than 10 basis points in the day, and the Italian bond yield rose by more than 20 basis points. The U.S. dollar index hit a three-week high, while the yen hit a 20-year low for the fourth day in a row. British natural gas rose 16 percent for its biggest gain in more than three weeks, while European gas rose nearly 7 percent for its biggest gain
Spot gold fluctuated downward on Thursday. It dropped to $1,840 in intraday trading and closed down 0.28% at $1,848.04 per ounce; spot silver fell sharply during the U.S. session, closing down 1.57% at $21.69 per ounce.
Comment: The market is currently full of uncertainties, and the price of gold will maintain a range-bound pattern in the short term. However, since April, the downward trend of gold prices has been obvious, and there are few catalysts for gold prices to break through, and the overall downward trend is more likely to continue in the next few months.
Suggestion: short Spot gold at 1846.00, and the target point is 1827.10.
The U.S. dollar index rose sharply during the U.S. session, standing at the 103 mark, and closed up 0.741% at 103.33; the 10-year U.S. bond yield remained volatile above 3%.
Comment: The European Central Bank announced the new policy, keeping the three key interest rates unchanged as scheduled, but significantly raised inflation expectations and lowered economic growth expectations. As of press time, the euro fell sharply by more than 55 points to 1.0687 against the dollar before rebounding, making up all the losses.
Suggestion: short position of EUR/USD 1.06160, target point 1.04920.
Crude oil was slightly lower, with WTI crude oil closing down 0.54% at $122.2 a barrel; Brent crude oil closing down 0.79% at $124.75 a barrel.
Comment: Oil prices fell slightly, fears of the epidemic re-emerged, and the decline in U.S. stocks dragged down oil prices, but the hope of restarting the Iran nuclear deal was fading, limiting the decline in oil prices; approaching the weekend, pay attention to the further progress of the relationship between Iran and the international nuclear monitoring agency.
Suggestion: long U.S. crude oil at 119.240, and the target point is 123.000.
The stock market's three major U.S. stock indexes opened lower and moved lower. The S&P 500 closed down 2.38% at 4017.82 points; the Dow closed down 1.94%, and the Nasdaq fell 2.75%. The Nasdaq Golden Dragon China Index closed down 6.7%, Bilibili and NIO closed down about 15% and 7%, respectively, after the results, and Alibaba fell more than 8%; U.S. stocks star technology stocks generally closed lower, Apple fell more than 3%.
Comment: Meta fell more than 6%, and its sector led the decline in S&P. Tesla, which had risen more than 5% in the session, closed down. Zhongguo fell, Station B fell by nearly 15%, and Weilai fell by more than 7%. The pan-European stock index hit its biggest drop in two weeks and a new two-week low, and power giant EDF rose more than 6%.
Suggestion: Go short at 4016.200 of the S&P Index, and target at 3959.080.
ECB plans to raise interest rates by 25 basis points in July, lowers eurozone economic growth forecast.
The European Central Bank kept the three key interest rates unchanged in the interest rate decision and decided to terminate the net asset purchase of the asset purchase program from July 1, 2022. It plans to raise interest rates by 25 basis points in July, and the scale of interest rate hikes in September will depend on the inflation outlook. Regarding economic forecasts, the European Central Bank raised its inflation forecast for the next three years and lowered its economic growth forecast for this year and next.
ECB President Christine Lagarde told a news conference that if the September forecasts set inflation at 2.1 percent or higher in 2024, the rate hike would be more than 25 basis points. At their meeting on Thursday, the sources said some ECB policymakers wanted to raise rates by 50 basis points in July.
White House officials expect Friday's CPI to rise.
A White House official said that headline inflation is expected to rise, and Friday's U.S. CPI data will show the ongoing impact of the Russia-Ukrainian conflict on food and energy prices, as well as spillovers on supply chains.
U.S. jobless claims beat expectations.
The number of Americans filing for unemployment benefits in the week ended June 4 recorded 229,000, higher than the expected 210,000 and the highest since the week of January 15, 2022.
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