Global Economic Daily - 08/16/2024
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Quote of the Day: Happiness is not a goal; it is a by-product. – Eleanor Roosevelt
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Equities: Stocks rallied on Thursday as investors regained confidence in the economy following encouraging consumer and labor data that helped ease recession worries. The?Dow Jones Industrial Average?leaped 554 points to end the day at 40,563.06. The?S&P 500?closed up 88.01 points at 5,543.22, for its sixth straight gain. The broad market index has advanced roughly 8% from its intraday bottom on Aug. 5. The?Nasdaq 100?jumped 467.47 points to 19,490.15. Retail sales?increased?1% in July, far surpassing an estimate from Dow Jones that forecast a 0.3% uptick. Also separately, weekly jobless claims fell for the week. The data served as a boon to investors and a broader market trying to mount a comeback from an August rout tied to concerns about a slowing economy that arose following July’s disappointing jobs report on Aug. 2. After a more than 3% gain this week, the S&P 500 is now roughly 2% below its record. The three major U.S. indexes are now trading above their Aug. 2 closing level, which was the session before the?global stock?market rout on Aug. 5?that was largely driven by investors’ concerns about an economic slowdown and an unwinding of a popular hedge fund currency trade. Encouraging inflation data this week had largely swept away investors’ recessionary fears prior to Thursday’s swath of economic data, and led to a rebound in equities following last week’s sharp global sell-off. Stocks climbed on Wednesday after the?consumer price index?reflected a slowing annual inflation rate of 2.9%, the lowest since 2021. That data — coupled with a?key measure of wholesale inflation?released Tuesday that rose less than expected — has reassured investors that an economic soft landing is back on the table and that the Federal Reserve will likely lower interest rates at the central bank’s September meeting. TECHNICAL OUTLOOK – Both the Dow and S&P are above the 14, 21 day moving average.
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Crude Oil: Oil prices gained more than $1 a barrel on Thursday after U.S. economic data allayed fears of recession in the world's biggest economy, although the rally was limited by concerns of slower global demand. Oil prices also drew support from worries about how Iran would respond to the killing of the leader of the Palestinian militant group Hamas last month. A new round of Gaza?ceasefire talks?was underway in the Qatari capital Doha, as Palestinian health authorities said the death toll from the war surpassed 40,000 and pressure to end the war in the Palestinian enclave mounted. The Russia-Ukraine conflict also kept prices elevated. Russia?said?on Thursday it would beef up border defenses, improve command and control and send in additional forces, days after Ukraine made the biggest attack on its sovereign territory since World War Two. Both main oil benchmarks had fallen more than 1% on Wednesday after U.S. crude inventories increased unexpectedly. U.S. crude oil stockpiles rose by 1.4 million barrels in the week ended Aug. 9, compared with estimates for a 2.2 million barrel draw, building for the first time since late June. China's factory output growth slowed in July, while refinery output fell for a fourth month, underscoring the country's spotty economic recovery and limiting the upside for crude markets on Thursday. TECHNICAL OUTLOOK – The Crude is above the 14, 21 day moving average.
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Metals: Gold and silver prices are solidly up in midday U.S. trading Thursday, as the bulls shrugged off bearish outside markets that include a higher U.S. dollar index, an uptick in U.S. Treasury yields and solid gains in the competing asset class, U.S. stock indexes. The precious metals bulls also seemingly ignored a much-stronger-than-expected U.S. retail sales report that fell into the camp of the U.S. monetary policy hawks. Technically, December gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,537.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,400.00. September silver futures bears have the overall near-term technical advantage. Prices are in a nearly three-month-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the August high of $29.355. The next downside price objective for the bears is closing prices below solid support at $26.00. TECHNICAL OUTLOOK – Gold is above the 14, 21 day moving average, while silver is still below.
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