Global Economic Daily - 08/22/2024
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Quote of the Day: Never apologize for showing feeling. When you do so, you apologize for the truth. – Benjamin Disraeli
Equities: Stocks rose higher on midweek. The?S&P 500?advanced Wednesday after a summary of the Federal Reserve’s policy meeting last month reinforced hope for lower rates in the near future. The broad index added 23.73 points to 5,620.85, marking its ninth winning session of the last 10. Wednesday’s advance propelled the benchmark within 1% of its all-time record close. Four of the 11 sectors that comprise the S&P 500 notched 52-week highs during the session. The?Nasdaq 100?climbed 105.02 points to 19,824.84, also clinching its ninth positive day of 10. The?Dow Jones Industrial Average?ticked up by 55.52 points to finish at 40,890.49 for its sixth winning day of the last seven. Those moves came as Fed officials said a decrease to the borrowing cost during the September policy meeting was increasingly likely, according to?minutes?from the July gathering released Wednesday afternoon. The majority of participants indicated that loosening monetary policy would be appropriate if data continued to come in as expected. Wednesday’s moves come a day after the S&P 500 and Nasdaq Composite snapped their longest winning streaks since late 2023. It was just the latest action in a choppy month for equities. A weak U.S. jobs report and an interest rate hike from the Bank of Japan sparked a global sell-off on?Aug. 5. But equities have since bounced back after strong?retail sales?and a weaker-than-expected?inflation report?helped alleviate recession fears last week. Now, all three of the major indexes are up compared to where they started August. TECHNICAL OUTLOOK – Both the Dow and S&P are above the 14, 21 day moving average.
Crude Oil: Oil prices settled down by $1 a barrel on Wednesday after the U.S. government revised sharply lower a set of employment statistics closely watched by investors. The department's estimate for total payroll employment for the period from April 2023 to March 2024 was lowered by 818,000. The revised jobs data offset support from a drop in U.S. oil inventories, and recently released minutes from the Federal Reserve indicating a likely September rate cut. U.S. crude stocks, gasoline and distillate inventories fell in the week ending Aug. 16, the Energy Information Administration said on Wednesday. Crude inventories fell by 4.6 million barrels to 426 million barrels in the week, the EIA said, exceeding analysts' expectations in a Reuters poll for a 2.7 million-barrel draw. Fed officials?last month were strongly leaning toward an interest rate cut at their September policy meeting, and several would have been willing to reduce borrowing costs immediately, according to the minutes of the July 30-31 gathering. Meanwhile, investors' worries persisted over the prospect of economic weakness in China weighing on the country's crude demand. China's economic struggles have contributed to weak processing margins and low fuel demand that has curbed operations at state-run and independent refineries. Elsewhere, a?Greek-flagged oil tanker?was adrift in the Red Sea on Wednesday after repeated attacks that started a fire on the vessel and caused the ship to lose power, the UK maritime agency said. Iran-aligned Houthi militants have launched a series of attacks on international shipping near Yemen since last November in solidarity with Palestinians in the war between Israel and Hamas. The Red Sea leading to the Suez Canal is a key shipping route for oil, and sustained attacks pose a potential threat to global crude flows. Meanwhile, U.S.?President Joe Biden?planned to talk by phone with Israeli Prime Minister Benjamin Netanyahu on Wednesday about ways to keep a potential Gaza ceasefire and hostages deal alive, a U.S. official said. The call follows U.S. Secretary of State Antony Blinken's?whirlwind trip?to the Middle East that ended on Tuesday without an agreement between Israel and Hamas militants on a truce in the Palestinian enclave. TECHNICAL OUTLOOK – The Crude is below the 14, 21 day moving average.
Metals: Gold and silver prices are a bit lower in midday U.S. trading Wednesday. December Comex gold futures Tuesday hit a record high of $2,570.40. The precious metals markets are on hold ahead of key Federal Reserve news that lie just ahead. Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,600.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,450.00. September silver futures bulls have the overall near-term technical advantage and have momentum on their side now. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at $28.00. TECHNICAL OUTLOOK – Gold and silver are above the 14, 21 day moving average.
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