Fri, August 19, 2022

Weekly Overview: Stocks, Crypto, Forex, Commodities July 15 

Natural gas record prices give power markets a jolt

Markets around the world are still working to recover their worth. How did the currencies, stocks, cryptocurrencies, and commodities fare this week? To assist you in predicting future trends, our weekly overview will summarize the markets’ performance for the previous week. 

Stocks Keep Struggling

U.S. stocks continued to decline on Thursday as investors processed Wall Street’s large banks’ remarks about earnings and the recession while also reeling from unexpected inflation statistics that increased the likelihood of a 100 basis point rate hike later this month. 

Despite recovering from session lows of almost 2%, the S&P 500 and Dow Jones Industrial Average each ended the day down 0.3 percent and 0.5 percent, respectively. The session ended barely above breakeven as the tech-heavy Nasdaq teetered into positive territory. 

JPMorgan Chase (JPM) made headlines on Friday after posting a second-quarter profit that fell by a wider-than-anticipated 28 percent. The company attributed the decrease to a $1.1 billion provision for credit losses due to worries about a potential economic slump. Shares finished 3.5% down. 

Morgan Stanley (MS) reported earnings that fell short of analyst estimates, principally due to a decline in investment banking revenue brought on by erratic market conditions. After paring a 2 percent loss, shares ended the session 0.3 percent lower. 

These outcomes affected the whole financial industry, causing shares of competing banks Citi (C) and Wells Fargo (WFC) to decline by over 3% and 0.9%, respectively, ahead of their own earnings on Friday. 

Crypto Weekly Overview 

After Federal Reserve Governor Christopher Waller indicated he backed an interest rate hike of 75 basis points in July, fears of a greater 100 basis-point rise to battle excessive inflation started. This led to a spike in bitcoin prices on Thursday. 

According to market capitalization, the most valuable cryptocurrency was up 4.8 percent on the previous day, trading at roughly $2,680. 

The possibility that the Federal Reserve would increase its target interest rate by 75 basis points to a range of 2.25 percent to 2.5 percent this month is presently seen as being 56% by traders of Federal funds on the CME exchange. A day earlier, the odds were 20 percent when traders changed their bets to a 100 basis-point increase in response to a June Consumer Price Index figure that was exceptionally hot. 

In a short squeeze, the price of VGX, the native token of defunct cryptocurrency lender Voyager Digital, tripled over three days, reaching a high of 95 cents on July 13. 

Since its Wednesday high, VGX has fallen down to roughly 46 cents, a 52 percent decrease. 

The majority of alternative currencies were up, with Uniswap’s UNI token driving market gains. After joining broker Robinhood’s cryptocurrency listings, UNI saw a 21 percent increase over the previous 24 hours. 

After the Ethereum scaling tool took part in Disney’s 2022 Accelerator program, the price of Polygon’s MATIC token increased by 19%. 

Ethereum increased 10% when the ninth shadow fork of the network went live, concomitant with testing for the forthcoming Merge. 

Forex Weekly Overview

The US Dollar Index hit its highest level in almost two decades at 109.29 on Thursday, continuing the dollar surge that was sparked by the sizzling inflation data on Wednesday. However, dovish Fed remarks prompted the dollar to lose momentum before the important US Retail Sales data was released. 

Additionally, the University of Michigan will issue its Consumer Sentiment Survey for July, and the Fed will publish its Index of Common Inflation Expectations (CIE) for the second quarter. The May Trade Balance statistics will be featured on the European economic docket. 

Christopher Waller, the governor of the Federal Reserve, asserted on Thursday that markets may have overestimated the likelihood of a 100 basis point (bps) rate increase in July. Waller further stated that while he supports a 75 bps rate increase in July, he could lean in the direction of a larger rate increase if retail sales and housing statistics come in stronger than anticipated.

Markets are currently pricing a 50% probability of a 100 bps rate hike in July, as opposed to an 80% probability during the European session on Thursday, according to the CME Group FedWatch Tool. 

Data from China earlier in the day revealed that the second quarter’s Gross Domestic Product (GDP) shrank by 2.6 percent on a quarterly basis. This number was worse than analysts had predicted, who had predicted a decrease of 1.5%. Positive news: In June, retail sales in China increased by 3.7 percent annually. Markets are still cautious in the morning in Europe, with daily losses for US stock index futures ranging from 0.25 percent to 0.3 percent. 

Commodities: Is Oil Price Increasing?

Investors are suspicious of the possibility of a significant U.S. rate hike later this month. Though it might reduce inflation, it will hurt oil demand.

Oil prices declined on Thursday-Friday, although virtually all of the losses were recovered after plunging more than $4 earlier in the session. 

For the third day in a row, the price of Brent crude futures for September fell by 47 cents, or 0.5 percent, to $99.10 per barrel. 

The price of U.S. West Texas Intermediate crude for August delivery decreased by 52 cents, or $95.78, or 0.5 percent. 

The day before Russia invaded Ukraine, on February 23, both contracts reached lows below that close, with Brent hitting its lowest point since February 21. 

After sobering inflation data revealed that pricing pressures are escalating, the U.S. Federal Reserve is reportedly stepping up its fight against 40-year high inflation with a massive 100 basis-point rate increase this month. The dates of the Fed policy meeting are July 26–27. 

The Fed rate increase is likely to follow the Bank of Canada’s comparable action, which shocked the market on Wednesday.

Despite a decline in exports of crude and processed products from Russia due to Western sanctions and supply interruption in Libya, oil prices have fallen over the previous two weeks due to concerns about the recession. 

Weekly Overview: Final Verdict 

How much longer will the terrible bear market last? Investors become less confident in purchasing financial assets. Keep checking back for updates the following week.

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