flg-icon English
24
Oct

U.S. Jobless Claims, Flash Manufacturing & Services PMIs, New Home Sales

calendar 24/10/2024 - 07:35 UTC

The U.S. dollar continued to strengthen against major currencies on Wednesday, with the dollar index rising 0.36% and reaching highs last seen in July. The dollar's gains were fueled by expectations of slower interest rate cuts, supported by rising Treasury yields and resilient U.S. economic data. The yield on benchmark U.S. 10-year notes increased by 3.4 basis points (bps) to 4.24%, reaching a 3-month high of 4.26%.

Based on the CME Fedwatch tool, markets are currently pricing in a strong likelihood of a 25-basis-point interest rate reduction by the Federal Reserve. The probability of such a cut stand at 90.9%, while the odds of rates remaining unchanged are negligible at 9.1%.

European stock markets are trading in negative territory, with the Germany 40 down by more than 1% so far this week. Markets await preliminary Purchasing Managers' Index (PMI) data from major eurozone countries as concerns about regional growth persist. Business activity is expected to remain below the expansion threshold for the month and this could pressure the European Central Bank (ECB) to further cut interest rates.

U.S. stock market benchmarks US 30, US 500 and US tech 100 declined on Wednesday, pressured mainly by the technology sector while investors grapple with rising Treasury yields.

In corporate news, Apple Inc. shares experienced a significant decline of 2.2%, leading a broader tech downturn, following a pessimistic update on iPhone 16 demand from renowned analyst Ming-Chi Kuo. Tesla shares declined by nearly 2% on Wednesday despite reporting a surprise increase in third-quarter earnings. However, the positive earnings news provided a temporary boost to the stock price in after-hours trading. While the company's sales volume rose by 6%, this growth was significantly lower than the 50% annual increases seen in the past.

Market participants may see some price action later today as several key economic indicators are released. These include US, EU and UK flash manufacturing and services PMIs along with US jobless claims and new home sales. Additionally, speeches by the Bank of England Governor, ECB President, and a Federal Reserve FOMC member, along with other key FOMC speeches, could also influence market sentiment.

EUR/USD

On Wednesday, the EUR/USD pair declined by 0.15%, as the Euro continued to weaken ahead of Thursday's fresh release of Purchasing Managers Index (PMI) data.

European Central Bank (ECB) officials downplayed economic concerns but stressed the importance of caution in future rate cut decisions.

Market participants are now closely watching the release of the flash PMI data from both the Eurozone and the US, which could offer fresh insights into the health of the global economy and influence broader risk sentiment.

Additionally, US bond yields will play a key role in driving the USD and providing momentum. However, the underlying fundamentals suggest that the path of least resistance for EUR/USD spot prices remains to the downside.

EUR/USD

Gold

Gold prices plunged from an all-time high on Wednesday as rising US Treasury yields, and a stronger US dollar weighed on the metal.

Investors seem increasingly convinced that former President Donald Trump could defeat Vice President Kamala Harris in the upcoming US election on November 5. As a result, many are seeking shelter in anticipation of potential policy shifts. Concerns are growing that Trump's approach to deficit spending, tariffs, and immigration could trigger another wave of inflation.

Gold

WTI Oil

Oil prices fell on Wednesday, driven by a larger-than-expected build in U.S. crude inventories, raising concerns over oil demand. Meanwhile, attention remained on U.S. diplomatic efforts to ease tensions in the Middle East.

U.S. Inventories Surge Data from the Energy Information Administration (EIA) showed U.S. oil inventories increased by 5.47 million barrels for the week ending October 18, far exceeding expectations of a 0.8 million barrel rise.

The volatile situation in the Middle East continues to offer support, particularly after Israel reported the killing of Hashem Safieddine, the expected successor to Hezbollah leader Hassan Nasrallah, who was killed by an Israeli strike last month.

WTI Oil

US 500

U.S. stocks slumped on Wednesday, weighed down by tech stocks as Treasury yields continued to climb amid concerns about a shallower outlook for the Federal Reserve’s rate cut cycle.

Apple Leads Tech Decline Apple Inc. fell more than 2%, leading the broader tech sector lower after analyst Ming-Chi Kuo from TF International, known for his accurate Apple predictions, delivered a downbeat forecast on iPhone 16 demand.

AT&T shares rose over 4% following a $4.4 billion goodwill impairment charge related to its business-wireline unit.  Coca-Cola saw its stock fall 2% after reporting weaker demand, although higher prices helped the company beat earnings expectations for the quarter.

The economic data calendar was relatively quiet, with September’s existing home sales as the main release. FOMC member Michelle Bowman is also scheduled to speak, offering potential insights on future monetary policy as expectations shift toward a more gradual easing by the Fed in the coming months.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

Join now to receive more training and knowledge
Open your personal account