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FX.co ★ 24.06.2022: Wall Street aims to close week with gains (S&P500, USD, CAD, Bitcoin)

24.06.2022: Wall Street aims to close week with gains (S&P500, USD, CAD, Bitcoin)

Hi, dear traders! Let’s discuss market sentiment and ongoing trends of the New York session. Wall Street investors have been unnerved by global uncertainty for the whole week. Today jitters have calmed down and investors regained appetite for risk, thus sending risky assets in the green. The market revived a faint hope for receding inflation. So, amid the lack of bad news, Wall Street could close the week with gains

The major stock indices closed volatile yesterday’s session up. The Dow Jones edged up 0.64%. The Nasdaq gained 1.62%. The S&P 500 grew 0.95% to close at 3,795. In the New York pre-market, Wall Street indices are trading higher in confidence, thus promising the long-awaited growth of stocks. Market sentiment is positive. Unless new US home sales log decent figures, the S&P 500 is expected to trade in the intraday corridor between 3,810 and 3,980.

The hawkish Fed supported American stocks yesterday. In the second testimony in Congress, Powell promised an unconditional approach to curb inflation that would not push the economy into a downturn.

The survey by Markit showed yesterday that business activity in the US weakened in June because soaring inflation and low consumer sentiment dented domestic demand. It might indicate that the US economy has already stalled its economic growth. Thus, the Fed’s actions have produced some effect.

Waning demand and mounting recession fears pushed energy stocks down. The energy sector fell 3.8%, extending its recent pullback. The sector has slumped 23% in the last 10 days which is the sharpest 10-day fall for the recent 40 years.

The stock market was inspired by the results of the Fed’s annual stress test. Large American banks passed the test easily, reinforcing public trust in the sector. As a result, banks, including JPMorgan, Bank of America, Wells Fargo, Citigroup, Morgan Stanley, and Goldman Sachs are entitled to use their excess capital to pay dividends and purchase stocks for shareholders.

The US dollar retreated further from the previous highs amid investors’ worries about a looming recession. Today its index is trading at nearly 104.2 with a bearish bias. The intraday corridor is seen between 103.9 and 104.3.

Apart from the statement that recession is a realistic scenario, Powell confirmed further rate hikes to follow. Federal Reserve Governor Michelle Bowman supported the idea of another rate hike by 75 basis points in July and some more rate hikes of half a percentage point.

There is a fly in the ointment. A significant fall in commodity prices toned down inflation fears and enabled a recovery in the stock market. This decreased demand for safe haven assets, on particular the US dollar. Investors are speculating that the Fed could ease a pace of monetary tightening after the nearest rate hike of 75 basis points. Investors expect the funds rate to reach its peak at 3.5% in March 2023 and then to be reduced by 20 basis points by July next year.

The USD/CAD pair retreated from 1.3000 and moved downward. Today the currency pair is trading at about 1.2968 with the downward bias. The pair is likely to trade in the corridor between 1.2940 and 1.2990 today.

A decline in prices of crude oil, the key Canadian exports, offsets expectations of more aggressive tightening by the Bank of Canada. Oil prices sank to the lowest level in 5 weeks on the back of recession fears and fading demand for energy. Today, oil prices have regained some losses in the context of the EU summit devoted to inflation in the energy market and further energy policy. Brent futures grew more than 1 dollar to 111.30 dollars a barrel. Futures are still trading 2% below one-week highs and 10% below one-month highs. WTI rose 1.35% to trade at 105.76 dollars a barrel.

Bitcoin eventually regained its footing. Today the whole crypto market perked up in tandem with the stock market driven by high-tech stocks. The flagship crypto has already gained 3.6% to trade at 21,271.

*Die zur Verfügung gestellte Marktanalyse dient zu den Informationszwecken und sollte als Anforderung zur Eröffnung einer Transaktion nicht ausgelegt werden
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