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Futures News, July 29th - According to foreign media reports, copper futures on the London Metal Exchange (LME) fell on Tuesday, influenced by a stronger dollar and rising market expectations of a Federal Reserve interest rate hike. A rate hike could dampen demand for industrial metals. Brokerage firm Sucden Financial stated that overall, base metals will find support during declines as the supply side remains favorable. However, a stronger dollar and high US Treasury yields mean that a rebound may require a stronger macroeconomic environment, especially ahead of the Fed decision and key US data releases later this week. Market participants are awaiting the outcome of the Feds interest rate decision, particularly given the decline in oil prices following the easing of tensions between the US and Iran. The FedWatch Tool shows traders expect a 62% probability that the Fed will keep interest rates unchanged this week, and a 38% probability of at least a 25 basis point rate hike, up from 16% a week ago. Rising interest rates could dampen economic activity, thereby suppressing copper demand.1. The WTI crude oil futures contract closed down 4.21% at $79.13 per barrel; the Brent crude oil futures contract fell 3.33% to $83.01 per barrel. 2. International precious metals futures generally closed lower. COMEX gold futures fell 1.18% to $4028.80 per ounce, and COMEX silver futures fell 2.35% to $57.34 per ounce. The current rising expectations of a Federal Reserve interest rate hike, coupled with high interest rate expectations suppressing precious metals, and the lack of substantial escalation in the US-Iran geopolitical situation, have led to a wait-and-see attitude in the market, all contributing to this price weakness. 3. London base metals all fell. LME lead fell 0.29% to $1885.5/ton, LME aluminum fell 0.60% to $3148.5/ton, LME copper fell 0.64% to $13644.5/ton, LME zinc fell 1.22% to $3567.5/ton, LME nickel fell 1.56% to $16945.0/ton, and LME tin fell 1.72% to $53405.0/ton. 4. The three major U.S. stock indexes closed mixed. The Dow Jones Industrial Average rose 1.03% to 52747.32 points, the S&P 500 rose 0.21% to 7428.78 points, and the Nasdaq Composite fell 0.22% to 24876.91 points. IBM rose more than 5%, leading the Dow Jones gains. The Wind US Tech Big Seven Index rose 0.69%, with Google up over 2% and Microsoft up over 1%. SpaceX rose over 2%. The Nasdaq China Golden Dragon Index rose 1.08%, with Autohome up over 7% and LuKong up over 6%. The memory sector plummeted, with SanDisk down over 14%, SK Hynix down nearly 9%, and Micron Technology and AMD both down over 8%. 5. European stock indices all closed higher: the German DAX rose 0.41% to 25464.01 points; the French CAC40 rose 0.63% to 8458.78 points; and the UK FTSE 100 rose 0.83% to 10871.02 points. A temporary ceasefire between the US and Iran led to a significant drop in international oil prices, easing energy cost pressures and boosting market sentiment. 6. Major Asia-Pacific stock indices closed lower. South Koreas KOSPI index closed down 10.84% at 6023.66 points, its biggest single-day drop since March 4, having briefly fallen below the 6000-point mark during the session. It has now fallen nearly 29% since July. Japans Nikkei 225 index closed down 3.95% at 62364.92 points. Indias SENSEX 30 index fell 0.09% to 76765.92 points.July 29 - According to Iranian reports, a senior Iranian military official responded strongly to the latest remarks by the Saudi Defense Minister, categorically denying Irans involvement in launching projectiles at targets within Saudi territory. The official warned that blaming Iran for any actions in the region targeting US interests is a serious strategic miscalculation and exposes a lack of understanding of the complex regional situation.On July 29th, SK Hynix (SKHY.O) released its financial report on Wednesday, showing a 557% surge in operating profit to 60.5 trillion won (approximately US$41.62 billion) in the second quarter, a record high, driven by strong demand for advanced memory chips fueled by increased investment in AI data centers by tech giants. This figure was compared to 9.2 trillion won in the same period last year. However, this figure fell short of market expectations of 64 trillion won, mainly because its high-end memory chips (HBM) accounted for a higher proportion of its product mix compared to competitors, thus failing to fully benefit from the current strong price increase cycle in conventional memory chips. This exacerbates concerns that the AI boom driving the semiconductor industry may be slowing down. SK Hynixs revenue also missed expectations, with the report showing second-quarter revenue of 79 trillion won, compared to market expectations of 84 trillion won. Following a 9% drop in its earnings report, SK Hynix shares fell another 9% in after-hours trading after closing down 9% on Tuesday. SanDisk (SNDK.O) and Micron Technology (MU.O) also fell by more than 4%, wiping out the boost from Seagate Technologys (STX.O) earnings report.The Federal Aviation Administration (FAA) has issued a grounding order for all American Airlines Group (AAL.O) flights across the United States due to an information technology problem.

The EUR/GBP exchange rate recovers above 0.8000 in advance of Eurozone inflation and UK gross domestic product

Alina Haynes

Mar 30, 2023 16:05

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The EUR/GBP pair extended its recovery above 0.88 during the Asian trading session. Anticipating that the European Central Bank (ECB) will continue to raise interest rates to combat persistent inflation, the cross has depreciated progressively. Friday will see the publication of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and Gross Domestic Product (GDP) (Q4) figures. Prior to the publication of these figures, it is anticipated that the asset will exhibit explosive activity.

 

It is anticipated that the preliminary Eurozone HICP will decelerate significantly from 8.5% to 7.3%. While it is anticipated that the core HICP will rise to 5.7% from 5.6% in the previous release. Weak energy prices are anticipated to have a significant impact on Eurozone inflation. In light of Christine Lagarde's prediction that inflation will remain elevated for an extended period of time, the European Central Bank (ECB) is expected to continue tightening monetary policy.

 

In the interim, banking tensions are subsiding as the absence of information regarding additional collateral damage has a positive impact on the market. Chief Economist Philip Lane stated on Wednesday that ECB interest rates must rise if banking tension has no or a "relatively limited" impact.

 

Investors avidly anticipate the United Kingdom's Gross Domestic Product (GDP) data. According to the consensus, the United Kingdom's growth in the fourth quarter of CY2022 remained unchanged. It is anticipated that the annual GDP will remain unchanged at 0.4%. It is expected that the British economy will undergo a severe recession as a result of high inflation and sluggish growth.

 

The Bank of England (BoE) policymakers appear confident that inflation will moderate in the near future and that the unexpected rise in February's inflation was a one-time anomaly; however, the absence of evidence raises doubts. If inflation persists, BoE Governor Andrew Bailey stated that additional rate increases would be announced. In contrast, Bank of America (BoA) analysts anticipate that the Bank of England (BoE) will not increase rates and will maintain current levels until 2024.


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