✅ Daily Market Analysis - FRIDAY AUGUST 25, 2023
Key events:
USA - Fed Chair Powell Speaks
On Thursday, all three major US stock indices wrapped up the day with declines surpassing 1% across the board. The Nasdaq, having enjoyed considerable gains recently, bore the brunt of the downward movement. Investor caution prevailed as they anticipated Federal Reserve Chair Jerome Powell's scheduled speech on Friday.
Nvidia's shares (NASDAQ: NVDA) managed to cling to a higher position by the close of the session, even after having achieved a record high earlier in the day. In a surprising turn of events, the company unveiled a strong forecast late Wednesday, riding on the back of robust demand for its artificial intelligence chips. Adding to the intrigue, Nvidia disclosed its intentions for a substantial $25 billion stock buyback program.
Nvidia stock daily chart
Nevertheless, all sectors within the S&P 500 faced losses for the day, with semiconductor stocks leading the downturn with a significant drop of 3.4%.
On Thursday, central bankers and economic leaders gathered at the annual symposium in Jackson Hole, Wyoming. The focal point of anticipation is Powell's forthcoming speech, which is set to shed light on the economic outlook, making it a highly awaited event.
During the week, the market had surged in tandem with Nvidia's performance, as investors expected the company's forecast to provide additional momentum to the ongoing rally in tech stocks, particularly those centered around artificial intelligence.
Boeing (NYSE: BA), a significant constituent of the Dow index, witnessed a sharp decline of over 4% after revealing a delay in 737 Max deliveries due to emerging manufacturing challenges.
Boeing stock daily chart
In the earlier hours of Thursday, data emerged indicating that claims for unemployment benefits in the US indicated a job market that remains persistently robust. This development has the potential to bolster the Federal Reserve's hawkish stance on maintaining higher interest rates over an extended period. As a result, yields on Treasury bonds saw a marginal uptick.
Furthermore, investors absorbed comments from Philadelphia Fed President Patrick Harker, who underscored the necessity of the Fed to sustain its restrictive interest rate approach for a considerable span during a CNBC interview on Thursday.
As part of its strategy to rein in inflation, the Federal Reserve has been gradually raising interest rates since March 2022. Market participants are now eagerly seeking clarity on the possibility of additional rate hikes and the Fed's intended timeline for maintaining elevated interest rates.
Simultaneously, the US dollar index, which serves as a measure of the currency's strength against a basket of six major peers including the euro and yen, surged to a peak of 104.20. This level has not been witnessed since early June, signifying a notable strengthening of the dollar.
US Dollar Currency Index daily chart
The euro's valuation experienced a decline, plunging to its lowest level since mid-June, reaching a nadir of $1.07845.
When juxtaposed with the Japanese yen, the dollar retraced its steps toward the nine-month zenith of 146.545 achieved the previous week, eventually stabilizing at 146.15.
EUR/USD daily chart
In anticipation of national figures, Tokyo's consumer price data, disclosed on Friday, revealed that inflation remained notably higher than the target set by the Bank of Japan. However, there was a consecutive second month of deceleration, indicating a lessening of pressure on the Bank of Japan to implement immediate policy adjustments.
Activity within the Japanese government bond market was limited, as the benchmark 10-year note did not see any trades throughout the day. After having recently climbed to a 9.5-year pinnacle of 0.675% in the previous session, the yield had retreated to 0.645% on Thursday. It's worth noting that the Bank of Japan unexpectedly doubled the unofficial policy cap on the yield to 1% at the conclusion of the previous month.
Conversely, equivalent US Treasury yields saw a marginal increase, eventually settling at 4.245%. This uptick followed a dip to 4.174% in the prior session, though it remained noticeably lower than the peak of 4.366% recorded on Tuesday. This peak marked the highest level observed since November 2007.
GBP/USD daily chart
Once again, the pound is undergoing a decline on Thursday, further extending the downward trend it has displayed over the past couple of days. This weakening is in response to worrisome economic data that has emerged from the UK.
Curiously, this ongoing pound depreciation could be influencing the relatively robust performance of the FTSE today. Amidst the European indices, the FTSE stands apart as one of the few that is maintaining a positive trajectory. While the index experienced early gains during the day, regrettably, these gains gradually waned as time advanced.
XAU/USD daily chart
Although there has been a modest rebound in the value of gold this week, its price movement continues to exhibit a sluggish and lackluster pace, even at this point in time. Despite showing signs of a revival yesterday, the momentum behind this uptick seems to have already faded as of today.
USA - Fed Chair Powell Speaks
On Thursday, all three major US stock indices wrapped up the day with declines surpassing 1% across the board. The Nasdaq, having enjoyed considerable gains recently, bore the brunt of the downward movement. Investor caution prevailed as they anticipated Federal Reserve Chair Jerome Powell's scheduled speech on Friday.
Nvidia's shares (NASDAQ: NVDA) managed to cling to a higher position by the close of the session, even after having achieved a record high earlier in the day. In a surprising turn of events, the company unveiled a strong forecast late Wednesday, riding on the back of robust demand for its artificial intelligence chips. Adding to the intrigue, Nvidia disclosed its intentions for a substantial $25 billion stock buyback program.
Nevertheless, all sectors within the S&P 500 faced losses for the day, with semiconductor stocks leading the downturn with a significant drop of 3.4%.
On Thursday, central bankers and economic leaders gathered at the annual symposium in Jackson Hole, Wyoming. The focal point of anticipation is Powell's forthcoming speech, which is set to shed light on the economic outlook, making it a highly awaited event.
During the week, the market had surged in tandem with Nvidia's performance, as investors expected the company's forecast to provide additional momentum to the ongoing rally in tech stocks, particularly those centered around artificial intelligence.
Boeing (NYSE: BA), a significant constituent of the Dow index, witnessed a sharp decline of over 4% after revealing a delay in 737 Max deliveries due to emerging manufacturing challenges.
In the earlier hours of Thursday, data emerged indicating that claims for unemployment benefits in the US indicated a job market that remains persistently robust. This development has the potential to bolster the Federal Reserve's hawkish stance on maintaining higher interest rates over an extended period. As a result, yields on Treasury bonds saw a marginal uptick.
Furthermore, investors absorbed comments from Philadelphia Fed President Patrick Harker, who underscored the necessity of the Fed to sustain its restrictive interest rate approach for a considerable span during a CNBC interview on Thursday.
As part of its strategy to rein in inflation, the Federal Reserve has been gradually raising interest rates since March 2022. Market participants are now eagerly seeking clarity on the possibility of additional rate hikes and the Fed's intended timeline for maintaining elevated interest rates.
Simultaneously, the US dollar index, which serves as a measure of the currency's strength against a basket of six major peers including the euro and yen, surged to a peak of 104.20. This level has not been witnessed since early June, signifying a notable strengthening of the dollar.
The euro's valuation experienced a decline, plunging to its lowest level since mid-June, reaching a nadir of $1.07845.
When juxtaposed with the Japanese yen, the dollar retraced its steps toward the nine-month zenith of 146.545 achieved the previous week, eventually stabilizing at 146.15.
In anticipation of national figures, Tokyo's consumer price data, disclosed on Friday, revealed that inflation remained notably higher than the target set by the Bank of Japan. However, there was a consecutive second month of deceleration, indicating a lessening of pressure on the Bank of Japan to implement immediate policy adjustments.
Activity within the Japanese government bond market was limited, as the benchmark 10-year note did not see any trades throughout the day. After having recently climbed to a 9.5-year pinnacle of 0.675% in the previous session, the yield had retreated to 0.645% on Thursday. It's worth noting that the Bank of Japan unexpectedly doubled the unofficial policy cap on the yield to 1% at the conclusion of the previous month.
Conversely, equivalent US Treasury yields saw a marginal increase, eventually settling at 4.245%. This uptick followed a dip to 4.174% in the prior session, though it remained noticeably lower than the peak of 4.366% recorded on Tuesday. This peak marked the highest level observed since November 2007.
Once again, the pound is undergoing a decline on Thursday, further extending the downward trend it has displayed over the past couple of days. This weakening is in response to worrisome economic data that has emerged from the UK.
Curiously, this ongoing pound depreciation could be influencing the relatively robust performance of the FTSE today. Amidst the European indices, the FTSE stands apart as one of the few that is maintaining a positive trajectory. While the index experienced early gains during the day, regrettably, these gains gradually waned as time advanced.
Although there has been a modest rebound in the value of gold this week, its price movement continues to exhibit a sluggish and lackluster pace, even at this point in time. Despite showing signs of a revival yesterday, the momentum behind this uptick seems to have already faded as of today.
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