On Wednesday (October 18th), as Tesla's stock price fell after hours, large exchange traded funds tracking the Nasdaq 100 Index (QQ) lost momentum in the late trading session, while Netflix surged 12% after announcing its financial results.
The S&P 500 index fell 1.3%, while oil prices rose due to an explosion at a hospital in Gaza, complicating diplomatic efforts to control the Middle East conflict, and Iran intensifying its rhetoric against Israel. Morgan Stanley's decline was the largest since 2020, due to a slowdown in investment banking business leading to a decline in profits. United Airlines Holdings' stock price fell nearly 10% after warning that the war between Israel and Hamas and rising aviation fuel costs would affect profits.
According to FactSet data, more than 10% of companies in the S&P 500 index have reported performance. About 78% of the reported companies exceeded analysts' expectations in terms of performance.
Jane Foley, Director of Foreign Exchange Strategy at Rabobank, said, "The latest news reports on the hospital explosion have increased the risk of escalation. Although there are almost no signs of panic, once the situation clearly escalates, we expect to see an increase in risk aversion
Gold prices have steadily risen and hit a six week high in US afternoon trading on Wednesday. Silver prices have slightly increased, reaching a three week high. With the fermentation of the Middle East conflict, the market's risk aversion has become stronger, and traders and investors are seeking safe haven assets such as gold and silver. In December, gold rose by $26.70 to $1962.40, while silver rose by $0.016 to $23.04.
In the foreign exchange market, traders revere the relatively safe Swiss franc, and the US dollar also rises. The weakest currency is the 'risk currency', with the New Zealand dollar and Australian dollar being the weakest among the major currencies.
Traders also carefully studied the Fed's speech and the latest Beige Book to find clues about the next steps of the central bank. The Federal Reserve stated in its survey of regional business connections that the outlook for the US economy is stable or there may be a slowdown in expansion.
New York Fed Chairman John Williams stated that interest rates must remain at restrictive levels for a period of time to bring inflation back to the central bank's target. Meanwhile, Federal Reserve Governor Christopher Waller pointed out that policymakers can wait and collect more data before deciding whether the economy needs further monetary tightening. Federal Reserve Governor Michelle Bowman stated that inflation has decreased but remains high. She emphasized the unexpected strength of commodity spending, which has not returned to the pre pandemic pattern, and the economic situation in the United States may be unique compared to other countries.
Fawad Razaqzada, a market analyst at City Index and Forex.com, said, "We just don't know how long inflation will remain high, which in turn raises questions about whether high interest rates can continue. Based on recent US data, oil prices, and Fed comments, it may take a long time for the Fed to cut rates again
Federal Reserve Chairman Jerome Powell will deliver a speech at the New York Economic Club on Thursday.
Evercore analyst Krishna Guha said investors are anxious about whether the unexpected economic uptrend will lead to further tightening of the Federal Reserve's policies. However, we believe that Powell will adhere to the message conveyed by Vice Chairman Philip Jefferson that the data has been strong, "but there have also been significant fluctuations in yields, which has led to a tightening of financial conditions. Therefore, the policy response in November is not urgent, and the Federal Reserve can adopt a wait-and-see attitude
On Wednesday, the yield of 10-year treasury bond climbed, breaking 4.9% for the first time since 2007. At the same time, the average interest rate on popular 30 year fixed mortgage loans has just reached 8%, the highest level since 2000.
Focus and wind vane on Thursday:
① 08:30 Australia September Quarterly Adjusted Unemployment Rate
② 14:00 Swiss September Trade Account
③ 16:00 Eurozone August quarter adjusted current account
④ 20:30 Initial jobless claims for the week from the United States to October 14th, Philadelphia Fed manufacturing index for October
⑤ 21:00 Federal Reserve Vice Chairman Jefferson delivers a speech
⑥ 22:00 Annualized total sales of completed homes in the United States in September, leading indicator monthly rate of the US Chamber of Commerce in September
⑦ 22:30 EIA natural gas inventory for the week from the United States to October 13th
⑧ At 00:00 the next day, Federal Reserve Chairman Powell delivered a speech
⑨ The next day at 01:20, Federal Reserve Gullsby participated in the activity Q&A
⑩ The next day at 05:30, Federal Reserve Huck delivered a speech on the economic outlook
Analysis of Major Currency Trends:
EUR: EUR/USD fell, closing at 1.0536, a decrease of 0.38%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.0577, the further resistance is at 1.0621, and the key resistance is at 1.0648; The initial support for the downward trend of the exchange rate is at 1.0506, further support is at 1.0479, and more critical support is at 1.0435.
GBP: GBP/USD fell, closing at 1.2140, a decrease of 0.35%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.2187, the further resistance is at 1.2236, and the key resistance is at 1.2261; The initial support for the downward trend of the exchange rate is at 1.2113, further support is at 1.2088, and more critical support is at 1.2039.
JPY: USD/JPY up, closing at 149.9220, up 0.08%. Technically, the initial resistance to the upward trend of the exchange rate is at 150.055, the further resistance is at 150.225, and the key resistance is at 150.51; The initial support for the downward trend of the exchange rate is at 149.6, further support is at 149.315, and more critical support is at 149.145.
