Fed gives reassurances, equities react positively – Market Overview

Fed gives reassurances, equities react positively – Market Overview

Fed’s statements from yesterday were all in the same direction: calming the markets on their concerns about a potential inflationary rebound.

All of them agreed that the rise in consumer prices has its origin in the increase in domestic demand after a period of collapse caused by the pandemic crisis. Also, the bottlenecks in the supply chain, a consequence of the lockdown and activity closures that have occurred globally, contributed to the recent economic reports.

In short, all of them have stated that it is a transitory phenomenon that will not lead to continuous increases in consumer price levels.

This discourse has been repeated continuously over the recent weeks. Now the question is whether Fed is right, or they just have been trying to calm the markets and prevent episodes of volatility from occurring, leading to obstacles for the implementation of expansionary monetary policies, especially in fixed income markets.

For now, the market has reacted positively, and risk sentiment has improved, as reflected in the fall in prices of U.S. Treasury Bonds Yields.

Stock indices also reacted positively with widespread increases in North American futures that are already recovering much of the falls from two weeks ago. Additionally, European indices reached new highs, like the German DAX index.

The recovery expectations in Europe have also improved substantially due to the lifting of the mobility restriction measures. Today, Germany’s Ifo Business Climate for May has been published, showing a figure of 99.2, higher than expected and improving the figure for April, 96.6.

All this, although the inter-quarterly GDP figure for the first quarter, also published today, fell 1.8%, a figure that was widely anticipated by the market without impacting it significantly.

In this somewhat more optimistic scenario from today’s market, the U.S. Dollar loses strength due to the fall in long-term interest rates and the outflow of investors that use the U.S. currency as a safe haven asset in uncertain situations.

This downward movement of the dollar impacts the price of the Chinese Yuan.

The USD/CNH pair continues its downward path, reaching levels not seen since mid-2018. The Chinese authorities are allowing the revaluation of its currency against the U.S. Dollar, which has a notable impact on global markets.

The market has been waiting for some kind of intervention by the Chinese monetary authorities, slowing down the upward trend of its currency, which has not yet occurred. After the pandemic, the Asian giant’s position allows it to have a stronger currency without fear of losing competitive power. At the same time, it makes its imports of raw materials cheaper, with prices recently skyrocketing.

Sources: Bloomberg, reuters.com.

Maklumat/penyelidikan ini disediakan oleh Miguel Ruiz (“tpenganalisis penyelidikan”) dan tidak mengambil kira objektif pelaburan tertentu, keadaan kewangan atau keperluan khusus individu. Penganalisis penyelidikan bertanggungjawab terhadap kandungan laporan penyelidikan ini, samada sebahagian atau keseluruhannya, memperakui bahawa pandangan mengenai syarikat dan sekuriti mereka yang dinyatakan dalam laporan ini jelas mencerminkan pandangan peribadi dan pedagang bertanggungjawab sepenuhnya ke atas risiko mereka sendiri.

Penyelidikan yang disediakan bukanlah pandangan JME Financial Services (Pty) Ltd ataupun undangan untuk melabur dengan JME Financial Services (Pty) Ltd. Penganalisis penyelidikan juga memperakui bahawa tiada sebahagian daripada pampasannya, adalah, atau akan, secara langsung atau tidak langsung, berkaitan dengan cadangan atau pandangan tertentu yang dinyatakan dalam laporan ini.

Sehingga tarikh laporan diterbitkan, penganalisis penyelidikan dan pasangannya dan/atau saudara-mara yang bergantung kepada penganalisis penyelidikan, tidak memegang kepentingan dalam sekuriti yang dicadangkan dalam laporan ini (“kepentingan” termasuk pemilikan langsung atau tidak langsung terhadap sekuriti).

Penganalisis penyelidikan tersebut bukanlah di bawah JME Financial Services (Pty) Ltd. Anda digalakkan mendapatkan nasihat daripada penasihat kewangan bebas mengenai kesesuaian pelaburan, di bawah penglibatan berasingan, seperti yang anda anggap sesuai dengan objektif pelaburan tertentu anda, keadaan kewangan atau keperluan kewangan tertentu sebelum membuat komitmen untuk melabur.

Undang-undang Republik Afrika Selatan akan mengawal sebarang tuntutan yang berkaitan dengan atau yang timbul daripada kandungan maklumat/ penyelidikan yang disediakan.

JME Financial Services (Pty) Ltd, beroperasi sebagai ZA.CAPEX.COM, bertindak sebagai perantara antara pelabur dan Magnasale Trading Ltd, rakan kontrak untuk perbezaan yang dibeli oleh pelabur melalui ZA.CAPEX.COM, yang diberi kuasa dan dikawal selia oleh Cyprus Securities. dan Suruhanjaya Pertukaran dengan nombor lesen 264/15. Magnasale Trading Ltd adalah prinsip utama CFD yang dibeli oleh pelabur.