News & Analysis

Overnight on Wall Street: Thursday 17 September 2020

September 17, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

It was a Fed day as investors awaited updates from the Federal Reserve Chairman Jerome Powell. Amid a fragile risk environment, markets are looking for support from central banks and governments. Given the US political gridlock over the fiscal stimulus package, the attention was switched to the Fed for guidance. 

As widely expected, the Fed remained on hold and expects US politicians to break the deadlock and push for a new round of stimulus measures. Global stocks ended mixed – US stocks failed to keep the upside momentum following the Fed’s new dot plot.


Source: Bloomberg

After a strong session, Wall Street pared gains in the final hours of trading following the Fed’s speech:

  • The Dow Jones Industrial Average ended27 points or 0.1% higher to 28,032.
  • S&P 500 fell by 16 points or 0.5% to 3,385.
  • Nasdaq Composite dropped by 140 points or 1.3% to 11,050.

Currency Markets

In the FX space, major currencies remained mixed against the US dollar. The British Pound, the Japanese Yen and commodity-linked currencies were among the best performers.


Source: Bloomberg

The FOMC meeting was the main event on Wednesday. Amid the political gridlock and ahead of the US election, the Fed was unlikely going to put forward policy changes that could alter the election dynamics. Besides the labour market, the US economy is showing signs of improvement which might not warrant any action from the Fed at this stage. As widely expected, the Fed remained on hold and conveyed the message that more need to be done by US politicians. 

The new dot plot shows that Fed’s policymakers expect no change in policy this year and borrowing costs will likely remain near zero through 2023.

The Japanese Yen remain well-bid following the election of the new leader, Yoshihide Suga who is broadly expected to follow the steps of the former Prime Minister. 

On the economic front, the main releases were the inflation data in the UK and Canada and the Retail Sales in the US.

United Kingdom

 

  • The Consumer Prices Index (CPI) 12-month rate was 0.2% in August 2020, down from 1.0% in July.
  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 0.5% in August 2020, down from 1.1% in July 2020.
  • Retail Price Index (MoM) meets forecasts (-0.3%) in August.

 

 

Canada

 

  • The Consumer Price Index (CPI) rose 0.1% on a year-over-year basis in August, matching the 0.1% increase in July.
  • Excluding gasoline, the CPI rose 0.6% in August, following a 0.7% increase in July. 

 

 

 

United States

The advance estimates of U.S. retail and food services sales for August 2020, were $537.5 billion, an increase of 0.6percent (± 0.5 percent) from the previous month, and 2.6 percent (± 0.7 percent) above August 2019. However, the figures came below the expected 1%. 

Commodities

Crude oil prices traded firmly on the upside supported by bullish oil reports. After the API reported a draw of -9.517M in September 11 from the previous 2.97M, the EIA issued a stock change of -4.4 million barrels in the same week. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading slightly firmer around $39.97 and $42.09 respectively.

Gold

Gold struggled to edge higher following the Fed’s comments. However, the XAUUSD pair remained in familiar levels around $1,950.


Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • Gross Domestic Product (New Zealand)
  • Full Time Employment, Employment Change and Unemployment Rate (Australia)
  • BoJ Monetary Policy Statement, Interest Rate Decision and Press Conference (Japan)
  • Consumer Price Index (Eurozone)
  • BoE MPC Vote, Asset Purchase, Interest Rate Decision and Minutes (UK)
  • Building Permits, Housing Starts Jobless Claims, and Philadelphia Fed Manufacturing Survey (US)
Friday, 17 September 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.158 0 0.097 0.073 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 4.763 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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