News & Analysis

Overnight on Wall Street: Thursday 19/09/19

September 19, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

As widely expected, the US Federal Reserve has cut interest rate for the second time this year by a quarter percentage point to a range of 1.75% to 2%.

“In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent.”

Markets participants have anticipated that the economic data does not fully justify the second-rate cut, but the Fed will likely proceed with the cut as insurance against slowing growth due to external factors rather than a slowing domestic economy.

We saw a divided Fed which is not ready to commit to further easing

Wall Street struggled to find a firm direction over the mixed signals from the Federal Reserve policymakers on the interest rate outlook.

  • S&P500 ended flat at 3007 points.
  • The Dow Jones Industrial Average finished 0.1% higher at 27,147.
  • Nasdaq Composite closed 9 points lower at 8,177.

Currency Markets

In the FX market, all the G10 currencies turned negative against the US dollar. Another insurance rate cut with no pre-commitment to further rate cuts helped the greenback to bolster higher.


Source: Bloomberg Terminal

The Pound was among the strongest despite the weakness of the US dollar. However, the GBPUSD pair failed to hold the 1.25 level and is currently trading at around 1.247.

GBPUSD (Hourly Chart)

Source: GO MT4

The New Zealand dollar was the worst performer ahead of the GDP report. The recent weakness in key inflationary sectors has kept the kiwi pair tilted to the downside. An upbeat GDP figure helped the pair to find some buyers but gains have been contained so far. Attention is now on the Aussie Employment reports.

Commodities

The rally in oil prices has tamed down as Saudi Arabia’s energy minister claimed that they have restored some lost production since the weekend disruption.

As of writing, WTI and Brent Crude fell from recent highs and are currently trading in the vicinity of $58 and $62. However, oil prices remain higher than last week despite the bearish EIA reports as the oil market is still on edge. The Yemen Houthi rebels warned of more drone strikes.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

Gold plummeted following the renewed strength in the US dollar. The yellow metal dropped below the key psychological level above $1,500 again.

XAUUSD (3-Day Chart)


Source: Bloomberg Terminal

Key upcoming events

Gross Domestic Product (New Zealand)
Fulltime Employment and Unemployment Rate (Australia)
BoJ Interest Rate Decision, Monetary Policy Statement, All Industry Activity Index and BoJ Press Conference (Japan)
SNB Interest Rate Decision & Monetary Policy Assessment (Switzerland)
Retail Sales, BoE Asset Purchase Facility, Interest Rate Decision, and Minutes (UK)
Jobless Claims, Philadelphia Fed Manufacturing Survey and Existing Home Sales (US)
 
Friday, 20 September 2019
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
0.06500.1450.0210.97200
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
0000000

 

Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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