Market Overview - Page 50

The US manufacturing PMI fell to 47.0 in September. The services sector remains a solid driver of the economy with a PMI of 55.4.

China announced a cut in key interest rates and reserve ratios, freeing up 1 trillion yuan ($142bn) and reducing the burden of mortgage payments. These measures are aimed at accelerating the economy and preventing it from slowing down.

Preliminary Eurozone PMI estimates came in weaker than expected, sending EURUSD down 0.67% within an hour and increasing pressure on the ECB to continue easing monetary policy. The PMI weakness pushed the EURUSD below 1.11 for the second time in a month.

Gold started the week with new highs and ended the week up 1.3%, despite a 2% dip on profit-taking following the Fed's rate decision. The wildest part of the rally may be ahead with a massive short squeeze, but traders should be on the lookout for signs of growth exhaustion.

The Fed cut the rate by 50 bps, This change was not fully factored into expectations, so it has the potential to trigger a prolonged market revaluation and change the rules of the game for the USD.

US retail sales rose 0.1% m/m in August, better than forecast, but sales growth in monetary terms slowed to 2.2% y/y. The industrial production index also rose by 0.9%, reversing two months of declines. Despite the strong economic data, markets regained confidence in a 50bp Fed rate cut.

German business sentiment deteriorated sharply in September, according to ZEW data. The relevant index fell to 3.6, the lowest level since October 2023. The situation was even worse for the component assessing current conditions, which fell to -84.5, the lowest.

Saturday’s statistics from China added to fears of a slowdown in the world’s second-largest economy, forcing the central bank to promise additional measures to lower borrowing costs. This is a fresh attempt to reverse the deteriorating trend in the economy.

Influential financial media are promoting the need for a 50-basis point rate cut. The Fed’s blackout period starts 10 days before the rate decision is released, so the main influence on the markets during this time comes from traders’ interpretation.

After three weeks of consolidation, gold moved decisively upwards, hitting a record above $2572 per troy ounce on the spot market on Friday. The price rise has approached 3% since the beginning of the week and 25% since the beginning.

US inflation in August was in line with expectations but caused some interesting market movements. The initial reaction was neutral, but then markets began reassessing expectations for the Fed Funds rate. The shift in expectations towards a 25bp cut rather.

Market picture US financial markets closed higher on Wednesday despite a rough start to the day. A strong performance from the technology sector helped the crypto market cross the $2 trillion mark, up 3% in 24 hours. The positive sentiment.