May 07, 2023 (MLN): There were significant events and developments in the global financial markets, especially U.S., over the past week. Following is a summary of key highlights:
Fed, ECB battle inflation with rate hikes
The U.S. Federal Reserve continued the rate hike journey, increasing interest rates by 25 basis points to 5.00%-5.25%, marking the tenth consecutive increase, bringing interest rates from 0.25% in March 2022 to 5.25% in May 2023.
The benchmark funds rate is at its highest level in 16 years.
Following the hike, Fed Chairman Jerome Powell hinted at a potential rate pause, stating that it is a meaningful change to no longer say we anticipate more firming of policy.
However, Powell also added that it’s not possible to say with confidence if the Fed has reached a sufficiently restrictive level.
The European Central Bank (ECB) followed the U.S. FOMC, raising its benchmark refinancing interest rate by 25bps to 3.50%-3.75%, this came as a shock to some market analysts as they were expecting a possible 50bps hike.
However, ECB president Lagarde expressed that the risks to inflation still remain too elevated and that financial conditions were still not sufficiently tight.
Lagarde’s comments suggested the possibility of multiple rate hikes, she added that we are not pausing, that is very clear.
A strong labor market gives Fed more tightening room
The U.S. jobs report was released, showing a 3.4% unemployment rate and +253k non-farm payrolls added for the month of April.
This data is a key indicator of the U.S. labor market performance and is closely watched by market participants.
Notably, the unemployment rate is at its lowest level since January of this year.
Tech giant’s earnings
Apple (NASDAQ: AAPL) beat earnings with an EPS of $1.52 as compared to market expectations of $1.43, reporting a revenue of $94.8 billion, and announced a $90bn buyback.
Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) received a $214 million dividend payout from Apple.
Nike (NYSE: NKE) announced a $0.34/share quarterly dividend.
AMC Entertainment Holdings Inc (NYSE: AMC) posted an LPS of $0.17 as compared to $0.33 in the last quarter, reporting a 23.5% surge in revenue to $954.4m.
Market performance
The U.S. stock market index S&P 500 (SPX) closed the week with a decline of 0.8% at $4136.26, while the technology index Nasdaq (NDX) inched up by 0.1% on the back of positive sentiment in the tech sector from earnings beat by apple.
The U.S. dollar index (DXY) continued its downward trajectory, down by 0.38%, it is down by 4.36% from the yearly high.
Commodity markets showcased extreme volatility throughout the week, with spot gold reaching a new all-time high but swiftly experiencing a sudden sell-off.
Ultimately, the week ended with spot gold closing at $2,015.36, a slight decrease from the weekly high but still representing the new record, and closing the week with +1.32%.
On the other hand, international spot silver closed the week at $25.64, reflecting a rise of 2.42%.
Meanwhile, Brent crude and West Texas Intermediate (WTI) both declined for the third consecutive week, recording a decline of 6.2% and 6.94% respectively for the week.
Other News: Musk, Twitter, HSBC, Nestlé
Recent reports indicate that 49% of Americans have fewer savings or no savings compared to the previous year, highlighting financial challenges for many individuals.
Elon Musk warned that a mild recession is already underway and further rate hikes could trigger a severe recession.
Twitter made its second interest payment on the $12.5 billion debt used by Elon Musk to take the company private.
HSBC announced a $2 billion share buyback and acquired SVB UK, while Nestlé Lanka PLC revealed plans to delist from the Colombo Stock Exchange.
These developments reflect the dynamic nature of the global financial markets and the potential impact on various sectors and economies worldwide.
Copyright Mettis Link News
Posted on: 2023-05-07T15:18:29+05:00
