European stock markets observed a mixed performance with the STOXX 600 index recording a slight increase of 0.2%, amid varying results from key sectors during the ongoing earnings season. The industrial sector, tracked by the .SXNP index, stood out with a 0.7% gain, primarily propelled by Swiss engineering company ABB, whose stock surged nearly 6% following first-quarter earnings that surpassed market expectations.

ABB 2024 Performance

ABB’s performance is significant as it contributes to the overall strength observed in the industrials sector, which often correlates with broader economic trends such as manufacturing and production growth. The positive movement in ABB’s stock price today may encourage investor confidence in the sector, potentially hinting at a stable outlook, barring any unforeseen economic disruptions.

In stark contrast, the healthcare sector, represented by the .SXDP index, experienced a decline of 0.3%. This was influenced heavily by the performance of Sartorius, a Franco-German lab supplies maker, whose shares plummeted by 7.4%. This marked its most significant drop in six months following a quarterly report that fell short of analyst expectations for both order intake and revenue.

Nokia’s Share Slump

Similarly, in the telecommunications sector, Nokia’s shares fell by 2.2% after the company reported quarterly profits that did not meet analysts’ forecasts. This underperformance may signal potential challenges within the sector, possibly due to operational inefficiencies or competitive pressures, which could impact the company’s stock price and investor sentiment in the near term.

Historical performances, such as Nokia’s struggles in the early 2010s, demonstrate how earnings misses can presage longer-term challenges for tech companies facing stiff competition and market saturation.

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The dollar softened on Thursday, pulling back as traders digested comments from Federal Reserve officials which implied that U.S. interest rates are likely to remain restrictive. This shift in the dollar’s trajectory, after a period of consistent gains fueled by strong economic indicators and persistent inflation in the U.S., suggests that expectations for near-term rate cuts may be premature. Historically, periods of restrictive monetary policy have often led to a strengthening dollar; however, the current scenario might temper those gains slightly due to the mixed signals about future economic conditions.

Concurrently, the Japanese yen saw a momentary appreciation after Masato Kanda, Japan’s top currency diplomat, indicated that G7 finance leaders are united against excessive currency volatility. This assertion could potentially lead to more aggressive market interventions if the yen continues to weaken, especially as it flirts with a 34-year low against the dollar. A precedent for such interventions was set in 2022 when Japan spent an estimated $60 billion to shore up the yen, signaling a high level of commitment to preventing excessive currency depreciation.

Trilateral Finance Dialogue

The discussions among the U.S., Japan, and South Korea in their first trilateral finance dialogue have emphasised a close consultation on currency market conditions. This initiative underscores the concerns from Tokyo and Seoul regarding their currencies’ sharp declines and raises the possibility of joint interventions if the yen and the Korean won continue to fall against the dollar. Market participants now believe any potential interventions could be triggered should the yen breach the 155 level, adjusted from 152, with some expecting this threshold could even shift to 156.

Despite the greenback‘s slight decline on Thursday, the dollar index, which tracks the U.S. currency against a basket of six major peers, was only down by 0.08% at 105.87, retreating from a five-and-a-half-month high of 106.51 reached earlier in the week. This suggests a consolidation phase as traders re-evaluate the likelihood of the Federal Reserve beginning to cut rates later in the year rather than sooner, with market expectations now seeing cuts totalling 44 basis points, a steep drop from the 160 basis points anticipated at the start of the year.

Euro, AUD, NZD Affected?

In light of these news, the euro has showed resilience, remaining largely unchanged at $1.0676, after a 0.5% gain on Wednesday, which helped it move away from a five-month low. The sterling also posted gains, rising by 0.15% to $1.2465. These movements indicate a slight easing in the dollar’s dominance, potentially offering European currencies some breathing room if the dollar’s bullish momentum stalls.

In contrast, the Australian and New Zealand dollars presented a mixed picture. The Australian dollar was up by 0.12% against the U.S. dollar, at $0.6442, while the New Zealand dollar dipped to $0.5917 after an initial spike of 0.6% on Wednesday.

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ICYMI – Market summary for today, 18 April 2024:

Chinese Market Performance

The Hang Seng Index in Hong Kong edged up by 0.2% to 16,281.48 today, showing a modest rise despite opening flat. This minor gain occurs amid a backdrop of cautious investor sentiment following hawkish remarks from Federal Reserve policymakers. These comments hint at ongoing economic challenges which could suggest a possibility of prolonged high-interest rates. This environment has left Hong Kong stocks without clear direction. In response to these market conditions, it would be prudent to anticipate a subdued performance in the near term, especially for sectors sensitive to interest rate changes.

In the decliners’ column, China Hongqiao Group dropped by 3.9%, while PetroChina and Wharf REIT both fell by 2.4%. Conversely, Ping An Insurance, Shenzhou International, and Zhongsheng Group recorded gains of 3.3%, 3.2%, and 2.5% respectively, showing some resilience within certain segments of the market.

Chinese markets too opened lower, notably influenced by downturns in technology and semiconductor stocks. Beijing Kingsoft Office Software and iFlytek saw declines of 1.8% and 1.25% respectively. This sector-wide drop came after ASML, a pivotal player in semiconductor manufacturing equipment, reported weaker-than-expected bookings for the first quarter. However, metal stocks like Baoshan Iron & Steel and Xinyu Iron & Steel bucked the trend, possibly due to potential U.S. tariff increases on Chinese steel and aluminum, rising 1.9% and 0.5% respectively. Overall, the Shanghai Composite Index was down slightly by 0.1% to 3,068.48, while the Shenzhen Composite Index and ChiNext Price Index fell by 0.8% and 1.5%, indicating broader market pressures.

Australian Market Performance

In Australia, the situation appears more grim with more than 10,000 companies expected to enter external administration by the end of June. This is the highest level since the 2012-2013 financial year, marking a significant uptick in business failures. This rise in insolvencies marks a 36% increase from the previous period, reflecting heightened economic strain. The Australian Securities and Investments Commission’s latest data shows 7,742 companies entered external administration from July 1, 2023, to the end of March this year. This could forecast tougher economic conditions ahead, possibly impacting consumer spending and business investment.

Southeast Asia Market Performance

Singapore’s FTSE Straits Times Index recorded a rise of 0.3% to 3,164.00, showing resilience despite an unfavorable lead from Wall Street and ongoing global economic concerns, such as fading hopes for Fed rate cuts and inflation worries. Noteworthy performers include Seatrium, up 1.3%, Singapore Technologies Engineering, which rose 1.0%, and OCBC, gaining 0.7%. Meanwhile, CapitaLand Investment and Hongkong Land were among the significant decliners, dropping 1.6% and 1.5%, respectively.

In Malaysia, the Kuala Lumpur Composite Index remained unchanged at 1,540.04, indicating market caution. Analysts at Malacca Securities suggest a cap on potential upside, driven by recent weakness in Wall Street and possible shifts towards defensive sectors. The predicted support and resistance levels for the KLCI are between 1,520-1,525 and 1,555-1,560. Notable movements included Bumi Armada, down 1.7%, and Mr. D.I.Y. Group, which decreased by 0.7%, whereas Telekom Malaysia and YTL Power International saw increases of 0.8% and 1.0%, respectively.

Regarding commodities, crude palm oil prices are expected to stabilise in the near term, supported by supply constraints. Analysts from UOB KayHian forecast Malaysia’s palm oil inventory to continue its decline into April, with production levels remaining flat and exports remaining robust. Nevertheless, the anticipated increase in soybean supplies from Brazil and Argentina in May could introduce price volatility, particularly as it coincides with a typically higher palm oil production period.

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What you need to know about the markets for 18 April 2024:

Asian markets exhibited a mixed response with the MSCI AxJ index marking a modest increase of 0.3%. However, Japan’s Nikkei stands out with a looming 4% weekly decline, signaling heightened investor caution towards potential risks in the region.

The oil markets are currently experiencing a period of volatility, having faced a 3% drop overnight, the steepest in the last two and a half months. This decline stems from ongoing demand concerns and geopolitical tensions, particularly involving Iran and its implications on global oil supply dynamics. Historically, such geopolitical tensions have led to significant fluctuations in oil prices, similar to what was observed during the Gulf War and the more recent U.S.-Iran escalations in 2020.

TSMC Earnings Report

Taiwan Semiconductor Manufacturing Co (TSMC) is in the spotlight with investors awaiting its earnings report. The outcome could be crucial for tech stocks, particularly if mirrored by the recent dip following ASML’s earnings miss. In December 2018, TSMC’s unexpected earnings beat led to a significant rally in tech stocks, highlighting the influence major tech companies hold on market sentiments.

Globally, markets are still digesting the implications of persistent high U.S. interest rates as indicated by recent Federal Reserve communications. The shift towards a higher interest rate environment has historically resulted in pressure on equities, a scenario reminiscent of the 1980s rate hikes that culminated in Black Monday in 1987.

The dollar’s slight retreat in the current session comes amid new developments in currency diplomacy. A unique trilateral agreement between the U.S., Japan, and Korea hints at possible coordinated interventions to manage dollar strength.

In the bond markets, U.S. Treasury yields showed a notable decrease with 10-year yields dropping by 7.2 basis points to 4.59%. This movement suggests a temporary easing in selling pressures which could provide a brief respite for rate-sensitive sectors like real estate and utilities, which often benefit from lower yield environments.

Downward Pressure on Euro and AUD

The Euro and Australian dollar are facing downward pressures, notably influenced by the European Central Bank’s upcoming policy decisions and unexpected shifts in Australian employment data. Currency fluctuations often have a delayed impact on exports and imports, affecting companies with significant overseas operations.

Looking ahead, market attention will also be directed towards U.S. jobless claims data and notable earnings reports from Blackstone and Netflix. These could provide further clues on the health of the U.S. economy and consumer sentiment, potentially influencing market directions in the short term.

In commodities, while metal prices have temporarily stabilised, the year-to-date surge in copper and stable iron ore prices suggest a continued industrial demand. Gold remains just shy of its record high, underscoring its status as a safe haven amid ongoing market uncertainties.

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为了因应近期日渐波动的股票市场风险，VT Markets 将于 2024 年 4 月 22 日调整股票产品的部份交易设置，详请参考如下：

1. MT4、MT5 的 US 美股产品从原杠杆 33:1 调整为 20:1。

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The U.S. dollar has strengthened with Federal Reserve Chair Jerome Powell’s hawkish outlook. The U.S. dollar’s ascent correlates with an uptick in U.S. Treasury yields, particularly the 2-year note which is approaching 5.00%. This suggests an enduring appeal of the dollar due to expected higher returns on dollar assets, especially in comparison to other currencies whose central banks may be adopting more accommodative monetary policies.

As expected, Powell’s latest comments introduce a level of caution into the market. His remarks about the persistence of firm price pressures and a slowdown in the rate of disinflation underscore a potential delay in any monetary easing. High borrowing costs will likely remain, bolstering the U.S. dollar as a preferred asset in the short term.

Impact on EUR/USD

The technical outlook for the EUR/USD reflects this broader sentiment, with the currency pair showing a bearish breakdown at 1.0635. The trajectory suggests a possible further decline to the 2023 low near 1.0450. However, should there be a rebound above 1.0635, the pair might encounter resistance at 1.0700, and potentially, this could stretch to 1.0725. The pivotal resistance, if surpassed, could lead to a short-term rally towards 1.0820, where significant moving averages lie.

In discussing inflation, Powell highlighted the longer-than-expected journey towards the Federal Reserve’s 2% inflation target. The Fed is likely to maintain higher interest rates for an extended duration. Such a scenario would continue to support the strength of the U.S. dollar, as investors often favor currencies from countries with higher interest rates.

The persistence of restrictive monetary policies, as Powell indicated, is justified by a strong labor market and modest inflation progress. This approach allows for a more measured decision-making process that could adjust to new economic data. It is indicative of a cautious optimism within the Fed, balancing robust economic indicators against inflation concerns.

First-quarter inflation data, which did not show the progress needed to consider policy easing, plays a crucial role in shaping market expectations. The absence of immediate rate cuts, as previously hinted by Powell, might now be seen as a prudent stance given the unpredictable economic landscape.

Focus on Inflation

Moreover, Powell’s comments on the PCE Price Index, which likely remained stable but above the target, further suggests a continued vigilance on inflation. Recent CPI figures have already caused market turbulence, indicating that investors are sensitive to any signs that could push back the timeline for easing monetary policies.

Finally, the overall economic backdrop, characterized by strong job market data and solid retail sales, points to ongoing economic resilience. However, this strength also brings challenges, particularly in managing inflationary pressures. Similar comments from Fed Vice Chair Philip Jefferson reinforce the narrative of a need for sustained high interest rates if inflation does not subside.

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Forex Analysis: April 17 2024 US Dollar

CURRENCIES

U.S. Dollar Strengthens: The U.S. dollar saw gains as Fed Chair Powell adopted a hawkish stance. This occurred alongside a rise in U.S. Treasury yields, with the 2-year note nearing the 5.00% level.

Powell’s Hawkish Remarks: Speaking in Washington, Powell noted a slowdown in disinflation and ongoing firm price pressures, introducing uncertainty around the timing of future rate cuts.

Implications for U.S. Dollar: High borrowing costs are likely to persist, which is expected to support the U.S. dollar, particularly as other central banks like the ECB and the Bank of England lean towards easing.

Technical Analysis on FX Pairs: The article next explores the technical setups for EUR/USD, USD/JPY, and GBP/USD, focusing on key support and resistance levels critical for risk management and trading strategy.

EUR/USD Technical Outlook: After a bearish breakdown at 1.0635, EUR/USD may continue to decline, potentially approaching the 2023 low near 1.0450. Conversely, a rebound above 1.0635 could face resistance at 1.0700 and possibly extend to 1.0725. A break above this could lead to a rally towards significant moving averages around 1.0820.

STOCK MARKET

Powell’s Remarks on Inflation: Federal Reserve Chair Jerome Powell noted that it would take longer than previously anticipated for inflation to decrease to the Fed’s 2% target, implying extended high interest rates.

Ongoing Restrictive Policy: Powell highlighted the strong labor market and modest progress on inflation as reasons to maintain restrictive monetary policies for a more extended period to allow further data analysis and guidance.

First Quarter Inflation Data: This period marked Powell’s first acknowledgment that the inflation data from the first quarter did not demonstrate the needed progress to start easing monetary policy.

No Immediate Rate Cuts Expected: Contrary to previous statements, Powell provided no assurances of imminent rate cuts, signalling a cautious stance amid uncertain economic indicators.

Personal Consumption Expenditures (PCE) Data: Powell discussed expectations for the PCE Price Index, noting it likely remained stable from February to March, but still above the target at 2.8% in February.

Inflation and Market Reactions: Recent hotter-than-expected Consumer Price Index (CPI) data led to market instability, with revised expectations pushing back anticipated rate cuts to possibly September.

Strong Economic Indicators: Despite high inflation, other economic indicators like robust job market data and solid retail sales suggest continued economic strength.

Comments from Fed Vice Chair: Fed Vice Chair Philip Jefferson echoed Powell’s sentiment, suggesting that if inflation remains persistent, high rates will be necessary for an extended period.

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VT Markets 为进一步丰富广大客户的投资选择并提供客户更优秀的交易环境，我们将于 2024 年 04 月 22 日针对土耳其里拉 TRY 相关产品做出调整。

详情请参考如下:

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温馨提醒：

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注意：以上数据仅供参考，实际执行数据有可能会有变动，具体请依据 MT4/MT5 软件为准。

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Forex Analysis: 16 April 2024 GBP/USD

CURRENCIES

GBP/USD Performance Analysis:

• The GBP/USD currency pair continues to decline amid signs of a weakening UK labor market.
• Unemployment in the UK rose to 4.2% in February, exceeding expectations and the previous month’s rate.

UK Labor Market and Wage Trends:

• Average earnings, including bonuses, held steady at 5.6%.
• Earnings excluding bonuses saw a slight decline, dropping 0.1% to 6.0%.

Upcoming Economic Reports and Impact:

• A critical UK inflation report for March is anticipated to significantly influence the British Pound’s short- to medium-term outlook.
• Inflation is expected to decrease from 3.4% in February to 3.1% in March, moving closer to the Bank of England’s target of 2%.

Bank of England’s Rate Cut Expectations:

• Market expectations suggest a 60% chance of a 25 basis point rate cut at the BoE’s August 1st meeting, contingent on further inflation reductions.

Technical Analysis of GBP/USD:

• The pair has broken below key support levels, including 1.2547 and 1.2500, showing potential to test further supports at 1.2381 and 1.2303.
• Recent price action has moved below all three simple moving averages, indicating bearish sentiment.

Trader Sentiment and Market Outlook:

• IG Retail data indicates a high ratio of traders are net-long on GBP/USD, which historically suggests possible further declines in the pair’s price.

STOCK MARKETS

Tesla Announces Major Staff Reductions:

• Tesla has confirmed a reduction of more than 10% in its global workforce, impacting at least 14,000 employees.

Context Behind Layoffs:

• The layoffs follow a disappointing Q1 delivery report where Tesla missed consensus estimates significantly.
• The company reported its first year-over-year quarterly decline in deliveries since 2020.

Analyst Insights on Tesla’s Layoffs:

• Dan Ives of Wedbush Securities describes the layoffs as a necessary but ominous sign for Tesla, suggesting difficult times ahead due to softer global demand.
• Ives maintains a $300 price target and a Buy rating on Tesla stock.

Stock Impact and Financial Outlook:

• Tesla’s stock fell by 5.6% to its lowest closing level in nearly a year following the announcement.
• The company is feeling the impact of a slowdown in EV demand both in the US and globally.

Upcoming Earnings Report:

• Tesla is expected to provide more details on the layoffs, their financial implications, and the outlook on demand in their earnings report on April 23.

Industry Perspective:

• CFRA analyst Garrett Nelson noted that while layoffs indicate a slowdown in the EV market, Tesla’s cost reduction efforts could positively affect the company’s bottom line.

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VT Markets 为进一步丰富广大客户的投资选择，我们预计将于 2024 年 04 月 22 日 (周一) 新增 2 只 Index 产品。

您可以在 Meta Trader 4、5 上交易以下新产品，交易细则如下：

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