Welcome to the Weekly Market Update!
In this edition, we bring you the latest highlights and insights from the world of finance. We will cover the week’s top stories, provide market analysis, highlight economic developments, discuss upcoming events to watch, and present technical analysis. Let’s delve into the key information you need to stay informed and make informed financial decisions.
Top Stories of the Week
- UK Economy Sees Modest Growth: UK’s GDP inched up by 0.2% MoM in August, recovering from a 0.6% contraction in July. This sluggish growth fuels speculation that the BoE may hold off on rate hikes.
- Birkenstock’s IPO Underwhelms: The German sandal brand debuted its IPO at $46 but closed at $40.20, indicating weak demand and possible overvaluation.
- LVMH Revenue Growth Slows: The luxury conglomerate reported Q3 revenues of €19.9 billion, an 8% YoY increase but a decline from last quarter’s 17% growth, signaling softer global sales.
- Gold Prices Surge: The precious metal saw a 2.5% increase, reaching a two-week high, driven by falling US treasury yields and a weaker USD.
- US Inflation Exceeds Expectations: The Consumer Price Index (CPI) rose by 0.4% MoM in September, surpassing the anticipated 0.3%. The annual rate remained steady at 3.7%.
Market Analysis
- Oil Prices Surge Amid Israel-Hamas Tensions: Brent and WTI crude soared to $90.89 and $87.69 per barrel respectively, marking their highest levels since the onset of the Israel-Hamas conflict. The surge came as Israel’s military issued a warning for over a million people to evacuate Gaza City, escalating concerns over a broader conflict affecting oil supplies. Despite the week’s earlier muted price movements, experts like Joe DeLaura of Rabobank suggest prices could reach $100 a barrel this quarter. European gas prices also reached a peak since February, although markets have yet to fully price in the risk of wider escalation.
Economic Highlights
- Fed’s Bostic Rules Out Further Rate Hikes and Recession: Atlanta Federal Reserve Bank President Raphael Bostic stated that additional rate hikes are unnecessary to bring inflation down to the Fed’s 2% target. Speaking to the American Bankers Association, Bostic emphasized that the economy still has momentum to absorb the effects of previous rate hikes without sliding into a recession. He also acknowledged that global uncertainties, such as the Israel-Hamas conflict, could impact U.S. and global economies but stressed the need to be prepared for unexpected events. Bostic’s stance appears to align with a softening view among some Fed policymakers regarding future rate hikes.
Upcoming Events to Watch
- Netflix Q3 Earnings (Oct 18): Netflix is set to unveil its Q3 financials after the market closes. Analysts forecast a 7.7% YoY revenue increase to $8.53 billion and a 12.7% rise in EPS to $3.49. The streaming giant’s share price has surged 25% this year, buoyed by its crackdown on password sharing and growing ad revenue.
- Tesla Q3 Earnings (Oct 18): Tesla will release its Q3 report post-market close. Despite a 7% sequential drop in Q3 deliveries to 435,059, Wall Street expects an 11% YoY revenue increase to $24.25 billion and EPS of $0.75, down 25% from last year.
- UK CPI Data (Oct 17): UK inflation data is slated for release, with investors keen to see if the cooling trend continues. Although down from a 41-year high, the 6.7% YoY rate in August still overshoots the BoE’s 2% target. Stronger inflation could revive talks of another BoE rate hike.
- China GDP Update (Oct 18): China’s GDP figures are expected to show a 4.4% YoY growth, a decline from 6.3%. However, QoQ growth is anticipated to be 1%, up from 0.8% in Q2. Mixed forecasts exist, but some U.S. banks have recently upgraded China’s 2023 GDP outlook.
- Procter & Gamble Q3 Earnings (Oct 18): Procter & Gamble is due to announce Q3 results before the market opens. Analysts predict an EPS of $1.72 and revenue of $21.63 billion. The focus will be on the company’s ability to pass on price increases amid its diverse product range.
Technical Analysis
We have analyzed the most popular trading pairs and assets, including EUR/USD, GBP/USD, Gold, and US500. Our aim is to provide you with an insightful analysis of their trends and support/resistance levels, which will help you make informed decisions.
EUR/USD
The EURUSD pair continued its bearish trend, hitting a low of 1.0500. This was triggered by negative market sentiment after breaking out of its bullish channel. Despite last week’s bullish signals, the pair is expected to test the support level at 1.0479 before a potential upward correction. However, if EURUSD breaks above the 1.0570 resistance and flips it into support, we could see bullish momentum targeting 1.0600.
GBP/USD
The GBPUSD pair saw a significant decline over the past 48 hours. Following a trendline rejection and a bearish engulfing candle last week, the pair is expected to hit its support level soon. Moreover, the release of U.S. retail sales data for September on Tuesday will offer insights into consumer spending, which accounts for roughly two-thirds of the economy.
XAU/USD
Gold saw a drop in the early hours of the Asian trading session, likely signaling a technical correction after hitting a three-week high last Friday. The ongoing Israel-Hamas conflict could drive gold prices higher next week. Globally, gold has shown a strong rebound this week with prices surging.
XUS500
Stay alert to changes in the dollar’s monetary policy and the situation in Palestine, as they may affect the price. Monitor the SPX’s 200-day moving average closely; falling below this line could set off a minor crash. Despite bearish news over the weekend, the weekly price action remains neutral to bullish. The market unexpectedly gapped up, not down, suggesting that Friday’s downward movement might be partly due to options.
Thank you for reading! Wishing you successful trades ahead!
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