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
- VinFast Sees Valuation Volatility: Vietnamese electric vehicle maker VinFast briefly rockets to a $191 billion valuation, making it the world’s third most valuable carmaker, before experiencing a dramatic 50% share price plummet within 48 hours.
- HP Stock Drops Amid Outlook Concerns: Despite mixed results, HP’s share price takes a 6% hit following warnings of a weakening outlook due to reduced PC demand.
- China’s Country Garden Reports Massive Loss: The conglomerate announces a colossal half-year loss of $6.7 billion, signaling a deteriorating performance and raising concerns over a potential default.
- Bitcoin ETF Moves Closer to Reality: The US Court of Appeal rules in favor of Grayscale against the SEC, clearing a significant hurdle for the launch of a Bitcoin ETF.
- Nvidia Hits Record High After Google Partnership: Nvidia shares soar by 4.2% to achieve a record closing high, following the announcement of a new collaboration with Google.
Market Analysis
- UBS’s Unprecedented Q2 Earnings: UBS, the Swiss financial giant, has recorded the largest quarterly profit ever for a bank, largely thanks to its emergency acquisition of Credit Suisse. The $29 billion accounting gain stems from a mere $3 billion purchase price, compared to the value of Credit Suisse’s balance sheet. The merger not only boosts UBS’s client assets to roughly $5 trillion but also aims to save more than $10 billion in costs by 2026. With a 30% increase in share price this year, UBS stands as the best-valued major European lender, signaling a robust financial standing and promising outlook.
Economic Highlights
- Worsening Euro Outlook: The future of the euro is increasingly uncertain as the European Central Bank (ECB) finds itself in a tight spot for tightening its monetary policy, despite inflation rates exceeding its target by 2.5 times. Recent data confirms a stagnation in inflation for July, coupled with a series of disappointing economic indicators and cautionary remarks from ECB’s Isabel Schnabel. This has led traders to anticipate a policy hold in the upcoming meeting. Fears of stagflation resurface as top financial institutions like Bank of America and JP Morgan slash their EUR forecasts. Even HSBC’s Dominic Bunning, a long-time EURUSD bull, concedes that maintaining a positive stance is becoming challenging.
Upcoming Events to Watch
- RBA Rate Decision (Sep 5): Eyes on RBA’s final meeting under Governor Philip Lowe, with rates expected to stay at 4.1%. Recent easing in inflation to 4.9% YoY supports a pause in rate changes. Michelle Bullock takes over mid-September.
- BoC Rate Decision (Sep 6): After a 25 basis point hike to 4.75% due to high inflation, BoC could go either way this meeting. Removed language on future hikes raises eyebrows, as inflation climbs but growth lags.
- China Economic Data (End of week): Focus on deteriorating health of China’s economy. PMI data, trade stats, and inflation figures to be released. Risk sentiment might be affected if no stimulus is announced.
- BoE MPC Hearing: BoE Governor Andrew Bailey to testify amid 6.8% YoY inflation and rates at a 15-year high of 5.25%. Market to watch for peak rate indications.
- September Seasonality: Historically a turbulent month for investors. S&P 500 averages a 0.7% drop since 1945, the worst-performing month, according to CFRA.
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
EUR/USD continues its downward trajectory, consistently recording lower highs and lows beneath the 50-day SMA. The pair saw a sharp decline following a mixed Nonfarm Payrolls release, which showed better-than-expected job growth but weaker wage increases and a higher unemployment rate for August. The RSI indicator leans bearish, yet it’s not in the oversold territory. Following a brief 3-day rally, the currency pair displayed a potential bearish engulfing candlestick pattern, reversing at the former swing high of 1.093.
GBP/USD
GBP/USD is on a downward slide, establishing lower lows and lower highs below the 50-day SMA. Right now, the currency pair is moving within a range from 1.2746 to 1.2550, forming a stable zone. While this stable zone could lead to sudden price moves, the overall trend for the week shows that the currency is more likely to go down.
XAU/USD
The XAU/USD is recovering a bit from a downward trend. Though it’s still showing lower points overall, it’s now above the 50-day SMA. The RSI, another indicator, suggests the price might continue to go up without being too extreme. In the past 10 days, the price has increased 8 times, showing a strong upward trend. Last week, gold’s value increased by more than 1.25%, influenced by a jobs report showing more unemployed people and a separate data point indicating US manufacturing is slowing down.
XUS500
The XUS500 is on an upward climb, consistently setting new high and low points and staying above the 50-day SMA. After emerging from a zone considered oversold, its RSI showed signs of potential further upward movement. Despite encountering a negative price pattern, it managed to maintain its support level at 4350 and followed it up with four consecutive days of gains.
Thank you for reading! Wishing you successful trades ahead!
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