'Higher rates for longer' and heightened tensions in the Middle East lead to a weekly loss for global stock indices, says Axel Rudolph, Senior Market Analyst at online trading platform IG.
Stocks end week in the red
“A hawkish Fed, surging US yields and the fear of an escalation in the Middle East have pushed global stock indices into negative territory for the week. An over 10% surge in the gold price in the past couple of weeks and rise in the price of oil to just below $90 for TWI is not helping inflationary pressures either with Fed Chair Jerome Powell yesterday re-iterating that US inflation remains too high and needs to come down."
German producer prices drop at record pace
“In an otherwise relatively empty economic calendar UK September retail sales slumped by a much worse-than-expected 0.9% month-on-month, showing that the cost-of-living crisis is a a drag on the British economy. In Germany producer prices dropped at a record pace as the country battles its recession. Next week's focus will be on the ECB's rate decision, US Q3 GDP and earnings by mega caps like Alphabet, Amazon, Meta and Microsoft."
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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