USD slips as the US officially enters a recession – Daily Market Brief, July 29, 2022

Wall Street bounced back from early losses to continue the Fed-induced rise for the second day in a row, despite weak economic figures like this week’s GDP report. 

The S&P 500 ended the day up 1.21 per cent at 4,072, its highest level since June 9 thanks to big gains in Microsoft and Tesla shares. In contrast, the Nasdaq 100 rebounded 0.92 per cent to 12,718, thanks to a drop in Treasury rates, with the 10-year yield temporarily falling to 2.65 per cent — its lowest reading since mid-April. 

There were no new hawkish bombshells thrown by the Federal Reserve at the close of its FOMC meeting on Wednesday, and the Fed warned that particularly substantial hikes will depend on future data indicating policymakers may slow down the speed at which they boost rates in the future.

Key Factors for Today

– Expected easing of tightening measures to avoid recession boosts stock market sentiment.
– US stocks continue the rally on weaker USD & upbeat tech earnings
– Four new Covid cases have China on lockdown.
– USD/JPY has dropped to a new seven-week low!

Coming Up 

– German Flash GDP and Unemployment
– US June PCE
– Canadian GDP

The S&P 500 led the way upward for US markets at the close.

Wall Street bounced back from early losses to continue the Fed-induced rise for the second day in a row, despite weak economic figures like this week’s GDP report. On a positive note, the major US market indices closed the day on Thursday with gains. As of yesterday, the S&P 500 has gained 1.21 per cent, leading the way upward. Indices such as the Dow and NASDAQ were up roughly one per cent, too.

Four COVID cases in Wuhan triggered a one-million-person lockdown.
Wuhan locked down a 1-million-person region after finding “four asymptomatic Covid cases.” This comes as Wuhan’s tourism was just recovering. China’s zero-Covid policy has led to severe lockdowns in Wuhan’s Jiangxi neighbourhood, where 970,000 people live. CNN says China labelled it “temporary control measures”. Residents have been instructed not to leave and public transport has been suspended. The province has “four high-risk neighbourhoods” and four “medium-risk” neighbourhoods.

It’s a new seven-week low for the USD/JPY!
USD/JPY is witnessing further selling pressure after sliding below 135.00 yen yesterday. Bond rates have decreased, allowing the yen to lead post-FOMC trading. The USD/JPY’s daily target is 132.00, with 131.49 also in focus. If that level is broken, attention will go to 130.00, where the 100-day moving average is 129.95.

Amazon rises by more than 13% after the company beats revenue expectations
NASDAQ-listed Amazon (AMZN) saw a gain of over 13% in extended trading on Thursday after the business reported second-quarter revenue that was better than expected and provided an upbeat forecast. The company’s second-quarter revenue growth exceeded expectations by 7%, breaking the trend among its Big Tech competitors, which had all posted poor numbers before Thursday. Apple and Amazon both outperformed forecasts. A 13-17% increase in third-quarter revenue is expected, which also added to the bullish momentum on the stock trading.

Apple exceeded expectations and reported strong revenue growth.
After Amazon beat estimates and guided to robust revenue growth, Apple (AAPL) had to complete the tech giant’s earnings parade. AAPL’s top and bottom-line earnings beat expectations, relieving concerns that supply chain issues and a fragile economy might hurt sales. Apple’s CFO Luca Maestri remarked, “We established a June quarter revenue record, and our installed base of active devices reached an all-time high… During the quarter, we generated $23 billion in operational cash flow, returned $28 billion to shareholders, and continued to invest in long-term growth”.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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