Market Wrap Up, June 2, 2023

  • US Congress Averts Default with Debt Ceiling Suspension.
  • Gold and Oil Respond Positively.
  • Meta Stock Surges on New Glasses Announcement.

The US Congress approves the suspension of the debt ceiling and avoids default.

On Thursday, June 1, the US Senate passed legislation supported by President Joe Biden to raise the government’s debt ceiling, which stands at $31.4 trillion, in order to avoid what could have been the first default ever.

The Senate voted with a majority of 63 votes in favor and 36 against to approve the bill that was passed by the House of Representatives on Wednesday, while lawmakers raced against the clock after months of partisan disputes between Democrats and Republicans.

The US Treasury Department warned that it would not be able to meet all its payments on June 5 if Congress failed to act by that time.

Members of the Senate rejected nearly ten amendments before the final vote to send the bill to Biden for signing before the deadline on Monday.

Under this legislation, the allowed borrowing limit will be suspended until January 1, 2025.

Biden praised this move and said, “This is a major victory for the economy and the American people.” He added that he “looks forward” to signing this bill, which he negotiated with the Republican camp for weeks.

Gold is on track for its best week in two months amid hopes of a halt in US interest rate hikes. 

Gold prices are set to achieve their most significant weekly gains in nearly two months on Friday, June 2, as the dollar’s weakness and hopes of the US Federal Reserve halting interest rate hikes enhance the appeal of the yellow metal.

Spot gold prices remained steady at $1,979.24 per ounce as of 04:57 GMT. US gold futures saw little change and recorded $1,996.60.

Gold has risen 1.7% this week, heading for its best week since the one ending on April 7.

The dollar index dropped to its lowest level in a week, making gold more affordable for buyers with other currencies.

As for other precious metals, spot silver fell 0.1% to $23.92 per ounce but increased by 2.7% throughout the week.

Platinum remained stable at $1,006.76, while palladium rose 0.3% to $1,399.02. Both metals are on track to incur weekly losses.

Oil prices rise as the US Congress approves the debt ceiling legislation.

Oil prices increased on Friday amid improved market sentiment following the approval of the US debt ceiling bill. Additionally, markets evaluated the possibility of OPEC+ implementing a production cut to support prices in the coming days.

Brent crude futures rose by 71 cents, or 0.96%, to $74.99 per barrel as of 06:00 GMT. US crude futures climbed by 66 cents, or 0.94%, to $70.76 per barrel. This comes after two consecutive days of losses in oil prices.

Markets received reassurance after the US Senate approved the debt ceiling bill on Thursday evening, local time, thereby avoiding a catastrophic default that could have caused significant market turbulence.

Market sentiment was further supported by the US Energy Information Administration’s crude inventory data released on Thursday, which indicated a surge in oil imports last week.

Investor focus has shifted to a meeting scheduled for June 4 involving the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as OPEC+.

During the meeting, ministers from major oil-producing countries will decide on potential further production cuts.

Meta stock gains $20 billion in a single session due to the new glasses. 

Meta’s stock jumped by 3% in Thursday’s session, marking its highest closing in 16 months.

The company added over $20 billion to its market value in this session, reaching approximately $699 billion.

According to a post by CEO Mark Zuckerberg on Instagram, these gains came after the company officially announced the new generation of its mixed reality glasses.

Meta, the owner of Facebook, also stated that starting from June 4, the old-generation Quest 2 glasses will decrease by $100 to $299.99 for the 128GB storage version.

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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