Biggest price movers of the week
Volatility has increased this week as a result of more Q1 reports and concerns about a recession. The following Fed meeting is starting to come to traders’ notice. According to data, the number of Americans requesting new unemployment benefits grew slightly last week, indicating a weakening of the job market.
Markets were shaken by the British double-digit inflation reading for March. The inflation is still above 10% as they anticipated further central bank tightening. It also showed that the yearly inflation rate for food in the UK is close to 20%.
The Fed, BoE, and ECB’s rate-hiking announcements for May are being priced in by traders. Many Fed officials were speaking, underlining the necessity for another rate rise and the “still high” inflation levels. But as Cleveland Fed President Loretta Mester said on Thursday, “Fed is much closer to the end of the rate-hike journey.”
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German statistics revealed producer prices climbed less than anticipated in March, registering the lowest year-over-year gain since June 2021, providing yet another encouraging sign regarding inflation.
Earnings have sparked volatility in stocks
The first quarter US business results season is still uneven overall. While it appears that banks are surviving the March storm, manufacturers like Tesla have shown symptoms of margin pressure.
Following yet another margin reduction to increase demand, Tesla stock fell more than 9%. Tesla upped the pricing for the Model S and X in the US just two days later, even though they are still 20% less expensive than they were at the beginning of the year. This was done to increase demand. With a 13% decrease so far, Tesla is on track for a losing week.
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Following Q1 results, AT&T experienced a significant decline, with the shares of the company falling by more than 10%. This can also be viewed as a buying opportunity, as the stock is slowly regaining its footing. AT&T is heading for a red close of around 8%, after four consecutive weekly gains.
AT&T 1W chart, source: tradingview.com
Major indices traded the week with heightened volatility, however, it looks like they will end mostly flat. The Dow Jones so far, is 0.4% in the red for the week, after five consecutive weekly gains of over 6.5% in total.
Following Dow, is the S&P 500 with a minor 0.2% red candle for the week, also after five green weeks. Nasdaq has been the most volatile, currently over 1% in the red for the week, with a mixed month.
First green week in a while for the US dollar?
The Fed fears are generally good for the dollar. The greenback edged higher in the early European session Friday and looks set to post its first weekly gain in more than a month on growing expectations that the Federal Reserve will tighten monetary policy further next month. The dollar index is currently 0.5% in the green for the week, after losing 3% over the last five weeks.
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After gaining for a month straight, EUR/USD is on its way to closing in the red this week. The renewed hiking worries are a good booster for the US dollar and the euro is unable to hold its ground. The pair is currently 0.4% in the red.
GBP/USD is looking to post a flat week, as the pound gained some tailwind with the British inflation results. The pair has been posting green ends for the last 7 weeks, therefore this might be the first red close in almost two months.
Commodities close the week in the red
Despite a gain on Friday due to positive economic data from the eurozone and Britain, oil prices were still on pace for a weekly loss due to economic and interest rate uncertainties. Both benchmarks are still on course for a weekly decline of roughly 5% after falling more than 2% on Thursday, to their lowest level since the unexpected announcement of production curbs by several OPEC members in early April.
After polls revealed that the euro zone’s economic recovery acquired steam this month, losses in early Friday trade were reversed. Analysts’ expectations of pulls from stocks starting next month, as a result of OPEC’s decreased output objectives and increased Chinese demand, provided more support for the idea of tighter supply.
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WTI, the US crude, dropped below the $80 mark for the end of the week to close around $77. The drop has been 6.5% this week, after an almost 3% gain last week. Brent, the UK, and the global benchmark posted a similar week, closing 5.7% lower.
Gold futures were very turbulent on Friday, as the Asian trading session brought the yellow metal to the brink of $2,000. The early US trading session broke through and dropped the price further down to $1,984. There is much buying opportunity and the last day of the week has indeed been turbulent. Silver futures follow a similar path, however, the price held above the $25 mark. Both precious metals marked a red week.
Gold futures 1W chart, source: tradingview.com
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