The U.S. stock market ended the trading on the positive side. The major U.S. stock indexes are highly correlated. The Dow Jones and S&P 500 closed at their highest levels in nearly seven weeks. Traders evaluated a new batch of corporate reports and fresh U.S. stock indices data.
U.S. stock indices are changing daily. The U.S. economy shrank 0.9 percent year on year in the second quarter, preliminary data from the U.S. Commerce Department showed. Analysts polled by Trading Economics had expected growth of 0.5%; the Bloomberg consensus forecast was for a rise of 0.4%.
Investors think the data on U.S. stock market indices may force the Federal Reserve to stop the cycle of aggressive tightening of rates soon.
At the end of this week’s meeting, the Federal Reserve expected to raise interest rates by 75 basis points, to 2.25-2.5%, and confirmed that it expects further tightening of monetary policy.
Meanwhile, the number of Americans filing for unemployment benefits for the first time fell by 5,000 last week to 256,000, according to a report from the U.S. Labor Department. According to revised data, a week earlier, the index was 261 thousand, not 251 thousand, as it was informed earlier. Experts interviewed by Bloomberg agency, on average, expected to reduce the number of applications to 250 thousand.
Current U.S. stock exchange index
The value of Dow Jones Industrial Average increased by 1.03% to 32529.63 points by closing of trading.
Standard & Poor’s 500 rose by 1.21 per cent to 4,072.43 points.
The Nasdaq Composite rose 1.08% to 12162.59 points.
Hershey Co. rose 2.8%. The U.S. chocolate maker reported net income rose 5 percent in its fiscal second quarter and improved its full-year guidance.
The market value of Etsy Inc. jumped 9.9%. The online trading platform operator reported better-than-forecast earnings in the second quarter, with revenues matching analysts’ forecasts.
Ford Motor Co. shares were up 6.1%. The U.S. automaker posted a 19% increase in net income in the second quarter of 2022, and adjusted earnings and revenue were better than market expectations. The company reaffirmed its outlook for the year.
Shares of Harley-Davidson Inc. are up 7.8%. The largest U.S. motorcycle maker boosted net income and lowered revenue in the second quarter of 2022, with results significantly better than analysts’ expectations.
Shares of Qualcomm Inc. fell 4.5%. One of the world’s largest semiconductor makers increased net profit 1.8 times in the third quarter of fiscal 2022, but gave a weak outlook amid falling consumer demand due to high inflation.
Comcast Corp. ‘s stock price was down 9.1%, though the largest U.S. Internet and cable TV provider posted adjusted earnings and revenue better than market forecasts for the second quarter of fiscal 2022.
Meta Platforms shares were down 5.2%. The company recorded a decline in revenue in the second quarter amid a decline in advertising revenue.
Altria Group’s stock declined by 0.2%. One of the largest tobacco companies in the world cut net income 2.4 times in the second quarter of 2022, while revenues fell by 5.7%.
Pfizer Inc. shares lost 1.6%, although the company reported better than market forecasts adjusted profit and revenue in the second quarter of 2022 due to increased sales of drugs to fight COVID-19.
JetBlue Airways Corp. ‘s stock price was down 0.4%. The U.S. airline entered into an agreement to buy Spirit Airlines (SPB: SAVE) Inc. for $3.8 billion. Spirit Airlines shares rose 5.6%.
Dollar at 2-week high, euro softer as market bets on rate cuts
© Reuters. U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Hannah Lang
WASHINGTON (Reuters) -The U.S. dollar was at a two-week high on Wednesday, while the euro was weak across the board as markets ramped up bets that the European Central Bank (ECB) will cut interest rates as early as March.
Although markets are still pricing at least 125 basis points of interest rate cuts from the U.S. Federal Reserve next year, the dollar was able to hold steady as rate cut bets for other central banks intensified.
The , which measures the currency against six other majors, was last up 0.19% at 104.16. The euro was down 0.29% to $1.0764.
Traders are betting that there is around an 85% chance that the ECB cuts interest rates at the March meeting, with almost 150 basis points worth of cuts priced by the end of next year. Influential ECB policymaker Isabel Schnabel on Tuesday told Reuters that further interest rate hikes could be taken off the table given a “remarkable” fall in inflation.
The euro also touched a three-month low against the pound, a five-week low versus the yen and a 6-1/2 week low against the Swiss franc.
“It’s a reasonably sized sell-off and the market is trying to digest, is it just a correction? Did the market get over-exuberant in the previous weeks? I think there is definitely an element of that,” said Amo Sahota, director at FX consulting firm Klarity FX in San Francisco.
‘A BIT OVERBOARD’
The ECB will set interest rates on Thursday next week and is all but certain to leave them at the current record high of 4%. The Fed and Bank of England are also likely to hold rates steady next Wednesday and Thursday respectively.
The Bank of Canada on Wednesday held its key overnight rate at 5% and, in contrast to its peers, left the door open to another hike, saying it was still concerned about inflation.
Traders have priced around a 60% chance of the U.S. central bank cutting rates in March, according to CME’s FedWatch tool.
“Markets have aggressively priced in rate cuts, without any kind of confirmation from central banks,” said Adam Button, chief currency analyst at ForexLive in Toronto. “As December continues, we need either a change in tune from central bankers or a repricing in markets.”
If the Fed were to cut rates as markets expect, it could result in the dollar loosening its grip on other G10 currencies next year, dimming the outlook for the greenback, according to a Reuters poll of foreign exchange strategists.
The spotlight in Asia was on China, as markets grappled with rating agency Moody’s (NYSE:) cut to the Asian giant’s credit outlook.
The offshore was flat at $7.1728 per dollar, a day after Moody’s cut China’s credit outlook to “negative”.
China’s major state-owned banks stepped up U.S. dollar selling forcefully after the Moody’s statement on Tuesday, and they continued to sell the greenback on Wednesday morning, Reuters reported.
Elsewhere in Asia, the Japanese yen weakened 0.15% versus the greenback at 147.38 per dollar. The Australian dollar fell 0.02% to $0.65495.
In cryptocurrencies, bitcoin eased 0.06% to $44,049, still near its highest since April 2022.
The world’s largest cryptocurrency has gained 150% this year, fueled in part by optimism that a U.S. regulator will soon approve exchange-traded spot bitcoin funds (ETFs).
Canadian dollar forecasts turn less bullish as BoC rate cuts eyed: Reuters poll
© Reuters. FILE PHOTO: A Canadian dollar coin, commonly known as the “Loonie”, is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch/File Photo
By Fergal Smith
TORONTO (Reuters) – Analysts see less upside for the Canadian dollar than previously thought over the coming year as recent data showing a slowdown in the domestic economy brings forward the expected start of Bank of Canada interest rate cuts, a Reuters poll found.
The median forecast of 35 foreign exchange analysts surveyed in the Dec. 1-5 poll was for the Canadian dollar to strengthen 0.4% to 1.3533 per U.S. dollar, or 73.89 U.S. cents, in three months, compared with 1.3450 in a November poll.
It was then expected to advance to 1.3130 in a year, versus 1.3000 in last month’s forecast.
“Our view is the Canadian dollar is going to face a difficult next three months as the data starts to look like the Canadian economy is teetering on the edge of recession if not in a mild recession,” said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.
The Canadian economy unexpectedly contracted at an annualized rate of 1.1% in the third quarter, avoiding a recession after an upward revision to the previous quarter but showing growth stumbling.
Soft domestic data “should bring forward expectations of BoC easing, especially relative to the Federal Reserve,” Harvey said. “Earlier Bank of Canada easing is going to widen rate differentials in favor of USD-CAD.”
Money markets expect the Canadian central bank to leave its benchmark interest rate on hold at a 22-year high of 5% at a policy announcement on Wednesday and then begin easing policy as soon as March. As recently as October, there were no rate cuts priced in for 2024.
A separate Reuters poll, from last week, showed economists expect the BoC to start cutting rates in the second quarter of next year and borrowing costs will drop by at least one percentage point by the end of next year.
The Canadian 2-year yield has fallen further below its U.S. equivalent in recent weeks to a gap of 54 basis points, which is the widest since March.
A lower yield tends to make a currency less attractive to investors.
(For other stories from the December Reuters foreign exchange poll:)
Dollar edges lower; euro hit by weak German factory orders
Investing.com – The U.S. dollar edged lower in early European trade Wednesday, but remained near a two-week high, ahead of key employment data, while the euro headed lower after weak German factory orders.
At 04:35 ET (09:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.925, having climbed 0.3% overnight.
The index is up 0.5% this month, after sliding 3% in November, its steepest monthly decline in a year.
Labor market data in focus
Recent data has generally pointed towards a slowing U.S. economy, although signs still point to a likely soft landing.
Tuesday’s release showed U.S. fell to more than a 2-1/2-year low in October, the strongest sign yet that higher interest rates were dampening demand for workers.
The labor market will remain in focus Wednesday, with the later in the day, setting up Friday’s monthly report.
“We suspect markets are holding a more cautious stance as we head into the key U.S. payroll figures on Friday and the Fed meeting next week, where there is a good probability the FOMC will deliver a protest against rate cut bets – especially if data fails to turn lower,” said analysts at ING, in a note.
Euro continues to weaken
In Europe, edged lower to 1.0794, close to Tuesday’s three-week low, after slumped 3.7% on the month in October, a sharp drop after gaining 0.7% the prior month.
Recent data has pointed to the eurozone heading into a recession in the final quarter of the year, as its economy contracted 0.1% in the third quarter, according to official data.
Eurozone are seen rising 0.2% monthly in October later in the session, an annual drop of 1.1%, as consumers in the region continue to struggle, ahead of the festive period.
This economic slowdown, coupled with inflation across the euro zone falling more quickly than most anticipated, has led many to think that the could deliver its first rate cut by March.
“Shorting the euro appears to be one of the most popular bets in FX at the moment,” ING added.
rose 0.1% to 1.2604, ahead of the release of the latest Bank of England .
Yuan hit by Moody’s downgrade
In Asia, rose 0.4% to 0.6576, recovering from two days of steep losses even as data showed Australia’s grew less than expected in the third quarter, hit chiefly by declining export demand in China.
traded 0.1% higher to 147.21, steadying after the yen recorded a sharp recovery against the dollar in recent sessions.
traded 0.2% higher at 7.1589, with sentiment towards the yuan battered by ratings agency Moody’s, which downgraded the country’s credit outlook to negative and flagged increased economic risks from a property market downturn.
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