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Goldman Sachs stated on Tuesday, April 7th, that technology stocks, including US stocks, appear cheap after a prolonged period of underperformance, creating potential entry opportunities for investors. "Weve witnessed one of the weakest periods of relative returns for the technology sector in 50 years," the company said. Multiple factors have contributed to the overall weakness of the technology sector since 2025, prompting investors to shift towards value stocks. These factors include the launch of DeepSeek, massive capital expenditures by US mega-corporations, and the disruptive impact of AI-driven software. These factors have provided opportunities for investors to enter the sector, which currently exhibits strong growth but low valuations. The valuation premium for US mega-corporations has declined and is now almost in line with other parts of the sector. Globally, the IT sectors price-to-earnings ratio is lower than that of the consumer discretionary, consumer staples, and industrial sectors. Goldman Sachs noted that despite the low valuations, the technology sectors earnings performance remains strong. Among the S&P 500 sectors, the market consensus is that the IT sectors Q1 earnings per share will grow by 44%, accounting for 87% of the indexs earnings per share growth.On April 7th, local time, the Japanese House of Councillors voted on the budget bill for fiscal year 2026 (April 2026 to March 2027) in a plenary session. The budget bill passed with a majority vote. The budget bill for fiscal year 2026 was passed by the House of Representatives on March 13th and subsequently submitted to the House of Councillors for deliberation. According to Japanese sources, the total size of Japans 2026 budget bill exceeds 122 trillion yen, a record high. Among them, the defense budget has exceeded 9 trillion yen for the first time, also setting a new record.On April 7th, analysts at First Abu Dhabi Bank stated in a report that the strength of oil prices has been and will continue to be (at least in the short term) a more structural driver of inflationary pressures. The analysts pointed out that inflationary pressures have led to a sell-off in interest rates as expectations of central bank rate cuts have faded. Previously, the market had anticipated two to three rate cuts by the Federal Reserve this year, but these expectations have been ruled out. LSEG data shows that the money market currently expects US policy rates to remain largely unchanged in 2026, with a very slight tightening bias. The market has even priced in a more hawkish rate hike scenario by the European Central Bank and the Bank of England by the end of this year, with increases of 74 basis points and 56 basis points respectively, "largely a result of imported energy inflation in Europe."Air India has announced an increase in its fuel surcharge due to a sharp rise in global jet fuel prices.The Bank of Italy lowered its 2026 economic growth forecast to 0.4% from 0.7% at the end of January, and its 2027 forecast to 0.6% from 0.9%.

The US Dollar Index is trying to regain 109 ahead of US Durable Goods Orders data from Jackson Hole

Alina Haynes

Aug 24, 2022 15:26

截屏2022-08-24 上午10.16.07.png 

 

As traders wait for the day's significant triggers amid a sluggish opening, the US Dollar Index (DXY) continues its rise toward the multi-year high established in July, adding bids to 108.60 in the Asian session on Wednesday.

 

The dollar index dropped from a multi-year high of 109.27 against the six major currencies the day before yesterday. While the present downturn in US data is driving the quote to retreat, the DXY bulls are supported by concerns of an economic slowdown and the US Federal Reserve's (Fed) quick rate hikes.

 

The president of the Minneapolis Fed, Neel Kashkari, was quoted by Reuters as saying that misreading the underlying inflation dynamics is the biggest worry. If the Fed sees inflation creeping closer to their target of 2%, they may slow their rate of rate hikes, according to the official.

 

However, traders in fed funds futures are pricing in a 52.5% chance of a rate hike of 75 basis points (bps) at the upcoming Fed meeting. On Monday, Reuters reported that a rate hike of 50 basis points in September was somewhat more likely than 50 percent.

 

Preliminary readings released on Tuesday by the US S&P Global Manufacturing PMI for August showed a decline to 51.3 from 52.0 expected and 52.2 earlier, while the Services index plunged to 44.1 from 47.3 compared to 49.2 market expectations. As reported by S&P Global, the Composite PMI has fallen to 45, the lowest level in 27 months, signaling a potential crisis for the US economy.

 

In addition, the number of newly constructed homes sold in the United States dropped to 0.511 million in July, down from 0.585 million the previous month and 0.575 million the market had predicted. The US Richmond Fed Manufacturing Index dropped to -8.0 in August from a reading of 0.0 the month before.

 

At press time, US 10-year Treasury rates were lingering at 3.05%, the highest level in a month, despite small advances for the day on Wall Street. S&P 500 Futures have been declining somewhat as of press time, which is notable.

 

DXY volatility may be constrained in the future by the light schedule preceding the North American session. Next, keep an eye on the US Durable Goods Orders for July, which are predicted to rise 0.6% after rising 2.0% in June. As markets try to predict the Fed's next move, Friday's speech by Fed Chairman Jerome Powell at the Jackson Hole conference hosted by the Kansas City Fed will be crucial.

 

DXY bears are threatened by a rising support line that has been in place for two weeks near 108.00, but the buyers won't be convinced until the uptrend is confirmed above 109.30.


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