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On May 19th, Capital Economics economists stated that although the Japanese economy had accumulated solid growth momentum before the Iran war, GDP growth is expected to stagnate this quarter and next. Capital Economics economist Marcel Tiliant pointed out that first-quarter data showed both household spending and business investment increased quarter-on-quarter, with a significant increase in exports exceeding a smaller increase in imports, providing impetus for economic growth. However, despite market speculation that fiscal policy under Prime Minister Sanae Takaichi would become more accommodative, government consumption slowed quarter-on-quarter, highlighting that the supplementary budget announced last November had not had a substantial impact on government spending. Meanwhile, consumer confidence declined sharply, and the fuel price cap only temporarily curbed inflation. Tiliant added that even if the Japanese government compiles a new supplementary budget to fund gasoline subsidies, it will at best only stabilize consumer spending.Reserve Bank of Australia meeting minutes: Previously anticipated that long-term inflation expectations could get out of control.Reserve Bank of Australia meeting minutes: The committee had previously considered whether to raise interest rates by 25 basis points or keep the rate at 4.10%.Tencent Music (01698.HK) shares rose more than 5% after the company announced the completion of its acquisition of Himalaya.Reserve Bank of Australia meeting minutes: The Committee will take necessary measures to meet its inflation and employment targets.

US open: Caution ahead of FOMC minutes

Alice Wang

Jul 08, 2022 15:14

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US futures

Dow futures -0.2% at 30617

S&P futures -0.85% at 3822

Nasdaq futures -0.3% at 11731

In Europe

FTSE +1.7% at 7140

Dax +1.6% at 12597

Euro Stoxx +1.55% at 3418

Stocks are declining

As caution reigns in advance of the publication of the minutes from the June Federal Reserve meeting, US markets are indicating a somewhat worse opening.


As investors worry about the effect of central bank action on growth, fears of aggressive monetary policy tightening have led markets down in recent weeks. The bond market's 10-year yield dropped below the 2-year yield, which is a classic recession indicator.


The minutes from the most recent Fed meeting will be released today, and they might provide more insight into the direction that short-term interest rates will go. The market will be watching for signs that the Fed will increase interest rates by 50 or 75 basis points in July. Watch out for any indications that the Fed would lower the rate of rises if symptoms of a declining inflation trend appear.

 

The FedWatch tool indicates that the markets are factoring in an 86 percent chance of a 75 basis point rate rise. Hawkish minutes might drive the stock market down, strengthen the dollar, and push gold back near $1722.


The ISM service PMI is forthcoming and is anticipated to decrease to 55.4 from 55.9 before to the minutes.


In business news, Apple stock will be in the limelight after Goldman Sachs lowered its price target and warned that, in the event of a longer recession, the stock might drop as low as $82. The share price would have dropped by 42% from present levels as a result.

What will the Nasdaq do next?

After regaining the 20 sna and resistance at 11700, the Nasdaq has once again encountered resistance at the multi-month declining trendline. At a neutral level, the RSI is not providing many hints. If the declining trendline is not retaken, the 20 sma may be challenged at 11600 before the June 30 bottom of 11300. Here, a break allows access to 11050, the 2022 low. However, a break above the declining trendline reveals the 50 sna at 12150 and resistance at 12225, the high from last week. A move higher than this results in a higher high.

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