While European stock markets remain closed for the holidays, the focus this Wednesday will be on the US session. The futures market is pointing to a neutral, mixed market open with only the Dow Jones Industrial Average positive with gains of less than 0.1%. And the stock market will wait for the event that will determine the day: the meeting of the US Federal Reserve.
Although no changes are expected in the base interest rate, which remains at 5.5%, speech by the president of the institution, Jerome Powell, which could provide a clue as to whether they will keep their current monetary policy unchanged for longer. “If the Federal Reserve said today that there is a high probability that there will be no cuts this year or even possibility of another rate increaseThis could intensify the sell-off in stocks,” explained Capital.com analyst Kyle Rodda.
With the Nasdaq 100 giving up key support at 17,800, the index the bears have taken control index, which saw gains on Wall Street. Last week, the main US tech index lost 17,100 points, where it was forecast to be in a bearish pattern. interrupted by a timid jump. However, the technical consultant ecotraderJoan Cabrero believes that this rebound is weak and the correction may continue until the area of 16,400 points is reached.
“The problem is that if that happens, Apple, the benchmark value these days, could lose critical support at $165, and if that happens, Wait, deeper curves may emerge. and we will see a fall to 15,400 points,” explained Cabrero, who also points to these levels as a buy zone. One event that could contribute to such a liquidation in stocks will be the Federal Reserve meeting this Wednesday. maintains this bearish tone and I will continue the correction to greater or lesser intensity, or if the rebound shows signs of greater strength and control shifts into the hands of those advocating purchases.
The debt market is showing risk aversion to tighter monetary policy longer than expected in early 2024. The US 10-year yield is close to 4.7%. profitability, representing an 80 basis point increase in productivity in the first four months of the year. And at these levels, the situation may remain this way longer even in the context of lower rates.
In its latest bond report, Barclays warns that the debt market is undergoing structural changes and it is possible that US bond yields will remain high even even if the Federal Reserve eases its monetary policy. This, in turn, will have repercussions in international bond markets, all of which are to blame for the huge budget deficits that the American giant has run, coupled with the Fed’s departure as the main buyer of debt.
The sovereign debt market in Europe is not immune to rising bond yields. German ten-year bonds are around 2.6%, while Spanish ones reach 3.35%.
Meanwhile, gold has become the main character in the commodity market in the early stages of 2024. Rising prices for the precious metal led to the fact that one ounce was exchanged for almost $2,400, although give 4% from there in recent weeks. However, there is reason to believe that he can once again reach his all-time record. An expert consensus compiled by Bloomberg estimates that by the first quarter of 2025 they may see that $2400 an ounce again. On the one hand, the precious metal served as a safe haven for the market in times of volatility or crisis. But buying gold is also part of monetary policy, and major central banks persist in their commitment to stockpile gold in their reserves.
Meanwhile, oil is falling due to possibility of extending the ceasefire in the Middle East this reduces tension in the area. A barrel of Brent, the benchmark in Europe, costs about $85.5. Crude oil prices in Europe have risen more than 11% this year.