Market Comment – Sentiment sours after strong US PMIs; stocks slip, dollar climbs
Rate cut expectations take another hit after upbeat PMIs
Dollar rises to 10-day high, Nvidia rally unable to lift Wall Street
Higher for longer weighs on oil and gold
![](https://www.xm.com/wp-content/uploads/2024/05/Perf-May24.png)
Fed may not cut until after election
It’s been a bad week for investors hoping to see a near-term rate cut by the Fed as expectations have been pushed out further towards the end of the year. The hawkish commentary by Fed officials on Tuesday was underscored by the FOMC minutes on Wednesday. But topping it all up on Thursday were better-than-expected flash PMIs that pointed to a pickup in both business activity and prices in May.
The composite PMI, covering both manufacturing and services, was the strongest in two years. The most worrying aspect of the S&P Global survey was the acceleration in input and output costs, with only employment registering some weakness.
The most worrying aspect of the S&P Global survey was the acceleration in input and output costs
The data strengthened the case for ‘higher for longer’, with the Atlanta Fed’s Bostic signalling on Thursday that a rate cut may have to be delayed until the last three months of the year.
Only last week hopes for a September cut got a major boost from a tame inflation report. But September is now looking more of a toss coin and the first cut is not substantially priced in until November, which is not a live meeting due to the US presidential election. That only leaves December as the most likely meeting for the Fed to feel confident enough to start lowering rates.
Equities stumble despite Nvidia lifeline
For the markets, which have had to contend with repeated disappointments on how soon the Fed can begin cutting rates, this latest setback came as quite a blow for Wall Street. The Dow Jones plunged by just over 1.5% and the Nasdaq reversed sharply from all-time highs earlier in the session to close down by about 0.4%.
Not even a 9.3% rally in Nvidia could prop up the market as the increasingly cloudy outlook for the Fed policy path unnerved investors. Nvidia’s share price surpassed $1,000 for the first time after the AI chip maker posted a triple-digit earnings growth.
the increasingly cloudy outlook for the Fed policy path unnerved investors
Oil and gold headed for weekly losses
The diminishing expectations for rate cuts have also been a significant drag on oil and gold prices this week.
There’s a possibility that OPEC will push for steeper production cuts when it meets at the beginning of June amid the less optimistic demand outlook, but it’s hard to see an agreement beyond an extension of the existing quotas.
Gold’s slide, meanwhile, has likely been exacerbated by profit taking, although a further rebound in US Treasury yields could turn into a bigger headache for the precious metal.
Dollar stands tall but euro and pound find support
The US dollar edged up for the fourth straight session on Thursday before easing slightly today. The euro found support from a surprise rise in negotiated wage growth in nine Eurozone countries. Although the Q1 data – watched closely by the ECB – was impacted by one-off bonuses in Germany, ECB policymakers may now be wary of signalling more cuts after June.
Although the Q1 data was impacted by one-off bonuses in Germany, ECB policymakers may now be wary of signalling more cuts after June
The pound also slipped versus the dollar yesterday but was clawing higher on Friday despite poor UK retail sales readings. A BoE cut in June has been all but ruled out after this week’s upside CPI surprise and the general election announcement. This could defend sterling should the greenback appreciate further in the coming days.
![](https://www.xm.com/wp-content/uploads/2024/05/Calendar-May24.png)
Ativos relacionados
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.