Morning Wrap (09.10.2024)

The bulls managed to maintain control until the close of yesterday's cash session in the USA. Despite reducing some gains, the indices closed in positive territory. The US500 gained 0.40% to 5,790 points, and the US100 held at 20,250 points, gaining 1.20%.

Federal Reserve vice-chairman Philip Jefferson said that the risks to the central bank's employment and inflation targets are now similar. Jefferson expects the US economy to continue to move towards the Fed's inflation target.

The New Zealand dollar (NZD) is today the weakest currency, losing about 0.6–0.8% after the Reserve Bank of New Zealand (RBNZ) decision on interest rates. The RBNZ cut interest rates by 50 basis points on Wednesday and stated that policy remains restrictive.

As a result of the bank's dovish stance, markets are now pricing in a more aggressive outlook for monetary easing, which led to a strong sell-off of the NZD. The decision to lower the cash rate to 4.75% was in line with market pricing and the expectations of most economists.

Chinese indices are slowing their declines after yesterday's deep sell-off. The Hang Seng Index (HSI) gains 0.20% to 21,000 points, and the Hang Seng China Enterprises Index (HSCEI) gains 0.35% to 7,500 points. However, the demand side is not strong enough to lead to increases. Investor concerns about the lack of further fiscal stimuli from the Chinese government remain significant.

The World Bank claims that China's economic growth rate will decline in 2025, doubting the recent stimulus measures. The growth rate in China will drop to 4.3% compared to the projected 4.8% in 2024.

As a result of the announced stimulus packages, the World Bank revised its 2024 estimates upward by 0.3%, but the forecast for 2025 remained unchanged. Weak consumer spending, problems in the real estate market, and an aging population are indicated as the main challenges, and the recent packages focused mainly on the supply side.

Oil gave up most of the gains related to the potential escalation of the conflict in the Middle East and ended yesterday with a 4.80% loss. The price of a barrel returned to around $74 and today remains at this level. The price of Brent oil stopped at around $77.70 per barrel.

Morgan Stanley raises its forecast for Brent oil price to $80 per barrel (from $75) for the fourth quarter of 2024. However, Morgan Stanley is cautious, stating that demand is weaker than expected, and production remains at a high level.

A mixed sentiment still prevails in the cryptocurrency market. Bitcoin is gaining 0.50% today to the level of $62,500, and the main resistance level remains the zone around $64,000. Ethereum is gaining 0.35% to $2,450.