STOCK PRICES AND NEWS
US equity futures advance after CPI shows rising inflation Premium
June CPI shows inflation rising off May's lows. US equity futures rise as CPI inflation bleeds into share prices. Headline CPI for June jumps from 2.4% to 2.7%. Banks mostly exceed earnings expectations, but Wells Fargo cuts guidance.
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US EQUITY INDICES
The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 most-traded stocks traded in the United States (US). It is often viewed as representative of “old economy” stocks and is considered a leading indicator for international investment.
While the Dow reflects the big money, the Standard and Poor’s 500 (S&P 500) is often the preferred gauge of equity markets due to its broad market coverage. The S&P 500 is a market value-weighted index comprising 500 large US stocks, covering about 75% of the US equity market.
The Nasdaq Composite is highly followed in the US as a performance indicator for technology and growth companies. The Nasdaq-100, which includes 100 of the largest non-financial companies in the Nasdaq Composite, accounts for about 80% of the index weighting of the Nasdaq Composite. The Nasdaq Composite is a capitalization-weighted index and it includes both US and non-US companies listed on the Nasdaq stock market. The NASDAQ represents the speculative retail money.
Generally speaking, a rise in the US equity markets tends to increase investors' risk appetite attracting foreign investment to the US equity market and pumping the US Dollar (USD) higher.
EUROPEAN EQUITY INDICES
Germany DAX - Daily
UK FTSE 100 - Daily
The DAX is a stock market index consisting of the 40 major German blue chip companies trading on the Frankfurt Stock Exchange. It is a total return index and prices are taken from the Xetra trading venue.
The Financial Times Stock Exchange 100 (FTSE 100), informally known as the “Footsie”, is a market capitalization-weighted index representing the top 100 blue-chip companies on the London Stock Exchange. The index represents over 80% of the total market capitalization in the United Kingdom (UK). Stocks in the FTSE 100 are free-float weighted, ensuring that only the investable opportunity set is included in the index.
JAPANESE EQUITY INDICES
The Nikkei 225, commonly called the Nikkei, is a stock market index for the Tokyo Stock Exchange (TSE). It is a price-weighted index, operating in Japanese Yen (JPY), that measures the performance of 225 highly capitalized and liquid publicly owned companies in Japan. It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1970.
Nikkei225 - Daily
Relationships between stocks and currencies
Currencies are probably the most difficult asset class to fit into a consistent intermarket model. For instance, when investors purchase stocks from a particular country, they must pay in the local currency, increasing the demand for that currency. Conversely, a strong currency can make bonds and stocks more attractive to foreign investors.
However, the correlation between stocks and currencies is not always clear. There are often response lags between the reactions of Forex and equities markets, leaving investors holding foreign equities exposed to exchange rate fluctuations.
This correlation is also fragile among international equity markets. The so-called global divergences occur when the stock market in one country starts performing better than the stock market in another country. This is often driven by currency capital flows from the country with the weaker stock market to the country with the stronger one.
US Dollar Index - Daily
Latest STOCK INDICES Analysis
Editors' picks
EUR/USD falls to multi-week lows below 1.1600
EUR/USD loses its traction and trades at its weakest level in three weeks below 1.1600. The US Dollar ignores the mixed macroeconomic data releases from the US and preserves its strength, not allowing the pair to reverse its direction.
GBP/USD retreats below 1.3400 on renewed USD strength
GBP/USD struggles to hold its ground in the second half of the day on Wednesday and trades in negative territory below 1.3400. Earlier in the day, hot inflation data from the UK boosted Pound Sterling but renewed USD strength forced the pair to turn south.
USD/JPY struggles to extend upside above 149.00, US PPI awaited
The USD/JPY pair faces selling pressure while extending its upside above 149.00 during the European trading session on Wednesday. The pair struggles as the US Dollar takes a breather after refreshing the three-week high, following signs from the United States Consumer Price Index (CPI) report of June that prices of imported goods have increased.
Gold pulls away from session highs, trades below $3,330
Gold erases its daily gains and trades below $3,330 after rising above $3,340 earlier in the day. Although retreating US Treasury bond yields help XAU/USD limit its losses, the broad-based USD strength limits the pair's upside as markets await comments from Fed officials.
WTI Oil dips further, approaching $65.00 on renewed fears about demand
Crude Oil Prices are trading lower for the third consecutive day on Wednesday as trade uncertainty, an unexpected increase in US stockpiles and the dwindling hopes of Fed cuts, following Tuesday’s US CPI data, have revived concerns about demand.