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Midweek Market Podcast – June 29

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The Market Week – June Week 4

This week the markets have seen inflation angst, tightening in central bank policies, recession concerns, and geopolitics, while the advent of month- and quarter-end rebalancing – a time when fund managers typically rebalance their portfolios, a process that can contribute to asset price swings – added some spice.


Stocks have sold, while Bonds were boosted. Latest economic data raised concerns about US demand adding pressure on the tech sector including mega-cap tech companies such as Apple, Microsoft and Amazon, with USA100 dropping by 3% alongside the global equities.

In FX the USDIndex remains buoyed by its safe-haven status holding above 20-day SMA. The Yen is back above 136 area. The USDIndex and USDJPY’s uptrend will likely persist a while amid yield differentials and policy tightening. EURUSD slid to 1.04 area.

Cable has slid to 1.21 area, as the UK moved one step closer to a trade war with the EU after the UK parliament voted in favour of the Northern Ireland Protocol Bill, while the divergent monetary policy stance is expected to add further pressure on GBPUSD.

Gold inched down to $1815 extending its 2-week downleg on a renewed bid for the dollar, and as the Fed promised further rapid interest-rate hikes. $1800 remains the next key support level for bullion.

USOil prices are higher as physical markets remain tight at $111-112 area from $101.72. The OPEC+ meeting this week is expected to add further volatility on the energy market.

The key question is what will happen if OPEC+ sign off the scheduled rise in production. Focus is also on US President Biden’s visit to Riyadh, where he will try to get help to boost alternative supplies.

 

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Andria Pichidi

Market Analyst

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