Technology, Energy, and Commodities Markets See Flurry of Activity as US Yields Rise and Fed Hawks Drive Further Rate Hikes
By This week has seen a flurry of activity in the technology, energy, and commodities markets. In response to Microsoft’s ChatGPT, Google has unveiled their own conversational Artificial Intelligence, dubbed Bard AI.[0] Microsoft scheduled a mystery event for today and Baidu announced that it will roll out its own AI in March, which saw its shares jump 15% in Hong Kong.[1] The US 2-year yield is above the levels it kicked off the year, the US 10-year yield is following suit, and the dollar is sharply bid this week.[2]
Rising geopolitical tensions, and the Fed hawks feed into higher US yields, with the S&P500 retreating by 0.60% yesterday and Nasdaq 100 losing 0.87%.[3] Losses could extend toward 4030 for the S&P500 this week, the minor 23.6% retracement on October to last week rally, and toward 12040 for Nasdaq.[3] In energy and commodities, Indian Tata steel announced an unexpected loss last quarter and the shares slipped more than 4%, while BP is to announce its earnings shortly.[3] Crude oil rebounded past the $75pb but solid offers are yet to be cleared into the 50-DMA, which stands a touch above the $77pb level.[1]
It is predicted that the Reserve Bank of Australia will increase interest by 25 basis points, setting the official cash rate at 3.35%, due to persistent inflation.[0] The Atlanta Fed President Raphael Bostic even said that the strong jobs report may encourage the Fed to raise the interest rates further above the 5% mark, which would require one more 25bp rate hike, on top of two more already expected.[3] He suggested that the pipeline could even be increased by 50bp.[3] Yesterday, the US declared their intent to impose a 200% tariff on Russian aluminum by the end of this week on the Russian front.[3]
In currencies markets, the EURUSD tanked to 1.0710 yesterday, and rebounded from the lower band of the latest bullish trend, while the USDJPY jumped to 132, and challenged its own 50-DMA resistance.[3] Cable consolidates a touch above the 1.20 mark and the Aussie-dollar is better bid today as the Reserve Bank of Australia (RBA) hiked the rates by 25bp points as expected.[2]
0. “US stocks extend losses, RBA set to decide rates” CMC Markets, 6 Feb. 2023, https://www.cmcmarkets.com/en/news-and-analysis/morning-wrap-us-stocks-extend-losses-rba-set-to-decide-rates
1. “Geopolitical tensions, Fed hawks weigh on sentiment [Video]” FXStreet, 7 Feb. 2023, https://www.fxstreet.com/analysis/geopolitical-tensions-fed-hawks-weigh-on-sentiment-202302070912
2. “Rising geopolitical tensions, Fed hawks take a toll on sentiment” FXStreet, 7 Feb. 2023, https://www.fxstreet.com/analysis/rising-geopolitical-tensions-fed-hawks-take-a-toll-on-sentiment-202302070647
3. “Rising Geopolitical Tensions, Fed Hawks Take a Toll on Sentiment” Action Forex, 7 Feb. 2023, https://www.actionforex.com/contributors/fundamental-analysis/485101-rising-geopolitical-tensions-fed-hawks-take-a-toll-on-sentiment/
