US Stock Market
US and European stock futures are trading modestly lower while investors are trying to make sense of the current rally. Overall, the stock market in Europe and the US are both on track to record another month of solid gains, and this is despite the fact that central banks in both continents are still fully committed to increasing interest rates, which many thought might be the time to call it a day.
Stock Futures Now
Traders are also focused on Chinese growth, and every day there is more pessimism among traders about the Chinese post-COVID demand. When China began the process of re-opening its economy, traders and investors thought that they would see huge demand from China, as after all, it is the second-biggest economy in the world. But now, Wall Street banks are busy cutting their forecasts and admitting that their numbers are wrong, and the time has come to face reality.
Although it is important to emphasise here that the PBOC is less concerned about inflation-related issues and is more focused on growth, The central bank and lawmakers are fully focused on reviving growth, and a large number of policies have been put in place to support growth, while others are in the pipeline. So one should be careful if they are less optimistic about China, as after all, China is a giant that can move the economic ship in one direction by itself.
Week Ahead: Bank of England’s Interest Rate Meeting
In terms of economic data, there isn’t much on the docket for today. However, there are plenty of fireworks throughout this week, which are going to keep traders highly busy. The two events worth keeping an eye on are the Bank of England’s monetary policy decision on Thursday and the Fed Chairman’s two-day testimony.
With respect to the BOE, it is widely anticipated that the Bank of England will cut further into its wounds as it has no other option but to continue to hike interest rates to tame inflation. The expectations are that the bank will increase the interest rate by 25 basis points at the minimum, and more surprisingly, it will not be the last interest rate hike as well.
Gold: What Is Moving The Price?
The precious metal is still very much on the back foot when it comes to price action. The price action lags momentum, and traders are worried that the risk on trade is taking the shine away from the metal. Secondly, the Fed’s hawkish stance has made it clear that there will be two more interest rate hikes this year, and traders know that it would make the dollar index even stronger, which isn’t the ideal scenario for the gold price. The Fed Chairman’s testimony will be the most closely watched event by gold traders, who are hoping to see some dovishness in the Fed’s comments, but in reality, it is less than likely.
Bitcoin: What is Next?
Finally, there has been some silver lining for the digital gold. Past weeks have been full of negative news as the SEC became highly strict in punishing the companies, which it blames for not playing by the rules. Although the crypto companies continue to blame the SEC for not having defined the rules in the book, they have been trying to practise best practises and remain highly open to working with the SEC. Nonetheless, the whole drama impacted the price of bitcoin adversely, and the upward move that started a few months ago lost its full momentum. But now, the situation has changed once again, and here is why:
Black Rock is a name that is highly known for its great work and its strong ties to the White House. The bank has advised the White House in many crises, and it is still the go-to place in terms of crises. Black Rock has been a supporter of Bitcoin, but after the recent SEC crackdown, there has been fear that the institute may change its stance towards bitcoin and we may see fewer opportunities for the institutions to get involved.
But the fact that Black Rock is highly close to filing for Bitcoin ETF approval with the SEC shows that not only does the institute have faith in the digital gold, but it actually still sees a huge opportunity in it as clients are still demanding bitcoin or they want to take advantage of Bitcoin’s current price, which is nothing but a bargain.
