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Tuesday, April 23, 2024

Today’s headlines

What’s happening: Gold prices fell sharply on Monday amid some easing in geopolitical concerns.

What happened: With an increase in risk appetite, investors flocked to equities and stock indices on Monday, exerting pressure on safe-haven assets.

Gold prices tumbled to a one-week low after settling at a new record high on Friday.

Why it matters: Gold has been gaining momentum lately due to heightened geopolitical worries and the increased buying of the yellow metal by major central banks. Gold prices have surged around 12% year-to-date. Gold futures for June closed at a new record high of $2,413.80 on Friday.

With some easing of geopolitical concerns, an increase in investor risk appetite took the Dow Jones index higher by more than 400 points, while the S&P 500 added around 1.4% on Monday. This, along with profit taking, exerted pressure on gold at the start of the week.

Investors continued monitoring inflation levels across bigger economies and the monetary policies by major global central banks. The US inflation rate accelerated at a faster-than-expected pace in March, raising prospects of the US Federal Reserve not slashing rates anytime soon.

Some weakness in the US dollar limited the overall losses for gold. The US dollar index, which measures the greenback’s performance versus a basket of major peers, slipped around 0.1% to 106.08 on Monday.

Gold for June delivery dipped $67.40 to close at $2,346.40 an ounce on Monday. The most-active contract logged its worst single-day percentage drop since February 3, 2023.

In other metals trading, Silver for May delivery tumbled $1.59 to settle at $27.25 per ounce, while May copper declined 2 cents to $4.48 per pound, platinum dipped more than 1% to $931.2, and palladium settled lower at $1,015.60.

What to watch: Investors now await the release data on the US PCE (personal consumption expenditures), due to be released on Friday, to get some further insights into the Federal Reserve’s upcoming rate cuts. Annual core PCE Price Index in the US, which fell to 2.78% in February from 2.88% in January, is expected to ease further to 2.6% in March.

Investors will also continue monitoring the demand of gold by the biggest consumers like India and China.

The markets today

European stocks will be in focus today ahead of a basket of major economic reports

Context: European equity markets closed higher on Monday as investors monitored the monetary policy outlook.

Details: Investors reassessed the path ahead for rate cuts by central banks, with some now expecting the US Federal Reserve to be among the last major central banks to slash interest rates.

European equities started the week on a positive note, following last week’s sell-off. An easing in the geopolitical situation also boosted the demand for stocks around the world.

On the economic data front, Eurozone’s consumer confidence came in at -14.7 in April, missing market estimates of -14.0, according to a preliminary reading.

Shares of Edenred rose around 2.7% on Monday after the company posted an 18.8% surge in profits in the first quarter.

The STOXX Europe 600 Index gained 0.6% to close at 502.31 on Monday, with most sectors closing in the positive zone. Telecom stocks were among the top performers, gaining more than 2.1%, while auto stocks bucked the overall market trend, falling 0.8%.

London’s FTSE 100 index recorded its fourth gain in a row on Monday, climbing 1.62% to settle at 8,023.87 points, surpassing its earlier record closing on February 20, 2023.

Germany’s DAX 40 gained 0.70% to close at 17,860.80, while France’s CAC 40 added 0.22% to close at 8,040.36.

What to watch: Investors await the release of economic data on composite PMI, manufacturing PMI and services PMI from the Eurozone today. The HCOB Eurozone Composite PMI, which was revised higher to 50.3 in March, is expected to rise to 50.8 in April.

Analysts expect the manufacturing PMI to improve to 46.5 in April, from 46.1 in March, while the services PMI is projected to rise to 51.8 in April, from previous reading of 51.5.

Other Markets: US trading indices closed higher on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.67%, 0.87% and 1.02%, respectively.

The news shaping the markets

Russia warned of a “direct military clash” with nuclear powers after the US approved billions of dollars in military aid for Ukraine. The news sent the safe-haven US dollar index higher in forex trading this morning.


Japan’s au Jibun Bank flash services PMI rose to 54.6 in April, versus a final reading of 54.1 in the prior month. The country’s services activity expanding for the 20th straight month lent support to the JPY/USD forex pair.


Australia’s Judo Bank composite output index rose to 53.6 in April, from 53.3 a month ago, sending the AUD/USD pair higher in forex trading this morning.


Canada’s industrial producer prices increased by 0.8% in March, in-line with market expectations, which lent support to the CAD/USD forex pair.


Mexico’s economic activity climbed by 4.4% year-over-year in February, accelerating from a 1.9% gain in the previous month, which sent the MXN/USD pair higher in forex trading this morning.

What else to watch today

UK’s public sector net borrowing, composite PMI, manufacturing PMI and services PMI, South Africa’s leading business cycle indicator, France’s composite PMI, manufacturing PMI and services PMI, Germany’s composite PMI, manufacturing PMI and services PMI, US Redbook index, composite PMI, manufacturing PMI, services PMI, new home sales, Richmond Fed manufacturing index, Richmond Fed services index, building permits and API crude oil stocks, Turkey’s total motor vehicles production, as well as Argentina’s economic activity estimator.


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