Asset Summary – Thursday, 13 November
GBPUSD is facing downward pressure, as recent economic data from the UK suggests a weakening economy. The lower-than-expected GDP growth, coupled with a rising jobless rate and slowing wage growth, increases the likelihood of the Bank of England cutting interest rates in the near future. This expectation diminishes the attractiveness of the pound. Furthermore, political uncertainty surrounding potential challenges to the Prime Minister’s leadership adds to investor anxiety, potentially driving capital away from UK assets and further weakening the pound against the dollar.
EURUSD is exhibiting upward momentum, propelled by improved risk sentiment after the US government reopened and anticipation surrounding future central bank actions. The Euro has gained ground, nearing multi-month highs, as the market factors in the likelihood of steady ECB interest rates. Comments from ECB officials suggest a cautious approach to monetary policy. Meanwhile, uncertainty surrounding the timing of a potential Fed rate cut, influenced by the government shutdown’s impact on economic data release and conflicting signals from Fed members, contributes to Euro strength against the dollar. The combination of Eurozone stability and US economic data delays is currently favoring the Euro.
DOW JONES faces a mixed outlook as US stock futures exhibited volatility, oscillating between minor gains and losses after achieving a record close. Investors are exhibiting caution, anticipating the release of significant economic data that could influence the Federal Reserve’s monetary policy decisions. A decrease in market expectations for a Fed rate cut suggests potential headwinds. While some megacap stocks like Apple and Meta are showing premarket strength, others such as Nvidia, Microsoft, and Alphabet are trending downwards. Positive earnings news from Cisco, contrasted by a slight dip in Disney’s stock, further contributes to the uncertain atmosphere surrounding the index’s immediate trajectory.
FTSE 100 experienced downward pressure due to a combination of factors. Disappointing earnings reports and lower oil prices negatively impacted energy sector heavyweights, dragging down the overall index. Several companies trading without dividend entitlements further contributed to the decline. Specific company news, such as slower sales growth reported by a major private equity firm and investor concerns about the UK insurance business of a leading insurer, also weighed on the FTSE 100. Supply chain challenges continued to concern investors despite robust demand reported by a major engineering firm. Finally, weak UK GDP data, indicating near stagnation and a contraction in September output, added to the negative sentiment surrounding the index.
GOLD is experiencing upward price pressure as the US government’s reopening has shifted investor attention to the Federal Reserve’s monetary policy. The end of the government shutdown has paved the way for resumed economic activity, but potential delays in key government reports are forcing investors to rely on potentially less reliable sources of data. Current private data indicating job losses are signaling a weakening labor market, boosting expectations of further interest rate cuts by the Fed. These expectations of monetary easing are a key factor driving gold’s recent rally, indicating that continued anticipation of rate cuts could further bolster gold prices.