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Dailu summary: Wall Street is trying to rebound

17:54 28 September 2022
  • Wall Street indexes are gaining today and bouncing back above the minimums of June this year. The S&P 500 and Nasdaq are up 1.7% and 1.5%, respectively, and the Dow Jones is also doing well, adding 1.77%. 
  • U.S. indices were helped in their rebound today by comments from the Fed's Raphael Bostic, who hinted at a likely smaller, 50bp rate hike in December and highlighted several signs of cooling demand in the U.S. economy, which is necessary to effectively lower inflation. Bostic's forecast of a 75bp hike at the next Fed meeting did not surprise markets;
  • European indices recovered from early session losses and ended the session higher. The DAX rose 0.36%, the FTSE gained 0.3%. The WIG20 continued to perform poorly, slipping 1.61%. In the early part of the session, the bulls reacted vividly to support near 1400 points and defended a key psychological level.  
  • The Bank of England took an unexpected first step toward dovish policy today and announced that it will buy 2-year government bonds, purchases will last until October 14. The decision represents a significant change because the bank had previously announced bond sales in October. The news caused a spike in volatility in the foreign exchange market and contributed to a better atmosphere on the indexes, which has persisted since then.
  • Performing brilliantly today are the recently oversold stocks of Meta Platforms (META.US) and Netflix (NFLX.US), which is gaining more than 8% after analysts at Atlantic Equities raised their recommendation. Alphabet's share price is also trying to return to the vicinity of $100;
  • Exceptionally against the backdrop of Wall Street companies, Apple is performing poorly, losing 3% amid growth in the technology sector. The company announced that it has suspended plans to increase production of the latest iPhones due to surprisingly lower-than-expected demand, which persists despite the fact that Apple has decided not to increase the price of the debut model this year. Biogen (BIIB) shares are gaining nearly 40%, the company reported on breakthrough results for its Alzheimer's drug;
  • The U.S. dollar is weakening today after a record rally in recent days. EURUSD is back around 0.97 and USDPLN scored a correction to the area of 4.92 after breaching PLN5 levels yesterday;
  • Oil rose to $87 today, crude is supported by the weakening dollar and the DoE report, which indicated a decline in inventories. Precious metals are also benefiting from the weak dollar. Gold is gaining more than 2%, silver is up more than 3.5%;
  • The recently indecisive cryptocurrency market is shining in the green today. Bitcoin has defended declines near $19,000 and is trying to break through psychological support at $20,000 again. Ethereum and the other altcoins, however, still seem relatively muted and are probably waiting for a decisive move from the 'king of cryptocurrencies'.

Today's session gives a breather to the demand side, however, the increases may still prove to be short-lived. Europe still cannot determine the direct perpetrator of the attacks on the Nord Stream gas pipelines, although the circle of suspects has also expanded to include the US (!). Moscow has pointed out that the results of referendums held in the occupied Ukrainian territories unequivocally indicate a desire to join Russia. Recognizing the territories as Russian could end in an even greater escalation of the conflict and further threats of nuclear escalation by Putin. Lavrov reported at the UN that the territories would fall under Moscow's nuclear doctrine, which in this case the United States nor Ukraine clearly has no intention of abiding by. The Pentagon has stated that it is closely monitoring Russian nuclear activity, and financial markets are likely to face increased geopolitical tensions soon. 

S&P500 chart, H4 interval. The index's declines slowed down near the peak of the panic in June, this year. The index is still in a downtrend, below the 50 and 200-day moving averages. The demand reaction to the decline in the area of 3650 points is still hard to call decisive, investors seem to be waiting for a sign that would embolden them to continue buying.RSI has definitely increased, however, it still shows neutral levels. Source: xStation5

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