Daily summary: US stocks under pressure as Powell-driven rally fades away

7:07 PM 1 December 2022
  • European indices rose for a second consecutive session on Thursday, with DAX rising 0.65% and reaching levels not seen since early June, driven by solid performance of the tech sector.
  • Major Wall Street are trading under pressure as disappointing US manufacturing data overshadowed upbeat PCE figures and yesterday dovish remarks from FED Chair Powell.

  • The ISM Manufacturing PMI plunged to 49 in November, the first contraction in factory activity since the pandemic-induced blow, while the core PCE price index, the Fed's preferred inflation measure, pointed to easing price pressures. Weak manufacturing data raise concerns that FED has extensively weakened the economy. For the first time  in a long time , we can observe that bad data is no longer supportive for US indexes. Tomorrow market attention will focus on the NFP report for November.

  • WTI crude briefly jumped above the $82 per barrel level as Chinese officials signaled a softening stance in the fight against the coronavirus, while the EU agreed on a cap on Russian oil at USD 60 per barrel, however the decision must be approved by Poland by tomorrow morning.

  • The U.S. Department of Energy requests an immediate end to the release of strategic reserves, which have fallen to the lowest level since 1984. Now oil traders awaited OPEC+ meeting on December 4 amid recent speculation of more production cuts. 

  • NATGAS price pulled back to 6.80 level following as the latest EIA data showed a slightly smaller-than-expected draw in stockpiles. J.P. Morgan Nymex natural gas prices are forecast to decline by about 40% by 2023.

  • The dollar index extended yesterday losses and dropped over 1% to  104.85 on the first day of December, the lowest in near five months, after fresh data showed PCE inflation slowed in October and factory activity shrank for the first time in over two years, strengthening the case for the Fed to slow the pace of interest rate increases. EURUSD broke above the 1.05 level for the first time since end of June. Currently GBP and JPY are the best performing currencies while USD and CAD lag the most.

  • Gold jumped above $1,800, closing on its highest level since early July amid fading Treasury yields and sharp dollar depreciation. Silver broke above $22.65 level. 

  • Major cryptocurrencies pulled back today, however the scale of movement is rather limited. Bitcoin pulled back to $16,900 as buyers failed to break above resistance at $17,200, while Ethereum bounced off $1300 level and retreated to $1270 level.

US500 still struggles to break above long term downward trendline. If sellers manage to regain control, then another downward move towards support at 4000 pts may be launched. On the other hand, if buyers manage to regain control, then recent upward move may accelerate towards resistance at 4175 pts. Source: xStation5

Precious metals recorded a solid session on Thursday. Silver finally managed to break above key resistance at $22.00 and as long as price sits above this level, upward move may accelerate towards $23.00 level. Source: xStation5

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