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Yes, it’s a lower GDP figure, but the stock market continues to climb
29.07.2022

code blockIs the US now officially in a recession? This is the question that most individuals are asking themselves, after the US Gross Domestic Product has been confirmed as much lower than expected. However, what traders are asking themselves is how this news will affect the financial trading markets such as the Oil, stock and Gold markets.

Normally, the news of the Gross Domestic Product declining for a second quarter would be taken negatively by the investors, for all markets including the stock market. However, the Federal Reserve has been significantly increasing interest rates this year. Investors are hoping that this news may refrain the Central Bank from further increasing interest rates.

EUR/USD

EURUSD - 29.07.2022.jpg EUR/USD 1-Hr Chart on Friday, July 29th.

The EUR/USD continues to be the US Gross Domestic Product which was confirmed as -0.9% instead of the 0.4%, something that was predicted by the market. This means that the US economy has shrunk by 2.5% over the previous 2 quarters and officially puts the US in a recession. However, economists are not all advising that the US is in a recession regardless of the figures. For example, the secretary of the Treasury, Ms. Yellen has advised that she did not believe the U.S. was in a recession, arguing that the labor market and household balance sheets remain strong despite slowing growth. A similar point of view was also taken by the US President.

The EUR/USD continues its multi-directional price movement with each impulse wave simply correcting back to its previous price. The price movement is illustrating the market’s lack of certainty as the US economic and monetary policy disappoint but yet investors continue to have a lack of confidence in the Euro and European markets. The price of the instrument continues to move within a price range with the average price remaining at 1.01835.

SNP500

US500 - 29.07.2022.jpg SNP500 1-Hr Chart on Friday, July 29th.

The SNP500 is the week’s best performing US stock-based index with the price increasing by 1.21% during yesterday’s trading session. The DowJones also performed well and increased by 1.03% followed by the NASDAQ which increased by 0.92%. The price is being influenced by the strong earning reports which have already been released. Regardless of the decline in the economic growth, as well as hopes from traders that the Central Bank may look to stop interest rate hikes or at least slow the pace of alterations to the monetary policy.

The price movement of the SNP500 is moving within a traditional steady trend, forming large impulse waves followed by only minor retracements and managing to break out to higher highs with little difficulty.

Apple was the latest company to release its earning reports which reported a better than predicted performance. Apple advised that revenues had risen 2% from a year ago to $83bn, slightly ahead of analysts’ forecasts for $82.8bn. In addition to this, the earnings per share were also recorded higher than expected but were unable to perform better than the previous quarter. The Earnings per share were predicted at $1.15 but were released at $1.20.

Bitcoin

BTCUSD - 29.07.2022.jpg BTC/USD 4-Hr Chart on Friday, July 29th.

The price of Bitcoin slightly increased against the US Dollar by 0.22% this morning but is on track to complete its weekly performance positively. The asset has once again reached the level of $23,900 as the downward price movement lost momentum on Tuesday. Now, the question is whether the asset will be able to cross onto a higher price high.

Investors will continue to monitor the risk profile of the market and also evaluate the price movement of the stock market. If the stock market continues to perform well, investors are hoping the industry will be able to regain some confidence and that it may fuel another bullish price trend.

Key takeaways:

  • US Economy official falls into a Recession
  • US sees a much lower GDP figure than initially predicted
  • Yellen and President Biden advise the economy is not in a recession due to strong labor statistics.
  • The stock market positively reacts to the GDP figure as investors hope the Fed will weaken its restrictive stance.
  • Confidence slightly grows within the cryptocurrency market
IMPORTANT NOTICE: Any news, opinions, research, analyses, prices or other information contained in this article are provided as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. Past performance is not an indication of possible future performance. Any action you take upon the information in this article is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this article.
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