This week in finance, we've seen a whirlwind of activity affecting markets worldwide. The Federal Reserve sends mixed signals about future rate hikes, while oil prices hit a surprising low, even as geopolitical tensions rise. As the Euro struggles against the Dollar, investors are left wondering: how will these global economic shifts affect their portfolios?
Join us as we break down these key developments and their implications for the investing world.
Dow Jones dives 220 points as Powell gives this inflation warning
The Dow Jones Industrial Average declined by 220 points following Federal Reserve Chairman Jerome Powell's remarks at the IMF Annual Research Conference in Washington, D.C. Powell's comments introduced uncertainty regarding the future trajectory of interest rates.
He emphasized the Federal Open Market Committee's commitment to establishing a monetary policy that effectively reduces inflation to 2% over time, but also acknowledged a need for more confidence in having achieved this goal. This statement dampened Wall Street's optimism, which had grown following last week's FOMC meeting. As a result of these developments, the Dow Jones fell to 33,891 points.
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Disney tops earnings forecasts
Walt Disney ($DIS) surpassed Wall Street's expectations with its latest earnings report, primarily due to increased attendance at its Shanghai and Hong Kong theme parks. The company's shares rose by 3% in after-hours trading, reaching $87.14. This increase reflects investor confidence in CEO Bob Iger's cost-cutting measures and the company's significant gains in streaming subscribers.
Additionally, Disney is considering reinstating dividend payments to shareholders by the end of 2023. For the fiscal fourth quarter ending September 30, Disney's earnings were 82 cents per share, exceeding the predicted 70 cents, with a total revenue of $21.2 billion, aligning with expectations.
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Oil prices drop to 3-month low amid record US production
Oil prices have reached a three-month low, influenced by record oil production in the United States. U.S. crude oil, particularly West Texas Intermediate, has seen a significant price drop of over 15% since late September, now trading at around $75 per barrel. This decline persists despite production cuts by major oil producers.
A key factor contributing to the price drop is the reduced global demand for oil, particularly from China, the world's second-largest oil consumer, which is currently facing economic challenges. In contrast, US oil production reached a new high with 13.2 million barrels per day at the end of October.
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EUR/USD price: FED & ECB president to facilitate a move toward 1.0800?
The Euro has recently shown signs of strengthening against the US Dollar, but has struggled to sustain gains above the 1.0700 level. Despite mixed messages from Federal Reserve policymakers, markets maintain a generally optimistic view that the Fed might pause its rate hikes.
The recent release of the European Central Bank (ECB) Economic Bulletin exerted slight pressure on the Euro, causing the $EURUSD to drop below 1.0700. The bulletin highlighted expectations of a continued weak economy throughout 2023, with reduced foreign demand and tighter financing conditions impacting investment and consumer spending.
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This concludes our weekly recap. Have a great weekend and see you next week! 👋
