The past week has proven once again that the only certain thing is uncertainty. The Federal Reserve's decision to raise interest rates, followed by the European Central Bank's (ECB) actions, has kicked up a storm of volatility that rippled across global markets.
How are these changes influencing the performance of stocks and other assets? In this weekly NAGA recap, we shine a light on this week's economic events.
The Federal Reserve hikes interest rates to the highest level since 2001
The Federal Open Market Committee unanimously decided to increase the federal funds rate by 25 basis points, taking it to between 5.25% and 5.5%. This move takes rates to their highest level in 🔺 22 years.
The Fed announcement indicated that future 📈 hikes might be possible as it continues to assess macroeconomic and fiscal conditions.
This decision was followed by an immediate reaction from the markets. In particular, the US Dollar declined significantly, which affected many currency pairs.
Trading involves significant risk of loss.
Big Tech's AI commitment put to the test: seeking tangible profits amid investor skepticism
As the quarterly earnings season approaches for America's technology giants, the anticipation among investors intensifies.
Microsoft ($MSFT), Alphabet ($GOOGL), and Meta ($META) are slated to share updates on their AI strategies, particularly in the wake of recent stock price surges attributed to AI excitement. The investing community is becoming more guarded, demanding concrete proof of AI's contributions to these corporations' financial health.
The recent underperformance of Tesla and Netflix, whose shares plummeted nearly 10% post the release of less-than-impressive earnings, underscores the prevailing investor nervousness.
Trading involves significant risk of loss.
Gold price shines despite rate hike in US Fed meeting
The price of Gold has seen a robust recovery as investors speculate that Wednesday's rate hike by the Federal Reserve may be the last one for this cycle. Gold has found favour among buyers following the Fed's anticipated decision to raise interest rates by 25 basis points (bps).
Specifically, the expectation that this rate hike could be the last in the current cycle has led investors to seek out safe-haven assets like Gold, driving up its value.
Trading involves significant risk of loss.
GBP/USD advances above 1.2950 on weaker US Dollar
The GBP/USD has been on an upward trajectory for three consecutive days, reaching over a one-week high of 1.2950, fuelled by the declining strength of the US Dollar. This comes despite the reduced likelihood of more aggressive rate hikes by the Bank of England, which would generally instil caution among investors.
The GBP/USD nearly reached a weekly high of 1.3000 amid the bullish momentum during Thursday's European trading hours. The positive market sentiment adds to this drive as investors anticipate US Gross Domestic Product (GDP) data releases.
The US Dollar is under sustained selling pressure due to growing market consensus that the Federal Reserve may have hit its terminal rate with Wednesday's 25 basis points rate hike.
Trading involves significant risk of loss.
This concludes our weekly recap. Have a great weekend and see you next week! 👋
