This week's market highlights include the Federal Reserve contemplating a pause in rate hikes, Nvidia's remarkable surge in stock prices, a retreat in crude oil prices influenced by OPEC+ and the US Dollar, and the decline of USD/JPY below a key support level.
Explore the details of these significant market movements and their potential implications!
Federal Reserve ponders pause in rate hikes
The minutes from the Federal Reserve's May meeting revealed its 10th consecutive rate rise within a year, setting the federal funds rate to a target range of 5-5.25 percent, its highest since mid-2007. The officials reevaluate their aggressive monetary tightening campaign as they assess how much more pressure the economy can handle to control inflation.
In addition to the lagged effects of the Fed's previous rate rises, the impact of tighter credit conditions following recent bank failures has led to a general consensus among the officials that further rate increases are "less certain".
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Nvidia stocks ($NVDA) skyrockets 26% on stellar AI chip sales
Nvidia's earnings surpassed consensus estimates for the quarter ending in April, with an EPS of $1.09 against an expected 92 cents, and revenue reaching $7.19 billion, significantly outpacing the predicted $6.52 billion. The company also anticipates sales of roughly $11 billion in the current quarter, over 50% higher than Wall Street estimates.
This strong performance was majorly attributed to "surging demand" for the company's data center products, including AI chips increasingly used by cloud vendors and large consumer internet companies.
As a result, Nvidia's share price spiked nearly 26% this week.
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Crude Oil price retreats on OPEC+ perspective
The crude oil price plummeted as OPEC+ indicated no intention of adjusting its production targets in the upcoming meeting, contrasting earlier warnings from Saudi Arabia. The US Dollar's sharp rise also influenced the oil market, while concerns over potential supply disruptions due to wildfires in Canada added to the volatility.
As a result, Brent futures settled down 2.7% to $76.25 a barrel. US WTI settled down 3.4% to $71.83. At their session low, both benchmarks were down by more than $3.
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$USD/JPY fits below 140.00 as USD Index extends further
The USD/JPY pair dropped below the important support level of 140.00 during the Asian session. This decline was influenced by the performance of the US Dollar Index (DXY), which experienced a correction and reached around 104.11 after failing to sustain a recent two-month high at 104.31.
The proportionally larger correction in the USD/JPY pair suggests that the Japanese Yen has also gained strength in the market.
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This concludes our weekly recap. Have a great weekend and see you next week! 👋
