Weekly News Recap 23 – 27 September 2024

News for 23 September 2024

Gold Continues to Rise

At the end of last week, gold prices rose to close at $2,622/oz, driven by comments from Christopher Waller, a Federal Reserve governor, which raised expectations for another 0.50% interest rate cut at the Fed’s November meeting, supporting the upward movement in gold.

On September 23 at 8:45 PM, the U.S. Manufacturing and Services PMI data will be released, with forecasts of 48.6 and 55.3, respectively.

Nike Stock Soars 6.84%

Nike (NKE.N) shares surged 6.84%, boosting the Dow Jones to a record high. The rally followed the announcement that former executive Elliot Hill will return to the company as CEO, replacing John Donahoe.

Dollar Strengthens Against Yen as BOJ Remains Cautious on Rate Hike

The U.S. Dollar Index, which measures the dollar against six major currencies, rose 0.11% to 100.723. Kazuo Ueda, Governor of the Bank of Japan (BOJ), stated in a press conference following the BOJ’s decision to keep interest rates at 0.25% as expected, that the BOJ can take time to assess the impact of global economic uncertainties. He added that future monetary policy decisions depend on economic, price, and financial conditions.

The dollar strengthened to 144.50 yen, marking its highest since early September.

J&J Takes Drastic Action: Subsidiary Files for Bankruptcy to Settle Talcum Powder Cancer Cases

A subsidiary of Johnson & Johnson filed for bankruptcy protection for the third time on Friday, September 20, as the healthcare giant attempts to push forward with an $8 billion settlement deal to resolve tens of thousands of lawsuits. The lawsuits allege that J&J’s baby powder and talcum powder products caused cancer.

Red River Talc, J&J’s subsidiary, filed the documents in the U.S. Bankruptcy Court for the Southern District of Texas. J&J faces more than 62,000 claims from plaintiffs who allege that the company’s baby powder and talcum products were contaminated with asbestos, leading to ovarian cancer and other types of cancer.

News for 24 September 2024

Gold Holds Steady at High Levels

On September 23, gold prices edged slightly, closing at $2,628/oz, driven by weaker-than-expected U.S. Purchasing Managers’ Index (PMI), which came in at 47.0. As a safe-haven asset, gold rose in response to the economic contraction.

On September 24 at 9:00 PM, the U.S. Consumer Confidence Index and Richmond Manufacturing Index are set to be released, with forecasts of 103.9 and -13, respectively.

The outlook suggests that U.S. economic data may continue to show signs of contraction.

Tesla and Meta Stocks Continue to Climb

Shares of Tesla and Meta Platforms, both interest-rate-sensitive growth stocks, rose by 4.65% and 0.6%, respectively, following Citigroup analysts’ upward revision of the price targets for both companies.

News for 25 September 2024

Gold Hits New Highs

On September 24, gold prices rose to close at $2,657/oz, driven by the U.S. Consumer Confidence Index hitting a five-month low at 98.7, alongside a weakening U.S. Dollar Index, which supported the upward movement in gold prices.

On September 25 at 9:00 PM, U.S. new home sales data is set to be released, with a forecast of 699k.

Gold is expected to continue its “Sideway up” trend, signaling a sustained upward movement.

China’s Economic Stimulus Measures Boost Global Stocks

Zachary Hill, head of portfolio management at Horizon Investments in North Carolina, stated that the primary market driver is China’s announcement of economic stimulus measures. This news not only directly supports the Chinese stock market but also positively impacts global stock markets, including the U.S. stock market. Sectors particularly benefiting include cyclical industries and those sensitive to news from China, such as metals and mining stocks.

Visa Shares Plunge 5.49%

Visa (V) shares fell by more than 5.49% after the U.S. Department of Justice filed a lawsuit against the company for alleged debit card market monopolization. The Department stated that Visa, the largest payment network operator in the U.S., engaged in anti-competitive practices by obstructing competitors in the debit card market.

Is It Time for Chinese Stocks? PBOC Takes Bold Steps to Combat Deflation

The Governor of the People’s Bank of China (PBOC) announced significant economic stimulus measures, including a 0.50% reduction in the reserve requirement ratio (RRR) for commercial banks and a cut in the seven-day reverse repurchase rate from 1.7% to 1.5%. The measures also include lowering down payment requirements for second homes and allocating 1 trillion yuan (approximately $141.78 billion) in long-term loans.

These actions indicate that the PBOC is attempting to curb the severe contraction of the Chinese economy by rapidly reducing interest rates. This rate cut is expected to support the Chinese economy and stimulate private consumption, leading to a strong rise in stocks and indices on September 24.

Chinese companies listed on the New York Stock Exchange saw robust gains, with Alibaba rising 7.88%, PDD Holdings soaring 11.79%, and Li Auto climbing 11.37%.

When comparing the price-to-earnings (P/E) ratios, Chinese tech stocks appear significantly cheaper than their U.S. counterparts. The average P/E ratio in the U.S. is around 30-40 times, while Chinese stocks average only 17-23 times, making them an attractive investment option.

Australia’s Inflation Slows to 2.7% in August, Lowest in 3 Years

Reuters reports, citing data from the Australian Bureau of Statistics, that the Consumer Price Index (CPI) rose by 2.7% in August compared to the same month last year, down from 3.5% in July and in line with market expectations.

Meanwhile, core inflation in August stood at 3.4% year-on-year, down from 3.8% in July. However, this figure remains above the Reserve Bank of Australia’s (RBA) target range of 2-3%, which may pose a challenge for future interest rate cuts.

Consumer Confidence in South Korea Declines for Two Consecutive Months

The Bank of Korea (BOK) revealed in a survey that consumer confidence in South Korea has decreased for the second consecutive month since August, primarily due to a slow recovery in domestic purchasing power. The consumer confidence index for South Korea stood at 100 in September, down from 100.8 in August.

News for 26 September 2024

Gold Moves Sideways

On September 25, the price of gold fluctuated within a narrow range, closing at $2,657/oz. This stability was attributed to a rebound in the dollar index, which rose from 100.27 to 100.92, leading to a slight strengthening of the dollar and keeping gold prices stable.

On September 26, at 19:30, the U.S. will announce the Final GDP figures, projected at 3.0%, along with initial jobless claims expected at 224k.

It is anticipated that gold prices will remain at high levels, adopting a sideways strategy as the market lacks new supporting factors.

Analysts Predict Continued Rate Cuts by ECB Amid European Economic Decline

Several analysts anticipate that the European Central Bank (ECB) is likely to continue cutting interest rates as signs of economic slowdown emerge in Europe. HSBC forecasts that the ECB will reduce rates by 0.25% at every meeting from October this year until April next year due to weak economic data. Additionally, Sweden’s central bank (Riksbank) has decided to lower its rate to 3.25% from 3.50%, signaling potential further cuts if inflation decreases as targeted.

In the European stock market, the STOXX 600 index, which encompasses stocks from 17 European countries, closed at 519.14 points, down 0.11%. Major indices in various countries also saw declines, including France’s CAC-40 index, which fell by 0.50% to close at 7,565.62 points, Germany’s DAX index down 0.41% to 18,918.50 points, and London’s FTSE 100, which decreased by 0.17% to 8,268.70 points.

If the ECB proceeds with rate cuts, it would significantly impact the financial and investment sectors in Europe, as signs of an economic downturn may push for more accommodative monetary policies. Investors are closely monitoring this situation to assess the future direction of the market.

News for 27 September 2024

Gold Continues to Reach New Highs

On September 26, the price of gold increased, closing at $2,672/oz. This rise was attributed to a weakening dollar, which fell from 100.93 to 100.56, providing upward support for gold prices.

On September 27, at 19:30, the U.S. Personal Consumption Expenditures (PCE) inflation index will be announced, with a forecast of 0.2%, indicating a continued decline.

Overall, gold is expected to follow a sideway-up trend, suggesting a sustained upward momentum.

Micron Technology Shares Surge 14.7%

Micron Technology (MU) saw its stock rise over 14.7% after the company reported fourth-quarter 2024 revenues that exceeded expectations. Additionally, it provided a revenue forecast for the first quarter of 2025 that surpassed analysts’ predictions, driven by strong demand for high-bandwidth memory (HBM) chips used in AI technology.

Chinese Communist Party to Boost Spending and Cut Interest Rates to Support Economy and Real Estate

The Central Committee of the Chinese Communist Party has pledged to increase fiscal spending to achieve economic growth targets and stabilize the struggling real estate sector. The committee also directed the acceleration of measures to reduce interest rates and lower the reserve requirement ratio (RRR) for commercial banks, as announced by the People’s Bank of China earlier this week. Following these announcements, shares of Li Auto surged 7.13%, PDD Holdings jumped 13.28%, and Alibaba soared over 10.08%.

SNB Cuts Policy Rate to 1.0%

The Swiss National Bank (SNB) has decided to lower its policy interest rate by 0.25% to 1.0% during its meeting on Thursday, September 26. This rate cut aligns with the expectations of 30 out of 32 analysts surveyed by Reuters and marks the third reduction in interest rates this year.

Chinese Leaders Push for Economic Stimulus, Luxury Stocks Surge 6.5%

Chinese leaders have committed to necessary fiscal spending to stimulate the economy and achieve a growth target of around 5% for the year. This has led to market expectations for new economic stimulus measures to be announced this week. The global economic boost has driven the luxury goods sector index, heavily reliant on the Chinese market, to rise by 6.5%. Notably, stocks like Hermes (HRMS) and Louis Vuitton (LVMH) saw significant gains of approximately 9%.