Macro economics

Analytics on 29.07.2021. Stocks at record highs in post-FOMC trading

Wall Street stocks finished mixed overnight despite the Fed’s dovish tone and upbeat corporate results. The Federal Reserve kept its accommodative monetary policies and signaled that economic recovery was on track. At the same time, the central bank noted that the path of recovery will depend on the virus. Meanwhile, Asian stocks rallied on Thursday, with Chinese technology giants leading the way. Chinese internet shares had slid earlier this week on reports that Beijing was considering restrictions on for-profit education ventures.

In Europe, equities opened higher to hit record highs due to a series of positive corporate earnings along with Fed’ dovish rhetoric. In individual stocks, Royal Dutch Shell rose over 3% after the company raised its dividend by almost 40% and said it will buy back $2 billion of shares.

On the data front, Eurozone July final consumer confidence arrived at -4.4, in line with the preliminary estimate. In the UK, June mortgage approvals came in at 81.3k versus 86.1k expected. Germany's unemployment change was -91.0k in July versus -28.0k expected.

Against this backdrop, the UK FTSE 100 adds 0.69% to 7,064, Italy’s FTSE MIB gains 0.59% to 25,410, France’s CAC 40 advances by 0.74% to 6,658, while the German DAX 30 rises 0.19% to 15,599. U.S. stock index futures are little changed, struggling for direction in early pre-market trade.

In currencies, the USD index came under pressure following the Fed’s rejection to discuss tapering. Following the FOMC announcement, the US Fed Funds Futures show the market is fully pricing in a 25 basis-point tightening by March 2023. EUR/USD is hovering around 1.1880, the highest in two weeks. The pair has been climbing for the fifth day in a row, targeting the 1.1900 figure. The first release of US GDP is in the spotlight today.

Elsewhere, oil prices keep a bullish bias, registering two-week highs around $74.65. The market is buoyed by a weekly decline in U.S. crude inventories and ongoing strength in implied demand for gasoline. The Energy Information Administration reported on Wednesday that U.S. crude inventories fell by 4.1 million barrels for the week ended July 23. The EIA also reported weekly supply declines of 2.3 million barrels for gasoline and 3.1 million barrels for distillates.

Nathan Lambert, Head of Global FX Analytical Department

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Interest rates

Country Rate Value
USA Federal Funds 0,25 %
Switzerland 3 Month LIBOR Range -0.75 %
United Kingdom Repo Rate 0,10 %
EU Refinancing Tender 0,00 %
Japan Overnight Call Rate -0,10 %
New Zealand Official Cash Rate 0,25 %
Australia Cash Rate 0,25 %
Canada Overnight Rate Target 0,25 %
All rates
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