Japan August CPI

US officials now believe that a ceasefire deal between Israel and Palestinian Islamist group Hamas in Gaza is unlikely before President Joe Biden leaves office in January, the Wall Street Journal reported on Thursday.

The newspaper cited top-level officials in the White House, State Department and Pentagon without naming them. Those bodies did not immediately respond to requests for comment.

“I can tell you that we do not believe that deal is falling apart,” Pentagon spokesperson Sabrina Singh told reporters on Thursday before the report was published.

US Secretary of State Antony Blinken said two weeks ago that 90 percent of a ceasefire deal had been agreed upon.

The United States and mediators Qatar and Egypt have for months attempted to secure a ceasefire but have failed to bring Israel and Hamas to a final agreement.

Two obstacles have been especially difficult: Israel’s demand to keep forces in the Philadelphi corridor between Gaza and Egypt and the specifics of an exchange of Israeli hostages for Palestinian prisoners held by Israel.

The United States has said a Gaza ceasefire deal could lower tensions across the Middle East amid fears the conflict could widen.

Biden laid out a three-phase ceasefire proposal on May 31 that he said at the time Israel agreed to. As the talks hit obstacles, officials have for weeks said a new proposal would soon be presented.

The latest bloodshed in the decades-old Israeli-Palestinian conflict was triggered on Oct. 7 when Hamas attacked Israel, killing 1,200 and taking about 250 hostages, according to Israeli tallies.

Israel’s subsequent assault on the Hamas-governed enclave has killed over 41,000 Palestinians, according to the local health ministry, while displacing nearly the entire population of 2.3 million, causing a hunger crisis and leading to genocide allegations at the World Court that Israel denies.

Source: ARAB

Where We Stand – 

Look Ahead –

GBP/USD Price Forecast: Bulls retain control near 1.3300 mark, highest since March 2022

The GBP/USD pair trades with a positive bias for the third straight day on Friday and hovers around the 1.3300 mark during the Asian session, just below its highest level since March 2022 touched the previous day.

The British Pound (GBP) continues to draw support from the Bank of England's (BoE) decision on Thursday to keep interest rates unchanged and run down its stock of government bonds by another  £100 billion over the coming 12 months. In contrast, the US Dollar (USD) languishes near its lowest level since July 2023 amid bets for more interest rate cuts by the Federal Reserve (Fed) and turns out to be a key factor acting as a tailwind for the GBP/USD pair. 

GBP/USD tests 1.33 as Greenback weakness prevails

GBP/USD found a fresh 30-month high bid on Thursday, with a broad-market selloff in the US Dollar sparking a risk bid in Cable and bolstering the Pound Sterling. The Federal Reserve’s (Fed) 50 bps cut this week helped galvanized global markets into a risk-on stance, while the Bank of England’s (BoE) fearful rate hold did little to spark further strength under the GBP.

The only datapoint of note on Friday will be UK Retail Sales for August, though not much momentum is likely to come of it with investors exhausted after a double-header of central banks between the Fed and the BoE. UK MoM Retail Sales in August are expected to tick down to 0.4% from the previous 0.5%, while the annualized figure is expected to hold steady at 1.4%. 

Source: FXSTREET

Silver price (XAG/USD) extends its gains for the second successive day, trading around $31.10 per troy ounce on Friday. The non-yielding Silver receives support following the bumper 50 basis point rate cut by the US Federal Reserve (Fed) on Wednesday.

Additionally, increasing expectations for further rate cuts by the US Federal Reserve by the end of 2024 are putting pressure on Silver demand. The latest dot plot projections indicate a gradual easing cycle, with the median rate for 2024 revised down to 4.375% from the previous forecast of 5.125% in June.

As a non-yielding commodity asset, the precious metal becomes more appealing to investors in a lower interest rate environment, as the opportunity cost of holding it decreases. This can make Silver potentially offer better returns compared to other assets.

Meanwhile, the People’s Bank of China (PBoC) decided to keep its one-year Loan Prime Rate (LPR) unchanged at 3.35%, while the Bank of Japan (BoJ) maintained its interest rate at 0.15% on Friday. Additionally, on Thursday, the Bank of England (BoE) opted to hold its interest rate at 5%, as widely expected.

The safe-haven demand for Silver was bolstered by escalating tensions in the Middle East, as Israeli warplanes conducted their most intense strikes on southern Lebanon in nearly a year of conflict late Thursday. The White House stated that a diplomatic solution was both achievable and urgent, while Britain called for an immediate ceasefire between Israel and Hezbollah, according to Reuters.

Source: FXSTREET

It was a great day for stocks, as the markets responded positively to the Fed’s interest rate cuts.

It was somewhat of a delayed reaction, as the markets seemed to take the Federal Reserve’s massive 50 basis point interest rate cut in stride on Wednesday afternoon. But after some time to digest the news, markets rallied on Thursday, with both the S&P 500 and Dow Jones Industrial Average touching record highs.

On Thursday, the Dow Jones Industrial Average was up 522 points, or 1.3%, rising above 42,000 points for the first time to 42,025. The S&P 500 also hit a record high, as it was up 95 points, or 1.7%, to an all-time high of 5,714.

The tech-heavy Nasdaq Composite had the biggest day, surging 441 points, or 2.5%, to break back over 18,000 for the first time since July, finishing the day at 18,014. The small cap Russell 2000 was also having a good day, rising 45 points, or 2.0%, to 2,251.

Tech stocks and banks lead the rally

The interest rate cuts sparked a rally across the board, but semiconductor stocks were the biggest gainers.

The largest chipmaker, NVIDIA (NASDAQ:NVDA), rose about 5% on the day to $119 per share, but AMD (NASDAQ:AMD) was the fastest mover, rising 6.6% to $158 per share. ASML Holding (NASDAQ:ASML), up 6%, GlobalFoundries (NASDAQ:GFS), up 5.8%, ON Semiconductor (NASDAQ:ON), up 5.6%, Marvell Technology (NASDAQ:MRVL), up 5.6%, and Broadcom (NASDAQ:AVGO), up 4.8%, were also some of the leading semiconductor stocks on Thursday.

In addition, banks were big movers on Thursday, which is a sign that investors are bullish on the economy. Bank stocks are typically bellwethers for economic growth, so the fact that investors were loading up on bank shares shows they feel good about the where the economy Is headed.

The KBW Bank Index was up 3% on Thursday, as large banks saw their prices. Bank of America (NYSE:BAC) stock jumped 3.4% Thursday, while Citigroup (NYSE:C) climbed 5%. Wells Fargo (NYSE:WFC) was also having a good day, up 3.1%, as was Goldman Sachs (NYSE:GS), up 4.2%.

“The Federal Reserve is embarking on what will likely be a series of rate cuts over a number of meetings over the balance of this year and next,” said Scott Wren, senior global market strategist at Wells Fargo, said. “We see a total of 175 basis points of cuts between now and year-end 2025. We anticipate that these Fed cuts should have a positive effect on the economy and markets in 2025. We believe the global economy is likely to benefit as well as major central banks around the world have already cut rates or are on the verge of doing so.”

Dividend stocks and small caps should benefit

Bank of America sees two more rate cuts in 2024, and that should provide a lift for stocks, said Chris Hyzy, chief investment officer for Merrill and Bank of America Private.

“When rates begin to fall, that has generally been positive for equities over the following 12 months,” Hyzy said. “Investors may also find potential opportunities in dividend-paying stocks, which have historically done well as rates decline.”

In the four previous rate cutting cycles, the top dividend beat the S&P 500 by 7.3% one year after the first cut, said Hyzy. The spread widens to 12% after three years, he added. Hyzy also sees opportunities in small cap stocks.

“Lower rates improve access to capital, and small companies have recently regained earning momentum after several disappointing years,” Hyzy said. He added that housing, automotive, and financials stocks should also benefit. 

Source: FXSTREET