Investors are continuously reducing the probability and timing of a Federal Reserve rate cut, as economic data indicates stronger growth and more stable inflation than previously expected. However, the first rate cut is now expected in September, with reduced chances of a second cut.
Currency
The US dollar fell, while the euro and yuan rose on the Moscow Exchange during Wednesday’s trading session. By 19:00 Moscow time, the US dollar was at 94.27 rubles, 15 kopecks lower than the previous closing level. The euro had increased by 15 kopecks to 100.39 rubles. The Chinese yuan rose by 1 kopeck and closed at 12.98 rubles.
On the global currency market, the US dollar index against a basket of six major currencies, DXY, decreased and was around 106.1 points by 20:30 Moscow time.
The likelihood of the Fed cutting interest rates in June decreased further after its chairman, Jerome Powell, indicated that monetary policy should be restrictive for a longer period. Powell stated at a forum in Washington on Tuesday that recent data did not provide confidence for rate cuts and more time may be needed to achieve that confidence.
Investors are steadily reducing the probability and timing of Fed rate cuts as economic data points to stronger growth and more stable inflation than previously expected. It was thought that the US Central Bank would start cutting rates in June and reduce it twice more by the end of 2024. However, the first rate cut is now expected in September, with reduced chances of a second cut.
Stocks
The trading session on the Moscow Exchange ended with a decline in key indicators. The MOEX index fell by 0.3% to close at 3454 points. The RTS index dropped by 0.1% to end the session at 1154 points. Major US stock market indicators showed a downward trend in the first half of the trading session. By 20:30 Moscow time, the Dow Jones industrial index had decreased by 0.1%, the S&P 500 index lost about 0.5%, and the NASDAQ-100 dropped by 1%.
An Bank of America survey shows that the US stock market is vulnerable to sell-offs at the moment, and any weakening of stocks could trigger a downturn as soon as investors start reducing their long positions, as reported by Bloomberg.
Factors such as still high interest rates in the US, signs of China’s economic growth momentum fading, and growing tensions in the Middle East could lead to a global sell-off.
Oil
Oil prices fell in the evening on Wednesday. The price of Brent crude oil futures on the ICE Futures London exchange was around $87.5 per barrel by 20:30 Moscow time. WTI crude oil futures on the New York Mercantile Exchange were trading at around $83 per barrel by that time.
Commercial crude oil inventories in the US for the week ending April 12 increased by 2.7 million barrels, or 0.6%, to 460 million barrels, according to the country’s Ministry of Energy. The current inventory level is approximately 1% below the five-year average for this time of year.
Oil production in the country remained at 13.1 million barrels per day during the same period.