Macro Roundup (Jun 18)

SHANGHAI, Jun 18 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar jumped on Thursday and hit a two-month high against a basket of currencies, a day after US Federal Reserve officials surprised markets by projecting a hike in interest rates and end to emergency bond-buying sooner than expected.

On Wednesday, Fed officials projected an accelerated timetable for rate increases, began talks on how to end emergency bond-buying, and said the COVID-19 pandemic was no longer a core constraint on US commerce.

A majority of 11 Fed officials penciled in at least two quarter-point rate increases for 2023, adding they would keep policy supportive for now to encourage a labor market recovery.

The dollar index, which tracks the greenback against six major currencies, was up 0.53% at 91.892, its highest since mid April. On Wednesday, the dollar surged nearly 1%, its largest daily percentage gain since March 2020.

On Wall Street, US stock futures inched up slightly on Thursday night, following a two-day sell-off for the Dow in the wake of the Federal Reserve’s policy update.

Futures for the Dow Jones Industrial Average were up 0.08%. Futures for the S&P 500 ticked up 0.13%, while futures for the Nasdaq-100 climbed 0.21%.

During the regular session, the Dow Jones Industrial Average fell 210 points, or 0.62%, to 33,823.45. The S&P 500 fell 0.04% to 4,221.86. The Nasdaq Composite rose 0.87% to 14,161.35.

The blue-chip Dow has lost 1.9% week to date and the S&P 500 has fallen 0.6%. The Nasdaq has gained 0.65% on the week.

Commodities prices declined sharply as China attempts to cool rising prices and the US dollar strengthens. Futures prices for copper, palladium and platinum fell, while US oil prices tumbled more than 1%.

Crude oil prices pulled back from multi-year highs on Thursday amid supply concerns.

Brent crude oil futures dipped 2.4% to $72.56 per barrel, while US West Texas Intermediate crude futures were 2.2% lower at $70.54 per barrel.

A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.

Gold shed more than 2% on Thursday, precipitating a sell-off across precious metals with palladium set for its worst day in over a year, as the dollar gained ground after the US Federal Reserve struck a hawkish tone on monetary strategy.

Spot gold fell 2% to $1,776.10 per ounce by 1:44 pm EDT (1744 GMT), having earlier touched its lowest since May 3 at $1,766.29.

US gold futures settled down 4.7% at $1,774.80.

European stocks pulled back on Thursday as global markets reacted to the Federal Reserve’s signal that rate hikes will come sooner than expected.

The pan-European Stoxx 600 closed down 0.1%, trimming some earlier losses, with utilities shedding 1% to lead losses while banks bounced 0.5% on the prospect of future interest rate hikes.

Global market sentiment has been dominated by the reaction to the latest Fed policy meeting in which the central bank raised inflation expectations and forecast rate hikes as early as 2023.