SMM News: overnight financial markets fluctuated sharply again, the U. S. stock market fell sharply on Monday, including the Dow tumbled more than 600 points. Affected by the sharp fall in the stock market, the market risk aversion mood heats up, the yen performance is strong, and the gold price also breaks through the $1300 mark in one fell swoop. Williams, the Fed's No. 3 figure, will speak on Tuesday and is expected to trigger market volatility again.
The stock market is under heavy pressure from escalating tensions. The S & P 500 posted its biggest drop in four months, with the Dow down more than 600 points and the Nasdaq down its biggest drop so far this year.
The Dow Jones industrial average fell 617.38 points, or 2.4%, to 25324.99, its biggest one-day decline since Jan. 3. The S & P also had its worst day since early January, falling 2.4 per cent to 2811.87. The Nasdaq composite index fell 3.4 per cent to 7647.02, its biggest one-day drop this year.
(Dow Daily Chart)
The Dow Jones Industrial average fell as much as 719.86 points in intraday trading, while the S & P and NASDAQ fell 2.8 per cent and 3.6 per cent, respectively.
Eleanor Creagh, an Australian market strategist at Saxo Capital Markets in Sydney, said the market underestimated the duration of the negotiations. The market is expected to fall further, particularly in the S & P 500 and China.
"I think this is a prelude to future events," said Phil Blancato, chief executive of Ladenburg Thalmann Asset Management. We should expect more volatility in the foreseeable future. "
The yen strengthened and the gold price broke through the 1300 mark
The yen, which has a safe haven attribute, performed well as the stock market tumbled, prompting investors to seek safe havens.
In late New York trading on Monday, the dollar fell 0.6 per cent to 109.34, hitting a three-month low of 109.02 at one point; the dollar fell 1 per cent against the yen last week.
(daily chart of US dollar / yen)
Bloomberg wrote that the yen performed best in the G10 currency on Monday, supported by options-related demand, with a one-month risk reversal to a four-month high and higher demand for yen call options.
Jingyi Pan, market strategist at IG Asia, said the longer it lasted, the more damage it would do to the global economy, which could benefit safe havens such as the yen.
U. S. stocks fell sharply on Monday as fears of tensions intensified, while safe-haven demand sent gold prices sharply higher.
Bloomberg wrote on Monday that gold had proved to be its biggest gain since February and that safe-haven demand for gold had been boosted.
Gold for June delivery closed up 1.1% at $1301.80 an ounce on the New York Mercantile Exchange, the biggest gain in major contracts since Feb. 19.
(gold futures chart)
Spot gold week rose as high as $1301.10 an ounce, or 1.09 per cent, to $1299.78 an ounce. In early trading in Asia on Tuesday, spot gold rose further to around $1303 an ounce.
(daily chart of spot gold)
Gold prices have fallen for three months in a row, and the escalation of the dispute has revived gold's popularity.
Hedge funds and other large speculators have increased their long positions in gold futures and options in the United States over the past two weeks, according to Bloomberg.
Tai Wong, head of basic and precious metal derivatives trading at BMO Capital Markets, said the fall in the stock market had "supported gold" because of safe-haven demand.
"geopolitical risks are rising, tensions are rising, the dollar is falling and stocks are under pressure-all of which are pushing up gold prices," said Phillip Streible, senior commodities strategist at RJO Futures. "
The speech of the "No. 3" of the Federal Reserve is coming.
On Tuesday, 15-15 Beijing time, Williams (John Williams), chairman of the Federal Reserve of New York and chairman of the FOMC permanent Bills Committee, will speak at an event organized by the SNB and the International Monetary Fund (IMF) in Zurich.
As the "No. 3 figure" of the Federal Reserve, Williams' speech will also have a significant impact on the market.
(Williams photo source)
The Federal Open Market Committee (FOMC) unanimously approved the target range of the benchmark federal funds rate at 2.25% to 2.5% by a vote of 10 to 0 on May 1.
Powell, chairman of the Federal Reserve, said at a subsequent news conference that the Fed had neither tightened nor loosened its policy, saying that weak inflation in the United States could be caused by "temporary" factors, which watered down speculation about the Fed's rate cut.
However, the Fed is likely to be more inclined to cut interest rates as US President Donald Trump raises tariffs on Chinese imports. Friday's federal funds rate futures showed that traders had digested expectations of a full rate cut in the first few months of next year.
"despite the very strong economy, we still see no sign of inflationary pressures," Williams said in a speech on Friday. " He points out that recent price data confirm once again that inflationary pressures remain subdued.
"the economy is still on the path of healthy growth, the labour market is very strong and there is no inflationary pressure," Williams said at the time. The current policy setting gives us a good position to maintain this state. "
The core consumer price index (CPI), which excludes food and energy, rose 0.1 percent in April from the previous month, less than expected and 2.1 percent higher than the same period last year, according to a report by the U.S. Labor Department on Friday. As expected. Overall US CPI rose 0.3 per cent in April from a month earlier, up 2 per cent from a year earlier and lower than expected.
Analysts said the dollar could take a hit if Williams made dovish comments today, pushing gold prices higher.