Risk appetite is under severe pressure in today’s trading, so what is the reason?

2023-05-30 12:01:00

© Reuters Risk appetite is under severe pressure in today’s trading, so what is the reason?

Arabictrader.com – Risk appetite declined significantly in trading on Tuesday, despite the political leaders in the United States reaching a preliminary agreement on the issue of the debt ceiling, which leads to easing fears of the United States incurring unprecedented economic and financial losses, which may have a positive impact On investor sentiment.

However, according to some news received today, some members of the US Congress may not agree to pass the initial agreement reached by the President of the United States and House Majority Leader Kevin McCarthy, as Reuters reports that a few hard-right Republican lawmakers have made it clear that they will oppose the agreement, This contributed to strengthening the pressures on investors’ sentiment towards risk in today’s trading.

The following can address the most important developments that affected risk appetite movements towards the most important commodities and currencies:

Risk appetite and stock markets

The movements of risk appetite varied during the trading of global stock markets, especially the American and European ones. With regard to the performance of European stocks; The 600 index declined by a very slight rate of 0.04%, to settle near the level of 460.69 points, affected by the decline in the French and British stock indices during trading, with the issuance of some statements reported by the members of the European Central Bank, which raised the market’s expectations that the bank will not cut interest rates this year.

As for US stocks, the performance of US stock futures contracts rebounded strongly in trading, with the American NVIDIA leading these rises, as the leading company in the global technology industry announced some developments with regard to artificial intelligence, which pushed the company’s share up, recording $ 402.51 per share in pre-market transactions.

Risk appetite and the US dollar

Risk appetite declined during the US dollar trading today, with the markets growing expectations that the agreement to raise the debt ceiling may not be approved by Parliament, which means that default risks still loom on the horizon, along with declining 10-year yields. As a result of the decline in demand for US bonds, investors are reluctant to buy the dollar.

Risk appetite and gold

Risk appetite rebounded strongly during today’s trading, as the yellow metal benefited from the decline in the US dollar. In many cases, the decline in the US dollar results in an increase in demand for gold denominated in the US currency, in addition to the news received about the possibility that the initial debt ceiling agreement will face tough opposition from Right-wing Republicans, which highlighted the stakes before the cap was reached in a few days.

How were commodity and currency prices affected by risk appetite developments?

Risk appetite and the US dollar: The US dollar, which measures the performance of the green currency against a basket of other major currencies, declined by 0.18% to settle near the level of 104.02 points.

Risk Appetite and Gold: Spot gold contracts rose by approximately 0.50%, to record about $1,955.47 an ounce, and also, it rose by about 0.52%, to settle near the level of $1,973.30 an ounce.

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