2023-07-21 11:14:02
The rise of gold and oil in the last trading week.. and stocks between decline and stability
With the close of trading this week, today, Friday, gold took an upward trend, supported by hopes of raising US interest rates and curbing inflation, and oil tended to achieve its fourth weekly gain in a row, and stock indices varied between bearish and stable. What about the movement of financial market indices?
Gold prices rose today, Friday, supported by hopes that the Federal Reserve (the US central bank) will stop raising interest rates to curb inflation after its upcoming meeting in July. And the price of an ounce of gold increased in spot trading, by 0.1%, to 1970.69 dollars, up 0.7%, and US futures contracts rose 0.1%, to 1972.8 dollars.
Among other precious metals, silver rose in spot transactions 0.3% to 24.82 dollars, while platinum increased 0.5% to 958.4 dollars, and palladium increased 0.3% to 1281.61 dollars.
Gold prices received support from expectations that the Federal Reserve will raise interest rates for the last time next week as part of its current monetary tightening cycle, while economists expect the Council to raise interest rates by 25 basis points at its meeting on July 25 and 26, knowing that lower interest rates reduce the opportunity cost of possessing non-returnable gold.
The rise in oil prices
Brent crude prices also rose today, amid market assessments of the possibility of announcing economic stimulus measures in China after weak economic data, in addition to declining inventories in the United States and reducing supplies from two major producers. The price of a barrel of Brent crude futures rose 63 cents to 80.27 dollars by 04:25 GMT, while US West Texas Intermediate crude rose 62 cents to 76.27 dollars. Prices ended Thursday slightly higher.
For the week as a whole, Brent crude is heading for a 0.5% increase, while US crude is heading for a 1.1% increase. This means that the two benchmarks continued to rise for the fourth week in a row.
Weak economic data from China weighed on oil prices all week after the world’s second-biggest oil consumer reported disappointing growth in gross domestic product for the second quarter, raising the possibility of missing the government’s 5% annual economic growth target. However, sentiment in commodities markets has been revived on hope that the central government will introduce more stimulus measures to support the economy.
Lower interest rates reduce the opportunity cost of holding non-yielding gold
In the context, sources in the energy sector said that Asian refiners booked near-record quantities of US crude for shipment in August to replace purchases of oil from the Middle East, after competitive prices and ample supplies caused a flurry of purchases. The jump in imports from the United States comes after expectations of strong demand from China for Brazilian oil in the third quarter, amid Asia’s efforts to boost its purchases of light oil from the Americas, which reduced demand for similar crude grades from the UAE.
Traders said that between 1.5 million and 1.9 million barrels per day of US crude, most of it from West Texas Intermediate Midland, will go to Asia next month. According to ship-tracking data from Kepler, these volumes will be slightly below the record 2.2 million barrels per day loaded in April.
The chip crisis weighs on the Japanese Nikkei index
In terms of stocks, the Japanese Nikkei index ended the day’s trading lower, affected by the acceleration of declines in stocks related to chips that track the impact of their counterparts in the United States. Shares of semiconductor industry giants Tokyo Electron and Advantest fell 5.6% and 5.8%, respectively, wiping out about 200 points from the Nikkei index. The Nikkei index fell 186 points, or 0.57%, to 32,304.25 points.
In contrast, the broader Topix index, which does not focus much on technology stocks, rose 0.06%. Screen Holdings, a maker of chip components, and Renesas Electronics, a maker of chips, fell 4.9% and 2.5%, respectively. This comes after the Philadelphia Semiconductor index fell 3.6% last night in the worst daily performance this year.
The large losses incurred by chip shares today, Friday, erased the impact of the rise in shares of the auto industry, which rose 10.4% on the back of positive data. Energy stocks were the best performers, and its sub-index rose 1.4%, supported by higher crude oil prices.
In Europe, European stocks witnessed stability in the beginning of today’s trading, as the decline in technology stocks, following pessimistic expectations from the software company SAP, squandered the gains of energy companies that track the impact of high oil prices. The European Stoxx 600 index settled at 463.72 points by 07:07 GMT, and is heading to record slight gains of 0.6% during the week.
(Archyde.com, The New Arab)
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