Oil prices drop over 2% after data burst
2023-06-28
Summary:
U.S. stocks advanced in a broad rally on Tuesday, and the dollar softened as robust economic data eased recession fears and stoked investors' risk appetite.
U.S. stocks advanced in a broad rally on Tuesday, and the dollar softened as robust economic data eased recession fears and stoked investors' risk appetite.
Gold prices softened as upbeat economic reports dulled the safe-haven metal's luster. Oil slumped over 2% on signals of more rate hikes and lower summer consumption.
Commodities
Benchmark 10-year Treasury yields climbed, making zero-interest-bearing gold less attractive. Gold has shed about 2.6% this month, set for a second consecutive monthly fall if losses hold.
‘the key question is the extent to which the internal tensions within Russia or any potential toppling of the government might affect global monetary policy,’ Commerzbank analysts wrote in a note.
U.S. inventory data from the API showed that U.S. crude stocks fell by about 2.4 million barrels in the week ended June 23, according to market sources citing the data.
Brent's six-month backwardation reached its lowest since December and was barely positive, indicating shrinking concern about supply crunches.
Forex
The greenback retreated further after data showed new orders for U.S.-manufactured capital goods unexpectedly rose in May, indicating some caution remained among businesses for new capital investment.
Additional data on single-family new home sales in May and home prices in April also indicated the housing market has been able to weather rising interest rates from the Fed.
Morgan Stanley said on Tuesday it was now expecting the Fed to hike its key interest rate by 25 basis points in July, from an earlier estimate of a pause, raising its terminal rate forecast to 5.375%.
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US stock indexes fell on Wednesday due to a drop in chip stocks, but the S&P 500 is still on track for its sixth month of gains.
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Gold reaches historic high despite weak China demand
Gold prices hit a record high on Wednesday due to uncertainties from the US election and the Middle East conflict, despite a strong dollar.
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