It feels like Deja Vu! Another large ship named Xin Hai Tong 23 was stuck in the Suez Canal, but only for several hours. The ship, a bulk carrier measuring 190 metres (623 feet), had an engine problem, so tugboats were sent to help. Although there was a brief delay when the ship's winch failed, they eventually managed to move the ship back to the centre of the canal. The incident disrupted the passage of at least two groups of ships before the ship was freed. The Suez Canal is an important route for global trade, handling about 12% of all trade worldwide. In 2021, the Ever Given headlined as the container ship blocked the canal for six days, causing significant disruptions to international trade.
On Wednesday, the stock market experienced a moderate decline as major indexes closed lower. Talks to raise the U.S. debt ceiling reached an impasse, adding to the pressure on stocks. Additionally, concerns about inflation were raised as UK consumer prices exceeded expectations, leading to a slide in the Euro Stoxx 50. Chip stocks saw declines, while Palo Alto Networks and Kohl's rose on positive earnings.
Gold prices hovered near a two-month low as concerns about raising the U.S. debt limit kept markets on edge. Despite the uncertainty, gold saw little safe haven demand as traders turned to the dollar, which reached a two-month high. The Federal Reserve's hesitation to raise interest rates further and the growing expectation of a rate hike in June added to the economic uncertainty.
Oil prices in Asian trade dipped slightly on a strong dollar and debt ceiling talks. Despite three consecutive days of gains fuelled by expectations of limited US supplies during the upcoming summer season and OPEC+'s promise, potential repercussions from the late debt ceiling decision on the global economy dampened market sentiment. Additionally, weaker economic indicators from major economies, along with a resurgence of COVID-19 cases in China, raised worries about slowing demand.
The US dollar strengthened against the euro and yen, reaching multi-month highs as traders scaled back rate cut expectations amid a resilient US economy and Fed Chair Powell's determination to beat inflation. Safe-haven demand for the dollar increased despite the looming US debt ceiling crisis, while weakness in Europe and China further supported its gains.