The IMF recently reported that first quarter global growth marginally topped projections, but current data shows mixed momentum ahead. Risks lean to the downside amid potential Ukraine escalation, stubborn inflation, and financial vulnerabilities, though service demand remains robust where tourism recovers. While 2023's 2.8% global growth forecast holds, the IMF advised the G20 to stay vigilant on inflation, enhance fiscal prudence, and shun splintered industrial subsidies that could fragment production. Upside risks include faster inflation moderation if output, jobs, and demand temper appropriately while Fed policy stays tight. Although the recession that was expected at the start of the year subsided, it is yet to be seen if 2024 will see the soft landing that was hoped for.
EQUITY
The Dow and Nasdaq closed higher on Thursday, led by gains in tech stocks like Alphabet and Meta, as investors looked ahead to earnings from major banks on Friday. Inflation showed further signs of easing based on the latest PPI data, though the job market remains strong. Amazon stock rose following a record Prime Day performance, while major banks like JPMorgan are set to report earnings on Friday, which will provide insight into the health of the banking sector.
GOLD
Gold prices have seen their biggest weekly gain since April, rising 1.9% this week to around $1,960 per ounce. The gain was driven by a weaker US dollar after a series of softening economic data led to expectations of a dovish Fed policy. If dollar weakness and lower rate hike expectations continue, gold prices could see further gains ahead.
OIL
Oil prices have hit 10-week highs, supported by supply disruptions in Libya and Nigeria and fading Fed rate hike expectations after lower US inflation, putting prices on track for a third straight weekly gain. However, sluggish fuel demand in China and slowing US gasoline consumption remain headwinds for oil markets.
CURRENCY
The US dollar has sunk to a 15-month low as cooling US inflation strengthened the dovish camp in the Fed, pushing its index below 100. The euro hit a fresh 16-month peak of $1.124 against the dollar, which also plunged to an 8-year low against the Swiss franc. Though the dollar may find some support from still-resilient US economic data, the greenback appears poised for further weakness if inflation continues to moderate and limits additional Fed tightening.
