The BRICS bloc, composed of major developing economies, have decided to expand membership for the first time in 13 years by admitting Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates. This expansion adds economic strength to the group and supports its goal of reshaping the global order into one more favourable to developing nations. However, tensions may arise between members wanting to counter Western dominance, like China and Russia, and those maintaining ties with the West. While the bloc has lofty ambitions, its impact has been limited by economic differences between members and a lack of consensus. The admission of Iran, however, shows a desire to include influential developing nations, even those at odds with the West.
EQUITY
Stocks fell on Thursday as higher durable goods orders and expectations of hawkish Fed Chair Powell's speech on Friday sparked a sell-off in overinflated tech stocks, with most analysts predicting one last rate hike in September. Key indexes like the S&P 500, Dow Jones, and Nasdaq closed down over 1% each. 10-year bond yields retreated from Monday's high but remained elevated, brewing a storm over the equity market as prices deviated wider between the two.
GOLD
Gold prices steadied near two-week highs on Friday after a fruitful week as markets awaited speeches at the Jackson Hole symposium for clues on future interest rate hikes. Traders are hoping remarks from Powell and other central bank leaders provide greater clarity on the policy outlook and how that may impact gold, especially whether rates will remain high despite easing wage pressures, which could limit gold's upside.
OIL
Oil prices fell slightly this week due to weak manufacturing activity and a strong dollar, despite tight supply from OPEC+ production cuts and declining inventories. Crude prices rose modestly on the Asian session after data showed gasoil stocks declined in Amsterdam, but investor caution ahead of a speech by Fed Chair Powell lifted the dollar. Oil prices are expected to close 2% lower this week, with support at $82 that has been tested.
CURRENCY
The US dollar climbed to 11-week highs as strong economic data and hawkish Fed rhetoric have powered dollar gains, while concerns over a global slowdown have weighed on other major currencies like the euro and yen. Markets are anticipating Powell will stress his commitment to taming inflation, implying further dollar strength as the Fed keeps rates higher for longer.