Two big news stories swept across the market yesterday, the first being the consumer inflation rate that came in lower than expected and the federal reserve with another pause with another month to complete a full year of static rates. However, they did reduce their projected rate cuts for 2024 to just one quarter point mitigation, down from the three cuts estimated in March. The central bank acknowledged "modest further progress" towards its 2% inflation target even as the market pointed out the complexity of job data last week. Fed Chair Jerome Powell emphasised that a single rate cut would have little impact on the economy, and that the overall policy path was more important. .

The stock market shrugged off the hawkish comment from Fed Chair Powell and clocked in cheeky gains, with the S&P 500 topping 5,400 for the first time in its history. The technology sector led the gainers among sectors, while energy posted the steepest loss. Nike shares fell 2.3% after a trademark application for "footware" was dismissed by the European Union court. However, the market is supported by Oracle, which surged by 13%, after the software maker gave an outlook for annual growth.


Gold prices declined after an initial leg up from CPI data following the Federal Reserve's updated economic projections, with only one interest rate cut expected for the remainder of 2024. This revision came against lower inflation data for May. This hawkish stance led to a stronger dollar and higher bond yields, which weighed on gold prices. However, some analysts argue the Fed's projections may already be outdated given the improving inflation numbers, and Goldman Sachs has reinstated confidence in two rate cuts.

Oil prices reacted to the U.S. Federal Reserve's decision to delay rate cuts until December rather inversely compared to other commodities. The decision impaired expectations for higher economic growth and oil demand. Additionally, higher U.S. crude and fuel inventories weighed on the market, further complicating the demand outlook. In calm waters, Houthi militants continued their attacks on international shipping in the Red Sea, taking responsibility for recent watercraft and missile strikes, although they no longer bear weight on the market.


The U.S. dollar was volatile yesterday; it initially fell on lower U.S. inflation data but later recovered its losses after the Fed's hawkish stance with its projection. However, markets still expect nearly two rate cuts in 2024 on the basis of lower inflation growth and job data. The yen remained under pressure ahead of the BoJ policy meeting on Friday, expecting a reduction in bond purchases. The market now looks for a clue in the Producer Price Index (PPI) and jobless claims for the next catalyst.