Evening Track : Fed`s jumbo rate cut brings cheers to markets by Kotak Securities Ltd
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Comex gold prices gained traction after an initial dip to $2575.3/oz following the Federal Reserve's much-anticipated 50 basis point rate cut. Initially, prices fell as Fed Chair Jerome Powell indicated that there was no rush to ease monetary policy aggressively.
WTI crude oil prices rose 1% to $71.5 per barrel, buoyed by a risk-on sentiment in global markets due to the Fed’s significant cut, which bolstered expectations that the US economy could avoid a downturn.
Additionally, concerns about a broader conflict involving Iran, sparked by Israel’s Defense Minister Yoav Gallant's announcement of a “new phase” in hostilities with regional Islamist groups, added to the volatility. US oil inventories also fell more than expected, decreasing by 1.6 million barrels to 417.5 million barrels, which is around 4% below the five-year average for this time of year.
In the LME, base metals traded higher amid optimism about a soft landing for the economy, aided by the Fed’s efforts to support growth and the labor market with the rate cut. LME Copper hit a two-month high of $9,477/tonne, while Aluminium steadied around $2550/tonne, and Zinc rallied 1.5% to $2930/tonne, supported by a significant pullback in the dollar from 101.47 to 100.5.
The Chinese central bank’s net cash injection through stepped-up open market operations Wednesday can help maintain reasonable and sufficient liquidity in the banking system in light of the maturity of a policy loan of 591 billion yuan ($83.5 billion), China Securities Journal reported Thursday, citing analysts. (Bloomberg) European natural gas prices jumped over 4% as heating demand outlook brightened, with forecasts indicating that parts of northwest Europe will experience temperatures dropping below seasonal norms late next week and into early October.
Today, the Bank of England is expected to keep its monetary policy unchanged.
On the data front, investors will be closely monitoring US jobless claims, the Philly Fed Manufacturing Index, and existing home sales for insights into the economic landscape.
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