Silver: US GDP growth -3.5% for the full year
2021-01-29 -- Friday will see GDP data from France, Germany and Canada, and overnight the US Commerce Department reported that US GDP grew 4% in the fourth quarter. GDP growth in 2020 will be -3.5%, the lowest since 1946. Meanwhile, initial claims for unemployment benefits fell to 847,000 last week.
In markets, risk sentiment improved sharply on Thursday, with the dollar slightly lower and higher Treasury yields weighing on gold. But oil prices fell more than 1 per cent as the spread of the mutant novel coronavirus and tighter blockade measures dented the fragile prospects for a recovery in demand.
It's also worth noting that spot silver rose about 6% overnight, after the price of the metal was buzzing on Reddit with a user Posting that the metal should be at $1,000 an ounce just for inflation. Meanwhile, Reddit forums mentioned the likes of Dogecoin and American Airlines, which also soared 190% and 80%, respectively.
On Thursday, many brokerages restricted trading in popular Reddit stocks such as GME and raised margin requirements, as U.S. retail investors who could not open stock positions poured money into new deals.
[Overnight Market Review]
Global currency markets: The dollar fell almost across the board against a basket of currencies on Thursday, with the dollar index.DXY dropping 0.06 percent to 90.54 as risk sentiment improved.
Global gold markets: Comex April gold futures closed down 0.4% at $1,841.20 an ounce. Spot silver rose about 6 percent after a heated discussion on Reddit, where a user posted that the metal should hit $1,000 an ounce just for inflation.
International oil markets: Worries about weak energy demand outweighed the impact of a bigger-than-expected drop in U.S. crude inventories on oil prices as the new world recession gets worse. WTI March crude settled down 0.96 percent at $52.34 a barrel. Brent crude for March delivery closed down 0.50 percent at $55.53 a barrel.
US stocks: The Dow closed up 0.99% at 30,603.36; The Nasdaq gained 0.50% to 13,337.16; The S&P 500 gained 0.98 percent to 3,787.38.
European stocks: The Stoxx Europe 600 index.SOX600 rose 0.10%. Germany's DAX30 index closed up 0.33 percent. France's CAC-40 index closed up 0.93 percent. Britain's FTSE 100 closed down 0.63 percent.
Asian stocks: The Shanghai Composite dropped 1.91%, the Shenzhen Composite dropped 3.25%, Hong Kong's Hang Seng dropped 2.55%, and Japan's Nikkei 225 dropped 1.55%.
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[Big pound -- market news]
Ms. Pelosi will continue to push as Mr. Biden tries to rally Republican senators to support the stimulus plan
US President Joe Biden has personally reached out to Republican senators after their party showed little enthusiasm for his $1.9 trillion stimulus plan. Winning bipartisan support for the stimulus bill -- Mr. Biden's stated goal -- would allow the plan to move faster through Congress. The U.S. House of Representatives will move forward next week on an agenda that would allow Democrats to pass a new bailout bill without Republican support, House Speaker Nancy Pelosi said Thursday.
The US economy will shrink by 3.5% in 2020 and GDP will grow by 4% in the fourth quarter
Earlier Thursday, the Commerce Department reported that the nation's gross domestic product grew 4 percent in the fourth quarter. GDP growth in 2020 will be -3.5%, the lowest since 1946. Forecasts from 70 economists ranged from 1.5% to 6.8% for the fourth quarter. The pace of US GDP growth slowed sharply in the fourth quarter from the surge in the third, due in large part to a natural deceleration in economic activity after a record surge.
Initial claims for unemployment benefits fell to 847,000 last week, while continuing claims fell to 4.771 million
The Labor Department reported that initial claims for unemployment benefits fell 67,000 to 847,000 last week, leaving the four-week moving average at 868,000. Continuing claims for unemployment benefits fell 203,000 to 4.771 million in the week ended January 16. Initial claims for unemployment benefits have risen significantly over the past two months as the closures have spread across the United States. Initial claims did fall slightly in the most recent week, but they are still above their lows and well above pre-outbreak levels.
[Voice -- Investment Banking Institution Perspective]
Peter Oppenheimer, chief global equity strategist at Goldman Sachs: "This should be seen as a correction in the new equity cycle, and when the market does rally again, it will be led more by cyclical and value stocks. The market will climb on the back of a strong economic recovery and a rebound in profits.
J.P. Morgan's Marko Kolanovic: Investors should ignore warnings of a stock bubble and take advantage of declines in the broader market to buy more stocks. The firm's analysis, he says, suggests that professional investors are far from hyperactive. "Any market correction, such as one caused by a correction in long-short fund positions associated with smaller stocks, is a buying opportunity."
Masanari Takada, cross-asset strategist at Nomura: US equity sentiment is usually seasonally stagnant between now and early February, but equities "have only hit a speed bump".