Stock Market Today
Volume in the stock market is likely to remain on the low side as the biggest economy in the world, the US, is closed for a bank holiday. The European futures indicate a lower open as traders and investors are picking up the momentum from Asia, where stocks closed mostly lower to the slowdown in the economic number and fear of recession.
Oil prices are trading almost flat while the risk is tilted to the downside as traders are concerned about slowing oil demand due to a strong possibility of an economic recession in the US and other parts of the world. On the supply side, there is no doubt that OPEC+ has completed its mission to restore its oil output. The cartel reduced its output during the pandemic to address weak oil demand.
Over in the US, the average gas price on the pump is above 5 dollars per gallon, and US lawmakers are pushing oil producers to pump as much oil as possible. This made the US rig count over 534 last week, a number we have not seen at this level in a long time. Until and unless we begin to see Iranian oil coming back on the market, the chances are that the oil supply will be very much in a tight spot. The other alternative to ease the supply concerns is if the war between Russia and Ukraine ends and sanctions are lifted from Russian oil, which seems to be a highly remote possibility for now.
Although OPEC has restored its pre-covid oil supply, Chinese demand hasn’t returned to the same level. If we do see a further recovery in the Chinese demand, then there are greater chances that we will see more issues on the supply side, which is what keeps the oil prices falling from a cliff.
The most important event of this week for traders and investors will be taking place towards the end of this week, which is the US NFP data. Any sluggish NFP reading is going to make the Fed even more nervous. Although, it is essential to note here that the Fed Chairman has already warned that the Fed is willing to tolerate some pain to lower inflation. Many investors believe that the interest rate in the US could reach 2.5% to 3% by the end of this year, and that could be the cut-off point for the Fed, i.e., when the Fed will stop increasing the interest rate. However, it is essential to note that the last time the Fed increased the interest to this level of 3%, inflation was running around 4.3%, and now US inflation readings are at 8%, which means that the chances of the Fed backing off from hiking interest rate are remote.
We will get more information about the Fed’s thinking and mentality this week as we have the FOMC Minutes scheduled on the economic docket for this week, and they will be out on Wednesday at 18:00 GMT.
Tesla’s stock price will be under focus today as the company reported its car numbers over the weekend. Tesla delivered 254,695 cars worldwide during the second quarter, and this number missed the estimates and ended a two-year winning streak. The shortage in car deliveries was blamed on the supply issues and factory shutdowns.
The cryptocurrency king, Bitcoin, had another painful weekend as the prices continue to trade below the 20K price mark fuelling further concerns among investors and traders that the path of the least resistance is skewed to the downside. Some investors are still very confident that the current rout in bitcoin prices is high to short-lived, and Bitcoin may be much higher than now towards the end of the year. Perhaps, it is confidence like this That Michal Saylor from MicroStrategy bought more bitcoin last week. MicroStrategy’s holdings took a hit of $3.4 billion as the price continued to move lower.