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📈 Forex Trading Afternoon Brief: USD, Oil, Gold, and Nasdaq📈

In today's afternoon market update, we focus on the performance of the USD, oil, gold, and the Nasdaq. The Nasdaq 100 is poised to achieve its best first-half performance on record, driven by a blowout rally in tech megacaps. Apple Inc. has made history by reaching a market capitalization of $3 trillion.

Nasdaq 100 stock index, Bar chart showing forex and commodities prices, green/red candles depict daily trading trends. Includes moving average, Bollinger bands, and RSI.

Traders are choosing to view the current economic situation optimistically, as signs of moderating inflation outweigh concerns about economic growth. Major equity benchmarks are on the rise, with the tech sector leading the way due to the impressive advancements in artificial intelligence (AI).


Larry Adam, Chief Investment Officer at Raymond James, remains bullish on big tech. He believes that technology, especially with the latest addition of AI, will continue to reinvent itself and drive earnings in the future.


The Nasdaq 100 has experienced a staggering increase in value, with nearly $5 trillion added since the beginning of the year. The tech sector's rally has been instrumental in pushing the broader S&P 500 index up by 16% in 2023. Within the tech sector, megacap companies have seen even more substantial gains, soaring by almost 75% during this period. On Friday, the Nasdaq 100 rose by approximately 2%, approaching its highest level since March 2022. Leading tech companies like Nvidia Corp., Tesla Inc., Microsoft Corp., and Apple experienced notable gains, with some surpassing 1.5%.


The chart above shows the Nasdaq 100 index's impressive performance in the first half of the year, setting a new record. Historical data indicates that such strength in the first half typically leads to positive returns for the rest of the year. When the index starts the year with a rally of at least 10%, the average returns for the second half amount to approximately 14%. However, when the first-half gain exceeds 20%, the average returns in the second half tend to be slightly lower at around 8.3%.


Tech stocks received an additional boost on Friday due to subdued activity in the bond market. The yield on 10-year Treasury bonds remained relatively stable at around 3.85%. Meanwhile, the US dollar continued its decline, extending the losses experienced earlier this year.


In terms of economic indicators, key measures of US inflation showed signs of cooling in May, and consumer spending stagnated, suggesting a potential loss of momentum in the economy. The personal consumption expenditures price index, a preferred gauge of inflation for the Federal Reserve, rose by 0.1%. Compared to the same period last year, the measure slowed down to 3.8%, marking the smallest annual advance in over two years.


Peter Boockvar, the writer of the Boock Report, noted that despite these developments, the odds of a rate hike in July remained at 80%. He believes that the Fed will need to provide compelling reasoning to justify another rate hike, especially considering the slower pace of inflation compared to the previous period when they paused.


Now let's take a look at the performance of other markets:


Stocks:

- The S&P 500 rose by 1% as of 10:43 a.m. New York time.

- The Nasdaq 100 increased by 1.7%.

- The Dow Jones Industrial Average saw a 0.6% rise.

- The Stoxx Europe 600 experienced a 1.2% gain.

- The MSCI World index climbed by 1%.


Currencies:

- The Dollar Index fell by 0.3%.

- The euro rose by 0.5% to $1.0919.


The British pound increased by 0.8% to $1.2719.

- The Japanese yen strengthened by 0.3% to 144.39 per dollar.


Cryptocurrencies:

- Bitcoin fell by 1.1% to $30,075.94.

- Ether remained relatively unchanged at $1,848.23.


Bonds:

- The yield on 10-year Treasuries declined by one basis point to 3.83%.

- Germany's 10-year yield decreased by one basis point to 2.41%.

- Britain's 10-year yield advanced by two basis points to 4.40%.


Commodities:

- West Texas Intermediate crude rose by 1.2% to $70.70 a barrel.

- Gold futures increased by 0.3% to $1,923.80 an ounce.


In conclusion, the tech sector, led by companies like Apple and Nvidia, continues to drive market gains, with the Nasdaq 100 on track for its best first-half performance on record. Signs of moderating inflation and subdued bond market activity have further bolstered the tech rally. Meanwhile, key economic indicators suggest that the US economy may be losing some momentum, but expectations of a rate hike in July remain high. As investors navigate these developments, they should closely monitor the performance of tech stocks, the USD, oil, and gold for potential trading opportunities.



Remember, investing involves risks, and it's essential to conduct thorough research and seek professional advice before making any investment decisions.

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