According to the analysts of Swedbank, the prices of gold and shares are currently rising as if on yeast, which is not a good sign for shares. In addition, Europe and the US are planning to cut interest rates this summer. This will have a very big impact on the economy.
Gold shines again – 11 percent. growth since the beginning of the year
Typically, gold is considered a relatively safe investment vehicle to which funds are directed in times of turbulence in the financial markets. However, since the beginning of the year, the financial markets have been in an upbeat mood, at the same time, the price of gold has increased by about 11 percent this year. and is at the highest level in the entire history of the price, Swedbank analysts note.
There are several reasons for the recent rapid appreciation of gold. First of all, it is the rise observed in the financial markets and the fact that the majority of investment instruments are currently becoming more expensive. Second, market participants are preparing for the upcoming Fed interest rate cut this year, which could affect the US dollar. value, therefore diverting funds away from money market instruments. The third reason could be the increased geopolitical risks in the world and the need for a so-called safe haven.
There have already been situations in history where stocks and gold went up at the same time. One of them was recorded before the Global Financial Crisis when an inflationary spiral took hold, and the second was observed during the pandemic, when a large amount of money was poured into the economy. Therefore, the appreciation of gold and stocks may indicate a certain overheating in the financial markets, the premonitions of a correction and the desire of investors to protect themselves from it.
Three rate cuts are expected in the US this year
Representatives of the Federal Reserve Bank (FED) continue to mention three interest rate cuts of 25 basis points each expected this year. They have also started to reduce their bond holdings more slowly, indicating that they are not worried about the higher inflation they have been recording recently.
During the last meeting, they unanimously agreed to keep the base interest rate in the target range of 5.25-5.5 percent. in the cut. It is planned to cut interest rates three times this year and extend the same reduction cycle next year.
Updated in 2024 Forecasts for inflation and economic growth in the US range from 2.4 to 2.6 percent, respectively. and from 1.4 to 2.1 percent. The unemployment rate forecast reduces by 0.1 percent. point – up to 4 percent.
Clearance of shares of technology leaders
Silicon Valley founders and CEOs are selling their holdings at the fastest pace in a year, as hype over artificial intelligence has lifted US tech stocks to record highs, according to an analysis published by the Financial Times.
For example, tech market veteran Peter Thiel sold $175 million. USD value data analytics company Palantir shares. At that time, Mark Zuckerberg sold Meta shares for 135 million in February. USD It was the largest amount of shares he sold since 2021. the end
Amazon founder Jeff Bezos cashed in a whopping $8.5 billion this year. USD worth of shares, although it is likely that in this way Mr. Bezos moved some of his wealth to the tax-friendly state of Florida. Amazon CEO Andy Jassy sold about 21 million units this year. USD shares, or about as much as in the last two years combined.
It’s true that record valuations for technology companies have breathed life into the IPO market. Social media company Reddit finally made its IPO last Friday, and its stock ended its first day of trading up nearly 50 percent. at a higher price level. Another AI-related start-up, chipmaker Astera Labs, was marked by a nearly 2-fold increase in its share price on its IPO.
Until Friday, March 29. over the two-week period, the Dow Jones gained 2.6 percent, the S&P 500 gained 2 percent, and the Nasdaq Composite gained 1.7 percent.
Rising demand for oil is putting pressure on prices
It is predicted that once the FED starts reducing interest rates, the price of oil could exceed the now usual 70-90 US dollars. for a barrel of rye. China’s drive to boost production and Europe’s desire to rebuild inventories suggest that commodity prices, particularly oil and copper, may start to rise.
Goldman Sachs predicts that raw material prices may increase by about 15 percent this year. as borrowing costs fall, manufacturing recovers and geopolitical risks persist.
At the same time, the world is consuming more oil than ever, and demand is once again exceeding expectations, so the question is how quickly the oil markets will react.
Brent crude futures were trading up 1 percent in the two-week outlook. at a higher level and reached 87 US dollars. per barrel. The US WTI oil price increased by 1.2 percent. up to USD 83 during the Friday session. The price of gold increased by 3.2 percent. up to $2,229 per ounce.
