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Dow turns positive for 2020!

SP500 – Daily Candlesticks
Source: GKFX / MT4 (July 31, 2020)

The SP500 index crossed record highs and has now touched the next big round number 3500.
 

TAKEAWAYS


•    Dow Jones briefly turns positive for 2020
•    Jay Powell formalises policy of ‘average inflation targeting’ at the Fed
•    TikTok sale about to happen – maybe to a Microsoft / Walmart combo
•    DAY AHEAD: EZ consumer confidence, US personal consumption, Canada GDP
 

MARKETS


Wall Street finished on positive note after Powell’s speech at Jackson Hole with rising yields helping bank shares, though tech dipped after a strong run of gains. Asian markets were mostly lower as South Korea reported its highest new coronavirus cases since March but Shanghai was the bright spot after China industrial profits data exceeded expectations.

Economic data kept helped the US dollar rise despite the dovish new policy twist at the Fed, which was largely expected. Weekly jobless claims stayed over 1 million but did not exploded higher once the new unemployment benefits kicked in and US Q2 GDP was revised to a slightly lower rate of decline but remains easily the biggest on record.

Oil prices were coming off again by Thursday having gained earlier in the week because of switched off production in the gulf coast before the arrivals of Hurricane Laura. Laura hit the coast today with damage in Louisiana but the strength of the storm had lessened so inland floods were avoided and oil refiners will likely be back online quicker.

Higher yields and a stronger dollar pushed gold lower by 2% to $1925 per oz, reversing a 1% gain that had been in place while the Fed Chair was speaking. 
 

GURU WISDOM

“I, my strategy is dynamic and ever-evolving. I constantly learn and change.” – Thomas Busby
 

Dollar Fed Response


In the end, the Fed delivered what had been leaked beforehand so the news that ‘average inflation targeting’ is official meant the dampening effect on the dollar was limited and quickly reversed. 
 

TikTok sale


Reports now suggest that Chinese firm Bytedance will sell the Australian, Canadian and USA editions of its Tiktok service as soon as next week. Oracle is in talks but the primary contender looks to be microsoft with the support of Walmart. A multitude of big US companies have seen the untapped advertsing potential associated with TikTok. If there is any repeat of what happened to Facebook when it bought Instagram, then the benefits to the purchaser can be substantial.
 

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