Dow Futures Hit Fresh Record High on Rate-Cut Bets


Major US stock-index futures extended gains on Fed rate cut bets. The Federal Reserve Chairman Jerome Powell concluded his semi-annual monetary policy testimony while affirming that the Fed will do whatever it takes to sustain the current economic expansion which priced in an interest rate cut of 25 basis point in the coming monetary policy meeting. The positive sentiment enhanced from Powell's testimony was enough to offset the effect of Trump's trade tweet. He claimed that China is not living up to the promises it made on buying agricultural products from American farmers. The Dow Jones Industrial Average futures advanced to a record high of 27179, the S&P500 futures rose to 3006, and the Nasdaq futures hovered near a high of 7963.


The dollar index, which measures the greenback against a basket of major currencies finished almost flat at 97.06 supported by inflation figures. The Core CPI came in at 2.1% beating estimates of 2.0%, to lower the chances of aggressive easing by the Federal Reserve. On the other hand, Chairman Powell made it clear that the Fed has room to ease the monetary policy in the coming meeting later this month. The US 10-year yields advanced to a one-month high of 2.149% following CPI figures, and the USDJPY rose to 108.61.


Gold fell sharply erasing earlier gains as inflation figures eased aggressive easing prospects. The price of a gold ounce fell from a high of $1427, reached on dovish Powell testimony, to trade at a low of $1401 weighed down by strong Core CPI reading. The price of a silver ounce hovered around $15.15, and palladium dipped to $1555.


Oil prices held steady near a multi-week high supported by lower output in the Gulf of Mexico, and escalating middle east tensions. Oi companies in the Gulf of Mexico were forced to cut more than half of their output due to a tropical storm. On the other hand, the recent renewed geopolitical tensions between the United States/ United Kingdom and Iran threatened oil supplies. The West Texas Intermediate crude oil futures rose to $60.91, and Brent futures climbed to $67.63.

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