General Market Analysis – 18/11/24

US Markets Smashed – Nasdaq Drops 2.2%

US stocks suffered significant losses on Friday as investors adjusted expectations for slower rate cuts from the Federal Reserve and assessed the implications of a new government setup. The Nasdaq bore the brunt, declining 2.24%, followed by the S&P, which dropped 1.32%, and the Dow, closing 0.70% lower. Earlier in the day, US Treasury yields surged to fresh highs but ultimately eased, with the 2-year yield falling 3.8 basis points to 4.305% and the 10-year yield down 1 basis point to 4.429%. The dollar also weakened, largely due to strong verbal intervention from Japanese officials, which drove USD/JPY down from levels above 156.00 to 154.50. Oil prices continued their decline amid concerns over Chinese demand, with Brent crude falling 2.09% to $71.04 and WTI down 2.45% to $67.02. Meanwhile, gold consolidated near recent lows, slipping 0.2% to $2,561.24 per ounce, marking its worst week in three years.

Yen Traders Back on Intervention Watch

Speculation about Japanese intervention was validated on Friday as Finance Minister Katsunobu Kato warned that action could be taken if the yen weakened excessively. USD/JPY swiftly dropped 1.4% following his comments. This marks the third intervention phase this year, following sharp yen recoveries in April and July after the pair reached 160 and 162, respectively. The usual pattern of verbal warnings escalating to direct yen-buying interventions appears to be unfolding again. Market attention now turns to Bank of Japan Governor Kazuo Ueda, who is expected to speak later today. His remarks may offer more clarity, but traders are bracing for increased volatility in an already sensitive market.

Quiet Calendar Day to Start the Week

The macroeconomic calendar is light to begin the week, but central bank updates will likely drive market focus. Bank of Japan Governor Kazuo Ueda’s speech during the Asian session is anticipated to create volatility following Friday’s intervention-related comments from Japan’s Finance Minister. Other central bank speakers scheduled today include the RBA’s Assistant Governor and German Bundesbank President Joachim Nagel during the Asian session, as well as the Fed’s Austan Goolsbee and ECB President Christine Lagarde later in the day.

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