Daily Market Commentary 27th July 2022

US equity markets headed lower, following some weaker than expected earnings numbers and ahead of the FOMC meeting. Walmart issued warnings over earnings as markets assess the impact on the consumer a recession will have. The US Q2 GDP number, released Thursday, will likely confirm a recession in the USA. The Fed will only add to this economic contraction, when it raises rates by an expected further 75 basis points, tonight. Rampant inflation is forcing Central Banks across the globe to sharply raise interest rates, driving recessionary pressures. The Bank of Japan is the exception, as the release of their minutes revealed. Inflationary pressures were there, but they held onto negative rates and QE, in an effort to stimulate wage growth.

US New Home Sales fell 8.1%, while House Prices look to be peaking, casting a negative pall across this important leading sector. The release of the Australian CPI number today, is expected to confirm a big jump, forcing the RBA to act aggressively. The Australian economy was late to register rampant inflation, but it has arrived like a freight train. The newly elected Labor Government have not inherited a happy economic situation and must now display fiscal responsibility. The AUD trades above 0.6900, ahead of the inflation data release, while the NZD is desperately trying to hold 0.6200.

All eyes remain on the Fed and US GDP.