As the equity market ushered in a new month, June has been a good month. May was a relatively flat month despite the indices closing in red yesterday. The rise in oil prices is regaining inflation fear, given Europe’s decision on a partial ban on Russian oil. This drags down major indexes.
Oil prices initially popped higher to hit $119 but moderated to a level around $115. Yet, the initial rise had already motivated stock selling, given that oil prices had risen by double digits in May. Elevated oil prices bode poorly for the stock market. High inflation is eroding the profit margin for the corporation, forcing them to raise prices, which is hurting demand. While the latest inflation result showed signs of peaking in inflation, higher oil prices will threaten such positive progress.
With the earnings season almost over, Pika World believes geopolitics and oil prices will again drive the market sentiments, given their impact on the next quarter’s earnings.
🏋Meeting of the Titans💎
As Uncle Powell spoke with Uncle Biden, both men were committed to bringing down inflation. It is the first meeting since Powell is nominated for his second term. It is a peaceful continuity as Biden stressed non-interference in the works of the Fed.
The Fed is positioned to increase the rate by 0.5% in each meeting in June and July. It comes at a sensitive point when Biden’s popularity poll has fallen. His approval rate is at 40.8%, which is a drop from 43.4% at the start of the year.
It is a tough nut to crack. The global economy is getting wobbly, persistent inflation due to the Ukraine war is likely to continue, and supply chains is still under strain with volatile energy and commodity markets. It is almost certain a hot soup for Biden.
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