July 29 financial breakfast: the U.S. economy shrank again in the second quarter, gold prices benefit from the 1750 mark, oil prices suffer from demand concerns

By    29 Jul,2022

The dollar traded near 106.17 at the beginning of Asian trading on Friday (July 29), after it edged lower on Thursday as the U.S. economy contracted again in the second quarter, fueling speculation that the Federal Reserve would not raise interest rates as aggressively as previously expected, with gold prices benefiting from a gain of nearly 1.3% to the 1,750 mark; oil prices suffered from concerns that a possible global recession would hit energy demand.


On the commodities close, Brent crude futures rose $0.52 to settle at $107.14 per barrel, while U.S. crude futures fell $0.84 to settle at $96.42 per barrel; U.S. gold futures rose 1.8 percent to close at $1,750.30 per ounce.

U.S. stocks closed with the Dow Jones Industrial Average up 1.03% to 32,529.63; S&P 500 up 1.21% to 4,072.43; Nasdaq up 1.08% to 12,162.59.

Friday's Outlook

7:50 BOJ releases summary of deliberators' views from July monetary policy meeting

Global market sentiment at a glance

U.S. stocks rallied for a second straight day Thursday, with all three major stock indexes up more than 1 percent, as data showed the economy shrank for a second straight quarter, sparking speculation among investors that the Federal Reserve may not need to raise interest rates as aggressively as some had feared.

The indicator 10-year U.S. bond yield retreated after the data was released , and utilities and real estate stocks, two sectors that tend to rise when U.S. bond yields fall, were the best performers among the S&P 500's major sectors.

Mona Mahajan, senior investment strategist at Edward Jones, said the drop in yields could suggest "the market believes the Fed will have to reverse and lower rates at some point, perhaps within the next 12 months, which does mean the pace of tightening will become more gradual going forward."

In addition, forecasts for second-quarter earnings growth rose this week as more S&P 500 component companies reported results and beat analysts' expectations. Ford shares jumped 6.1 percent after reporting better-than-expected quarterly net income. After the bell, Amazon jumped more than 12 percent after the online retailer reported quarterly sales that beat Wall Street expectations. Amazon was up 1.1 percent in regular trading hours. 

Earlier, the U.S. Commerce Department said the U.S. economy unexpectedly contracted in the second quarter, the second consecutive quarterly decline in the government's reported gross domestic product (GDP). This increases the likelihood that the economy is on the brink of recession, which some investors say could prevent the Federal Reserve from continuing to aggressively raise interest rates as it battles high inflation.