Key Takeaways
- Gold prices remain surprisingly stable despite anticipated high volatility this week, driven by economic data, the FOMC interest rate decision, and upcoming earnings reports, suggesting it is poised for a significant breakout from its tight trading range.
- The European Union has initiated formal proceedings against Chinese e-commerce giant Temu, alleging violations of the Digital Services Act (DSA) due to insufficient measures against illegal items and manipulative practices on its platform.
- A new US-EU trade deal has been reached, setting a 15% tariff rate on most EU goods, a significant reduction from the previously threatened 30%, which is expected to provide relief for the European auto industry, including Mercedes-Benz (MBG).
- Oppenheimer has raised its S&P 500 target to 7100, forecasting a third consecutive year of 20% gains, citing the Federal Reserve's success in managing inflation and growth opportunities in artificial intelligence.
- Israeli Prime Minister Benjamin Netanyahu has reiterated Israel's commitment to continue fighting until all hostages are released and Hamas is defeated, while denying claims of starvation in Gaza and blaming Hamas for aid distribution issues.
Global markets are bracing for a week of heightened volatility as key economic data releases, the Federal Open Market Committee (FOMC) interest rate decision, and a flurry of earnings reports are expected. Despite these anticipated movements, gold prices have remained "eerily quiet" this morning, suggesting the precious metal is poised for a significant breakout from its recently tight trading range.
In international trade news, the European Union has launched formal proceedings against Chinese online marketplace Temu, accusing it of violating the Digital Services Act (DSA). The EU claims Temu is not doing enough to prevent the sale of illegal items and is employing manipulative practices on its platform, which has over 45 million monthly users in the EU. This investigation follows preliminary analyses of Temu's risk assessment report and information shared by third parties. If found in violation, Temu could face substantial fines, potentially up to 6% of its global revenue, or even a ban from operating in the EU.
A significant development in transatlantic trade saw the US and EU reach a new trade deal, which is being digested by markets. This agreement sets a 15% tariff rate on the vast majority of EU goods, a substantial reduction from the 30% tariffs previously threatened by the US. This deal is anticipated to provide a "relief" for the German auto industry, including Mercedes-Benz (MBG), which had been facing potential 25% tariffs on top of existing duties. EU Commissioner Maroš Šefčovič emphasized that the US deal is not solely about trade but also encompasses security and support for Ukraine. The agreement also includes strategic US AI chip purchases to power European gigafactories, and the "zero" EU-US tariff list remains open to additions.
On the economic front, Oppenheimer has raised its S&P 500 target to 7100, projecting a third consecutive year of 20% gains for the index. This optimistic outlook is attributed to the Federal Reserve's effective management of inflation and the burgeoning growth opportunities presented by artificial intelligence.
Geopolitical tensions continue to be a focal point, with Israeli Prime Minister Benjamin Netanyahu reaffirming Israel's commitment to fight until all hostages are released and Hamas is defeated. Netanyahu categorically denied claims of starvation in Gaza, labeling them "bold-faced lies," and asserted that Israel has enabled humanitarian aid to enter the territory, blaming Hamas for stealing and obstructing its distribution. Meanwhile, China's market regulator has announced plans to control low-price competition among businesses, aiming to regulate market price order and address "involutionary" competition.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.