25.09.202511:22 Forex Analysis & Reviews: Americans are buying houses, while investors are buying oil and bonds: a new paradox in the US economy

Dollar Strengthens, Stocks Slip

On Wednesday, the MSCI global equity index declined, while the US dollar gained ground and gold prices fell. Investors were digesting cautious remarks from Federal Reserve Chair Jerome Powell about the timing of the central bank's next potential rate cut.

Powell on Balancing Risks

In his first speech since last week's rate reduction, Powell stressed that policymakers must carefully weigh the risks of persistent inflation against the signs of a cooling labor market before making further monetary moves.

Market Expectations

Despite his careful tone, CME FedWatch data indicates that traders still anticipate a rate cut in October.

Housing Market Surprise

Economic data released Wednesday showed a sharp surge in new single-family home sales, which jumped 20.5% in August to an annualized 800,000 units. Economists had expected a decline to 650,000. July figures were also revised upward to 664,000 from the previously reported 652,000.

According to Goldman Sachs, the unexpectedly strong housing numbers could reduce the Fed's urgency to deliver further rate cuts.

Inflation in Focus

Investors now await Friday's release of the August consumer spending report, which includes the Fed's preferred inflation gauge and may heavily influence upcoming policy decisions.

Market Closing Numbers

• Dow Jones Industrial Average: down 171.50 points, a drop of 0.37%, closing at 46,121.28;
• S&P 500: down 18.95 points, a drop of 0.28%, closing at 6,637.97;
• Nasdaq Composite: down 75.62 points, a drop of 0.33%, closing at 22,497.86.

Stocks Under Pressure

The global MSCI index slipped by 3.21 points, or 0.33%, finishing at 978.95.

Gold Retreats from Highs

Gold prices pulled back after reaching record levels in the previous session, as the US dollar strengthened. Market participants are now awaiting key economic releases that could shape expectations for the Federal Reserve's next policy moves.

Spot gold fell 0.86% to 3,731.62 dollars an ounce, while US gold futures eased 0.36% to 3,767.10 dollars.

Dollar Extends Gains

The US currency advanced against the yen, the Swiss franc, and the euro. Meanwhile, the New Zealand dollar weakened following the appointment of a new central bank governor.

The dollar index climbed 0.66% to 97.87. The euro declined 0.66% to 1.1737 dollars. Against the Japanese yen, the dollar rose 0.83% to 148.85. Versus the Swiss franc, it gained 0.54% to 0.795. The New Zealand dollar slipped 0.77% to 0.5811.

Oil Hits Seven-Week High

Crude prices surged to their highest level in seven weeks, climbing more than 2% as supply disruptions and export difficulties in Iraq, Venezuela, and Russia fueled market concerns.

US crude gained 2.49%, or 1.58 dollars, closing at 64.99 dollars a barrel. Brent crude advanced 2.48%, or 1.68 dollars, to 69.31 dollars.

Bitcoin in the Green

Bitcoin added 1.36%, reaching 113,558.60 dollars.

European Stocks Start in the Red

On Thursday, the pan-European STOXX 600 index slipped 0.5%, standing at 551.3 points as of 07:08 GMT. Major regional exchanges also opened lower: Germany's DAX and the UK's FTSE 100 both retreated by 0.4%.

Healthcare Sector Under Pressure

Healthcare stocks were among the hardest hit, with the sector index down 1.1%. Shares of Siemens Healthineers plunged 6% after the US Department of Commerce announced new investigations into imports of medical devices, protective equipment, robotics, and industrial machinery over national security concerns.

British firm Smith+Nephew also saw losses, falling 1.1%.

Weakness Spreads to Other Sectors

Construction and materials companies dropped 1.1%, while the industrial goods and services segment declined by 0.6%.

Bright Spot: H&M Surprises with Strong Results

Against the broader downtrend, Swedish fashion retailer H&M surged 9.4% after reporting third-quarter earnings that came in far stronger than analysts had anticipated.