InvestMacro

By JustMarkets

At the end of Wednesday, the Dow Jones Index (US30) rose by 1.09%, and the S&P 500 Index (US500) gained 1.02%. The NASDAQ Technology Index (US100) closed yesterday 1.18% positive. The S&P 500 and Nasdaq 100 indices hit new all-time highs, while the Dow Jones Industrials Index hit a 7-week high. The strength in chip maker stocks led tech stocks and the broader market higher Wednesday after Taiwan Semiconductor Manufacturing Co (TSMC), the sole supplier of cutting-edge chips to Nvidia and Apple, reported better-than-expected second-quarter sales. In addition, Apple shares rose to a record high on news that the company intends to ship 10% more new iPhones this year.

Today, the US will release its inflation report for June. Economists expect consumer inflation to rise 0.1% month-over-month and fall slightly to 3.1% from 3.3% year-over-year. The core rate, which excludes food and energy prices, is expected to be unchanged at 3.4% year-on-year. Economists note that if the June CPI report meets expectations, the Fed will likely start a rate cut cycle in December. This could give the US dollar temporary confidence. At the same time, economists note that any downward deviation of the index (especially the core index) by more than 0.2% will sharply increase the probability of the first rate cut in September, especially given the recent weak economic data. A further slowdown in inflation could convince more market participants to bet on two Fed rate cuts by December. Such a situation would pressure the US dollar but send a green signal for precious metals and stock indices.

Equity markets in Europe were mostly down on Wednesday. Germany’s DAX (DE40) rose by 0.94%, France’s CAC 40 (FR40) closed higher by 0.86%, Spain’s IBEX 35 (ES35) climbed 1.59%, and the UK’s FTSE 100 (UK100) closed positive 0.66%.

Germany’s annualized inflation rate for June 2024 eased to 2.2%, down from 2.4% in the previous month, in line with preliminary estimates. Commodity prices slowed (0.8% vs. 1% in May), while energy costs declined faster (-2.1% vs. -1.1%). Looking at the consumer price index harmonized across EU countries, the annual rate fell to 2.5% from 2.8%, and the monthly rate was 0.2%, unchanged from May.

The UK economy grew by 0.4% month-on-month in May 2024 after stagnating in April. Construction grew at the fastest pace in almost a year. UK industrial production rose by 0.2% month-on-month in May 2024, recovering from a 0.9% fall in the previous month and matching market expectations. Manufacturing output rebounded (0.4% vs. -1.4% in April).

WTI crude oil prices rose to 82.7 dollars per barrel on Thursday, rising for the second consecutive session thanks to a larger-than-expected decline in US crude inventories. According to the EIA, the US crude oil inventories fell by 3.444 million barrels in the week ended July 5, a larger-than-expected decline of 3.0 million barrels. Gasoline inventories also fell more than expected. In addition, OPEC reaffirmed its forecast for strong growth in global oil demand in 2024. The EIA forecasts global oil demand to reach 104.7 million bpd by 2025, slightly higher than the projected supply of 104.6 million bpd, indicating a future deficit.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) was up 0.61%, China’s FTSE China A50 (CHA50) was down 0.51%, Hong Kong’s Hang Seng (HK50) was down 0.29% for the day, and Australia’s ASX 200 (AU200) was negative 0.16%.

The Australian dollar exchange rate surpassed $0.675, hitting its highest level in six months amid growing expectations that the Reserve Bank of Australia (RBA) may raise interest rate again if inflation picks up. Markets still see a 20% chance of further RBA policy tightening in August while ruling out the possibility of a rate cut this year.

S&P 500 (US500) 5,633.91 +56.93 (+1.02%)

Dow Jones (US30) 39,721.36 +429.39 (+1.09%)

DAX (DE40) 18,407.22 +171.03 (+0.94%)

FTSE 100 (UK100) 8,193.51 +53.70 (+0.66%)

USD Index 105.01 -0.12 (-0.11%)

• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – UK Trade Balance (m/m) at 09:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US FOMC Member Bostic Speaks at 18:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets 

At Tuesday’s close, the Dow Jones (US30) Index was down 0.13%, while the S&P 500 (US500) Index added 0.07%. The NASDAQ Technology Index (US100) closed positive 0.14%. Stock indices showed mixed performance on Tuesday, with the S&P 500 (US500) and NASDAQ (US100) hitting new all-time highs. Strengthening bank and chip stocks led to a higher overall market.

Fed Chairman Powell said Tuesday that good data would bolster confidence that inflation is moving toward the Fed’s 2% target and recent data point to “modest further progress” in prices. He added that the labor market is strong but not overheated, and easing too quickly and too much could hurt inflation progress. Markets estimate the odds of a 25 bps rate cut at 5% at the next FOMC meeting on July 30–31 and 71% at the next meeting on September 17–18.

Markets await the US CPI report for June, due out on Thursday, to see if price pressures continue to ease. The consensus is that the June CPI fell to 3.1% y/y from 3.3% y/y in May, while the core CPI was unchanged from May at 3.4% y/y. Falling inflationary pressures may put pressure on the US dollar.

Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) was down 0.02%, France’s CAC 40 (FR40) fell by 0.63%, Spain’s IBEX 35 (ES35) lost 0.01%, and the UK’s FTSE 100 (UK100) closed negative 0.13%. European equity markets opened higher on Wednesday amid easing political concerns in France. France faces a hung parliament after no party won an outright majority in Sunday’s election, although the left-wing New Popular Front won the most seats.

Norway’s annual consumer inflation rate slowed to 2.6% in June 2024, down from 3% the previous month and below market estimates of 2.9%. This is the lowest since December 2020, mainly due to lower inflation for food and non-alcoholic beverages (4.9% vs. 5.4%), recreation and culture (4% vs. 7.6%) and healthcare (4.6% vs. 4.8%).

WTI crude oil prices hovered around $81.5 a barrel on Wednesday, trying to break a three-day decline as traders reacted to a larger-than-expected drop in US crude inventories. According to API data, the US crude oil inventories fell by 1.923 million barrels in the week ended July 5, significantly higher than market expectations for a 0.25 million barrel decline. In addition, oil prices are supported by the growing likelihood of an interest rate cut by the Federal Reserve. This move is seen as a potential boost to economic activity and demand.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 1.96%, China’s FTSE China A50 (CHA50) climbed 0.99%, Hong Kong’s Hang Seng (HK50) was little changed for the day, and Australia’s ASX 200 (AU200) was positive 0.86%. Stock indices in Asia continued to rise at Wednesday’s open as soft consumer inflation data in China bolstered the case for easing monetary policy in the country.

China’s annual inflation rate fell to 0.2% in June 2024 from 0.3% in the previous two months, falling short of market estimates of 0.4%. It was the fifth straight month of rising consumer inflation but the lowest since March amid a fragile economic recovery. Food prices fell for the 12th month (-2.1% vs. -2.0%) despite a sharp price rise during the Dragon Boat Festival. The offshore yuan weakened to 7.29 per dollar.

The Reserve Bank of New Zealand (RBNZ) kept the official cash rate (OCR) at 5.5% at the July 2024 policy meeting, extending the rate pause for the eighth consecutive time and confirming market expectations. Policymakers noted that restrictive monetary policy has eased pressure on manufacturing capacity and lowered consumer price inflation. Core inflation fell to a nearly three-year low of 4% in the first quarter of 2024 but was still above the target range of 1-3%. The Committee continues to expect core inflation to return to the target range in the second half of the year. The degree of restraint will be gradually adjusted in line with the expected decline in inflationary pressures.

S&P 500 (US500) 5,576.98 +4.13 (0.074%)

Dow Jones (US30) 39,291.97 −52.82 (0.13%)

DAX (DE40) 18,236.19 −235.86 (1.28%)

FTSE 100 (UK100) 8,139.81 −53.68 (0.66%)

USD Index 105.12 +0.12 (+0.11%)

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
• – China Consumer Price Index (m/m) at 04:30 (GMT+3);
• – China Producer Price Index (m/m) at 04:30 (GMT+3);
• – New Zealand RBNZ Interest Rate Decision at 05:00 (GMT+3);
• – New Zealand RBNZ Rate Statement at 05:00 (GMT+3);
• – US Fed Chair Powell Testifies at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – US FOMC Member Bowman Speaks at 21:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

On Monday, the Dow Jones (US30) decreased by 0.08%, while the S&P 500 (US500) added 0.10%. The NASDAQ Technology Index (US100) closed positive 0.28%. Strengthening chip stocks on Monday led technology stocks higher and boosted the overall market.

Markets are awaiting Fed Chairman Powell’s semi-annual monetary policy report before the Senate Banking Committee on Tuesday and before the House Financial Services Committee on Wednesday. Markets are also cautiously awaiting key US inflation data on Thursday (CPI) and Friday (PPI). On Monday, data showed that expectations for 1-year US consumer inflation fell for the second straight month to 3% in June from 3.2% in May. Last week’s data also pointed to rising unemployment, a contraction in service-sector activity, and weak private-sector employment. The probability of a Fed rate cut in September is about 76%.

Nike (NKE) stock price fell more than 3% and topped the Dow Jones Industrials’ list of losers after Jim Cramer said the company’s latest conference call was a “desperation call” and he “can’t find anything good for the company.” Shares of Gilead Sciences (GILD) closed higher by more than 1% after Raymond James upgraded the stock to “outperform” from “market perform” with a $93 price target.

Equity markets in Europe were mostly down on Monday. Germany’s DAX (DE40) was down 0.02%, France’s CAC 40 (FR40) fell by 0.63%, Spain’s IBEX 35 (ES35) was down 0.01%, and the UK’s FTSE 100 (UK100) closed negative 0.13%.

German exports for May fell by 3.6% m/m, weaker than expectations of 2.8% m/m and the biggest decline in 5 months. Imports fell by -6.6% mom in May, weaker than expectations of 1.0% m/m and the strongest in 17 months. ECB Governing Council spokesman Muller said yesterday that wage and service price growth in the Eurozone remains strong and “for this reason, the ECB cannot rush to cut interest rates.”

The Euro Stoxx 50 Index rose to a 3-week high on Monday after Sunday’s French election was unexpectedly won by a far-left party, leaving a divided parliament and without a clear majority. This result limits the options for any party, leading to expectations that President Macron will form a new coalition between centrists and center-leftists.

Trade tensions between China and the EU are escalating, with Beijing planning to hold anti-dumping hearings next week over brandy purchased from the EU. The move follows the imposition of additional tariffs on Chinese electric cars from the EU.

WTI crude oil prices fell to $82 a barrel on Tuesday, extending losses from the previous session, amid easing fears of supply disruptions. Tropical Storm Beryl, which first hit Texas as a Category 1 hurricane, has been downgraded due to reduced wind speeds and now looks set to dissipate without impacting US domestic oil markets. In addition, concerns about supply risks due to wildfires in Canada have diminished as they have not largely spread to Suncor’s infrastructure. Meanwhile, investors are watching geopolitical developments in the Middle East amid prospects of a ceasefire agreement between Israel and Hamas, which reduces concerns about the escalation of the conflict and possible disruptions to oil supplies.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) decreased by 0.32%, China’s FTSE China A50 (CHA50) fell by 0.50%, Hong Kong’s Hang Seng (HK50) lost 1.55%, and Australia’s ASX 200 (AU200) was negative 0.76%.

The Reserve Bank of New Zealand (RBNZ) will hold a monetary policy meeting as early as tomorrow. The Central Bank is expected to leave the official monetary rate at 5.5% for the eighth consecutive time. At the last meeting in May, the Bank said that restrictive policy should be maintained to ensure that inflation returns to target levels. In addition, the possibility of raising interest rates was discussed at that meeting. As the RBNZ has little reason to move to a less hawkish stance, a repeat of the May message could help boost the Kiwi.

The offshore yuan slid to 7.29 per dollar after the People’s Bank of China (PBoC) weakened its benchmark rate. The Central Bank set the average rate at 7.1310 per dollar, reversing the strengthening trend over the past three sessions. The yuan has faced pressure since the beginning of 2023 due to domestic issues, including a sluggish real estate sector, weak consumer spending, and declining yields, which have caused capital outflows. However, despite these challenges, there is potential for the offshore yuan to strengthen. On Monday, China’s Central Bank announced temporary liquidity operations, which helped ease pressure by improving liquidity management and stabilizing short-term interest rates.

S&P 500 (US500) 5,572.85 +5.66 (+0.10%)

Dow Jones (US30) 39,344.79 −31.08 (−0.08%)

DAX (DE40) 18,472.05 −3.40 (−0.02%)

FTSE 100 (UK100) 8,193.49 −10.44 (−0.13%)

USD Index 105.01 +0.14 (+0.13%)

• – Australia NAB Business Confidence (m/m) at 04:30 (GMT+3);
• – US Fed Chair Powell Testifies at 17:00 (GMT+3);
• – US FOMC Member Bowman Speaks at 20:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets 

On Friday, the Dow Jones (US30) Index gained 0.17% (for the week +0.73%), while the S&P 500 (US500) Index gained 0.54% (for the week +1.43%). The NASDAQ Technology Index (US100) closed positive 0.90% (for the week +2.58%). Stock indices rose moderately on Friday, with the S&P 500 (US500) and Nasdaq 100 (US100) setting new record highs. Stocks found support on Friday after the June US payrolls report bolstered the Fed’s outlook for interest rate cuts this year.

US non-farm payroll employment for June rose by 206,000, exceeding expectations of 190,000. However, May’s non-farm employment data was revised downward to 218,000 from the previously announced 272,000. In addition, the June unemployment rate unexpectedly rose by 0.1 to a 2–1.5 year high of 4.1%, indicating a weaker labor market than expected with no change at 4.0%. Average hourly earnings for June declined to 3.0% y/y from 4.1% y/y in May, which matched expectations and was the slowest growth rate in 3 years.

President Joe Biden has faced growing skepticism within his own party about his potential 2024 re-election campaign. Rep. Mike Quigley of Illinois and Rep. Angie Craig of Minnesota have publicly urged Biden to reconsider his intention to run for president again. Quigley and Craig’s calls for Biden to resign were a notable development given their status as members of his party. The growing voices of dissenters within the Democratic Party indicate a search for alternative strategies or candidates that could strengthen their chances in the upcoming electoral contest.

The price of Bitcoin (BTCUSD) fell more than 3% to a 4-month low on Friday. Concerns over the possible sale of Bitcoin by lenders and governments have put pressure on digital assets. Administrators of the bankrupt Mt Gox exchange are returning $8 billion of Bitcoin to creditors, and uncertainty over how much of that will eventually be sold is weighing on the overall market. According to Arkham Intelligence, a wallet linked to Mt Gox moved $2.7 billion worth of tokens on Friday. There were also signs that German authorities are preparing to sell some of the 50,000 bitcoins seized earlier from online criminals, putting pressure on Bitcoin.

Equity markets in Europe were mostly down on Friday. The German DAX (DE40) rose by 0.14% (week ended +1.31%), the French CAC 40 (FR40) closed down 0.26% (week ended +0.03%), the Spanish IBEX 35 (ES35) fell by 0.39% (week ended -0.57%), the British FTSE 100 (UK100) closed negative 0.45% (week ended +0.49%).

In France, opinion polls showed that no party is likely to win a clear majority in the parliamentary elections. The left-wing Alliance is projected to win up to 198 seats, Macron’s centrists are likely to win up to 169 seats, and Marine Le Pen’s far-right National Rally will come in third with up to 143 seats. The election results have raised fears of further political uncertainty and market volatility as France’s legislature will be in a vacuum, and the prospect of a left-wing government will raise fiscal risks.

The UK Labor Party returned to government for the first time since 2010 and promised to launch its plan to fix the economy. In particular, there are several difficult short-term decisions to be made on public sector pay, fuel duty, and health funding. Solving them will cost £10 billion, according to official estimates and think tank calculations. Another £20 billion or more will be needed for a long-term fix to public services, according to the International Monetary Fund. The question is how the new Chancellor of the Exchequer will be able to do this when the debt ratio is close to 100%, growth rates are anemic, and the tax burden is the highest in decades.

WTI crude oil prices fell below $83 a barrel on Monday, extending the previous session’s losses as traders continue to assess last week’s mixed US jobs data. The latest data has raised concerns that the US economy, the world’s largest oil consumer, could slow down and affect oil demand. In addition, the growing likelihood of a ceasefire in Gaza has dampened estimates of strong summer fuel demand.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) gained by 2.69%, China’s FTSE China A50 (CHA50) fell by 0.68%, Hong Kong’s Hang Seng (HK50) gained 1.23%, and Australia’s ASX 200 (AU200) was positive 0.71%.

The Australian dollar rose as high as $0.675, hitting new six-month highs amid expectations that the Reserve Bank of Australia (RBA) may fall behind the global rate-cutting cycle or even raise interest rates again on the back of strong inflation data for May. Markets currently rate the probability of the RBA raising rates at its next meeting in August as slightly less than even, while the likelihood of a rate cut this year has been ruled out.

S&P 500 (US500) 5,567.19 +30.17 (+0.54%)

Dow Jones (US30) 39,375.87 +67.87 (+0.17%)

DAX (DE40) 18,475.45 +24.97 (+0.14%)

FTSE 100 (UK100) 8,203.93 −37.33 (−0.45%)

USD Index 104.88 −0.26 (−0.24%)

• – German Trade Balance (m/m) at 09:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.