InvestMacro

By JustMarkets

At Monday’s close of the stock market, the Dow Jones Index (US30) closed up by 0.52%, while the S&P 500 Index (US500) added 0.40%. The NASDAQ Technology Index (US100) closed positive by 0.19% on Monday. The Dow Jones Index (US30) extended its daily winning streak to its eleventh consecutive gain, helped by a rally in energy. Energy stocks were supported by a rise in oil prices to an April high amid bets that OPEC supply cuts will tighten market conditions.

The Federal Reserve begins its two-day meeting on Tuesday. A 0.25% rate hike is expected as early as tomorrow, which is already fully factored into the price. Morgan Stanley analysts believe Wednesday’s expected rate hike could likely be the final rate hike, predicting a peak federal funds rate of 5.375% this year.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) increased by 0.08%, France’s CAC 40 (FR40) fell by 0.07%, Spain’s IBEX 35 (ES35) declined by 0.29%, and the UK’s FTSE 100 (UK100) closed 0.19% higher.

The fall in economic indicators across Europe poses a difficult task for the European Central Bank: to make another rate hike in September or to switch to full data dependence. For the ECB, there are now three main options:

• The ECB continues to signal that if the core level of inflation is maintained, further tightening is likely. Such signaling is likely to trigger a hawkish market reaction with interest rate expectations rising.
• The ECB maintains a fully data-dependent regime, with a willingness to hike but no clear bias towards tightening. In this scenario, the market reaction could be moderately dovish.
• The Central Bank assumes that clear progress has been made toward the inflation target, and it is unclear whether further rate hikes are needed. In this scenario, market reaction is likely to be very dovish.

The middle scenario is the closest considered by analysts, which could put pressure on the euro against the dollar in the near term.

Gold’s rally appears to be weakening ahead of this week’s policy meetings between the US Federal Reserve, the European Central Bank, and the Bank of Japan. Gold is highly sensitive to US government bond yields and the dollar index. Hawkish comments from the US Fed will give temporary support to the dollar, which will be negative for precious metals. But in the medium and long term, banks expect the dollar and government bond yields to fall, so gold still has good growth prospects in the higher time frames.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) increased by 1.23%, China’s FTSE China A50 (CHA50) fell by 0.54%, Hong Kong’s Hang Seng (HK50) lost 2.13% on the day, and Australia’s S&P/ASX 200 (AU200) was negative by 0.10% on Monday.

Chinese state-owned banks unexpectedly conducted currency intervention to support the yuan against the dollar. The People’s Bank of China (PBoC) set the yuan (CNY) discount rate at 7.1406. It is allowed to trade plus-minus 2% of this rate. This applies to CNY, which is traded on China’s exchanges. There is also an offshore yuan (CNH). Its trading range is unlimited, so significant fluctuations in the exchange rate compared to CNY tend to trigger a reaction from the PBoC.

S&P 500 (F)(US500) 4,554.64 +18.30 (+0.40%)

Dow Jones (US30) 35,411.24 +183.55 (+0.52%)

DAX (DE40)  16,190.95 +13.73 (+0.085%)

FTSE 100 (UK100) 7,678.59 +14.86 (+0.19%)

USD Index  101.40 +0.33 (+0.32%)

• – German Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (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.

By George Prior 

China’s raft of new measures to bolster its economy strengthens the case for global investors’ continued attraction to the country, says the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The bullish analysis from Nigel Green of deVere Group comes as China’s economic planning agency announced Monday a series of measures to encourage investment.

Beijing’s series of policies is ahead of a key Politburo meeting this week which will review China’s first half economic performance.

In the 17-point statement, the National Development and Reform Commission vowed to lure more private capital to become involved in the construction of important national projects and major industrial supply chain ventures.

The moves come after last Thursday’s announcement from the People’s Bank of China and the State Administration of Foreign Exchange to confirm that they have modified their cross-border financing rules to allow companies to borrow more from international investors.

Nigel Green says: “Will these measures work? Yes, because they strengthen the case for global investors’ recently renewed enthusiasm for China – which is robust, despite the economic red flags.

“Weaker international demand, which has triggered the drop in exports, comes at a time when the economy is under pressure from a weak property sector and a disappointingly slow Covid rebound after controls were dropped at the start of the year. In addition, youth unemployment is at its highest level on record.

“But despite these challenges, it remains an appealing destination for investors.”

One of the most compelling reasons why investors are attracted to China is its massive market potential.

“With a population of over 1.4 billion people and a growing middle class, China offers a vast consumer base for businesses to tap into. The rising incomes and increasing urbanization have fuelled demand for various products and services, providing ample opportunities for investors across sectors such as technology, healthcare, and consumer goods,” says the deVere CEO.

The People’s Republic also has a proven ability to navigate and adapt to economic challenges. “Despite recent headwinds, including trade tensions and the pandemic, China has shown remarkable resilience.”

The country’s emphasis on research and development, coupled with significant investments in emerging technologies like artificial intelligence, 5G, and biotechnology, has propelled China to the forefront of technological advancements, affirms Nigel Green.

He notes: “Investors recognise this immense potential in these sectors and are eager to capitalise on the nation’s technological prowess, which offers unique opportunities for high returns on investment.”

Investors are also fully aware of China’s economic model which is gradually shifting from export-driven growth to one fuelled by domestic consumption. This transition presents investors with a new set of opportunities as the Chinese population becomes increasingly affluent and consumption-oriented.

Companies that cater to the evolving tastes and preferences of Chinese consumers stand to benefit immensely from this paradigm shift, prompting investors to focus on sectors such as e-commerce, entertainment, and luxury goods.

Nigel Green concludes: “Beijing’s proactive policies, such as stimulus measures and targeted reforms, have effectively supported economic growth and stabilized market conditions in the past and we expect the new measures will do the same. This track record instils confidence in global investors, as they believe that China can effectively address and overcome future obstacles.

“The new policies will further help investors see beyond the short-term and look for the long-term potential in China.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

By JustMarkets

At Friday’s stock market close, the Dow Jones Index (US30) closed at the opening level (+2.11% for the week), while the S&P 500 Index (US500) added 0.03% (+0.61% for the week). The NASDAQ Technology Index (US100) closed positive by 0.20% on Friday (-0.42% for the week). The Nasdaq’s decline in recent days is attributed to the expiration of one-month options and the pending rebalancing of the multi-trillion dollar Nasdaq 100. In recent days, indices have begun to trade multi-directionally, indicating a rotation of funds between sectors. There is now a flow of funds from the technology sector into the banking and healthcare sectors.

American Express’s (AXP) shares fell nearly 4% after the credit card giant missed quarterly earnings expectations and posted a weak full-year profit outlook. Consensus estimates suggest the current reporting season will be a flop. Real GDP growth is expected to deteriorate towards the end of the year.

Equity markets in Europe traded flat on Friday. The German DAX (DE30) decreased by 0.17% (+1.02% for the week), the French CAC 40 (FR40) added 0.65% (+1.62% for the week) on Friday, the Spanish IBEX 35 (ES35) increased by 0.55% (+1.66% for the week), the British FTSE 100 (UK100) closed positive by 0.23% (+3.08% for the week).

The ECB will hold a monetary policy meeting this week. The ECB is expected to raise the rate by 0.25%. But the focus will be on the central bank’s plans for September, and markets are divided on whether there will be another hike or whether the ECB will hit the pause button. ECB President Christine Lagarde is likely to reiterate that future decisions will be based on incoming economic data. Europe’s economic outlook is deteriorating rapidly, with GDP falling in a number of key economies, business activity falling, and manufacturing declining. The only thing holding the economy together is a strong labor market.

Crude oil prices rose for the fourth week in a row. On Friday and Saturday, Russia continued to attack Ukrainian food export businesses in southern Ukraine and escalated tensions after pulling out of an UN-brokered safe sea corridor agreement to transport Ukrainian grain. Moscow has set a condition for the grain deal in the form of lifting some sanctions but is deliberately destroying Ukraine’s port infrastructure, confirming its reputation as a terrorist state.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 0.87% for the week, China’s FTSE China A50 (CHA50) fell by 0.64%, Hong Kong’s Hang Seng (HK50) ended the week down by 1.29%, and Australia’s S&P/ASX 200 (AU200) ended the week positive by 0.15%.

On Monday, Hong Kong stocks fell amid signs that foreign investors are cutting their bets on China’s biggest companies as Beijing refrains from major stimulus measures amid a deteriorating economy.

Japan’s trade balance data last week showed a trade surplus in June, which could lead to wage growth going forward if demand for Japanese goods remains strong. Wage growth tends to be accompanied by rising prices, meaning inflation will continue to rise slowly, which is crucial for the Bank of Japan before it changes its loose monetary policy. At the same time, Japan’s top financial diplomat suggested on Friday that the central bank may change its approach to monetary stimulus at its policy meeting because of “signs of change” in corporate behavior regarding wage growth and price increases.

New Zealand recorded a small trade surplus in June, mainly due to lower volumes and values of imported gasoline and diesel. Imports and exports totaled about $16.3 billion, with exports exceeding imports by only $8.8 million. These figures are better than Westpac’s forecast of a $450 million monthly deficit. However, they do not change the overall picture of an alarming annual deficit. On a seasonally adjusted basis, the country’s trade deficit for the second quarter totaled $2.3 billion.

S&P 500 (F)(US500) 4,536.34 +1.47 (+0.032%)

Dow Jones (US30) 35,227.69 +2.51 (+0.01%)

DAX (DE40)  16,177.22 −27.00 (−0.17%)

FTSE 100 (UK100) 7,663.73 +17.68 (+0.23%)

USD Index  101.09 +0.21 (+0.20%)

• – New Zealand Trade Balance (q/q) at 01:45 (GMT+3);
• – Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
• – Australia Services PMI (m/m) at 02:00 (GMT+3);
• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• – Germany Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Germany Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (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

As of Thursday’s stock market close, the Dow Jones Index (US30) added 0.47%, while the S&P 500 Index (US500) decreased by 0.68%. The NASDAQ Technology Index (US100) fell sharply yesterday by 2.05%. The Dow Jones Index (US30) has posted nine straight days of gains, the longest streak of gains since 2017.

Shares of Tesla (TSLA) fell more than 9% at the open yesterday and were on track for the biggest one-day percentage drop after the electric car maker reported second-quarter gross profit fell to a four-year low and CEO Elon Musk hinted at further price cuts. Netflix (NFLX) was down by 8% from the open after the streaming video company’s quarterly revenue missed estimates. Analysts at Barclays raised their price target on shares of Nvidia (NVDA) by $100 to $600 per share ahead of its second-quarter earnings report. Barclays joined HSBC and Rosenblatt, who also raised their price targets. Analysts believe Nvidia could deliver another strong earnings report above expectations amid GenAI demand.

The Labor Department said initial claims for state unemployment benefits fell 9,000 to 228,000. Economists had forecast 242,000 claims in the past week. That increased the likelihood of a more hawkish stance from the Fed next week. On Thursday, the Conference Board said its leading economic index, a gauge that anticipates future economic activity, fell by 0.7% in June to 106.1. Other data on Thursday showed US secondary home sales fell to a five-month low in June.

Equity markets in Europe traded higher on Thursday. Germany’s DAX (DE40) increased by 0.59%, France’s CAC 40 (FR40) added 0.79% yesterday, Spain’s IBEX 35 (ES35) closed positive by 0.72%, and the UK’s FTSE 100 (UK100) closed up by 0.76%.

According to the survey, the European Central Bank will raise interest rates by 25 basis points on July 27. But this decision is already factored into the price, so the main focus of attention will be on the ECB’s future plans. The hawkish attitude of officials will hint at another rate hike in the fall.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 1.23%, China’s FTSE China A50 (CHA50) fell by 0.25%, Hong Kong’s Hang Seng (HK50) lost 0.13%, while Australia’s S&P/ASX 200 (AU200) ended the day positive by 0.02%.

Technology chip giant TSMC reported lower profits and provided a gloomy outlook. China’s National Development and Reform Commission, China’s economic planner, unveiled new measures aimed at boosting spending in the auto and consumer electronics sectors. Fund managers have become less optimistic about China’s economic recovery this year amid weak performance and limited policy support. Economists at Bank of America (BAC) warned that local stocks could test 11-year lows as the post-COVID economic recovery falters.

S&P 500 (F)(US500) 4,534.87 −30.85 (−0.68%)

Dow Jones (US30) 35,225.18 +163.97 (+0.47%)

DAX (DE40)  16,204.22 +95.29 (+0.59%)

FTSE 100 (UK100) 7,646.05 +57.85 (0.76%)

USD Index  100.77 +0.49 (+0.49%)

• – Japan National Core Consumer Price Index at 02:30 (GMT+3);
• – UK Retail Sales (m/m) at 09:00 (GMT+3);
• – Canada Retail Sales (m/m) at 15:30 (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.