InvestMacro

By JustMarkets

The US indices traded yesterday without a single trend. By the close of trading yesterday, the Dow Jones Index (US30) decreased by 0.22%, while the S&P 500 Index (US500) was down by 0.04%. The Technology Index NASDAQ (US100) closed yesterday positive by 0.27%.

The US trade deficit narrowed by 6.1% to $91.1 billion from $97.1 billion in April. But even with the reduction in May, the trade deficit is up more than 10% since March. According to analysts, trade is likely to be a drag on US economic growth in the second quarter.

Tesla (TSLA) shares jumped more than 2% on optimism that lower prices supported demand and pushed sales to record levels in the April-June quarter. Analysts estimate Tesla could sell 155,000 vehicles in China in Q2, up 13% from the first quarter.

Stock markets in Europe mostly rose Wednesday. German DAX (DE30) gained 0.64%, French CAC 40 (FR40) added 0.98% yesterday, Spanish IBEX 35 (ES35) jumped by 0.99%, and British FTSE 100 (UK100) closed positive by 0.52%.

ECB President Christine Lagarde said yesterday that if the base case scenario holds, the European Central Bank will continue to raise rates in July. She added that core inflation is not declining as expected and did not comment on the September meeting. At the same time, Fed Chairman Powell indicated that monetary policy was not restrictive enough and said he did not rule out the possibility of raising rates at the next meetings. The Fed chief added that the strong labor market continues to fuel consumer spending, which accounts for about two-thirds of economic growth. The policymaker’s comments increased the likelihood of a Fed rate hike in July to about 82%, up from 74% the day before.

Governor Bailey told the European Central Bank Forum that last week’s decision to raise the bank rate from 4.5% to 5% was the best way the Bank of England could have responded to the latest economic data. Market indicators imply further bank rate hikes to 6.00% by the end of the year as service sector price-fixing boosted core inflation for the second month in a row. That said, markets are predicting no rate cuts this year and for most of 2024 through September.

Inflation in Italy was softer than expected and down significantly from the previous month, which bodes well for the broader EU inflation figure to be released Friday. Italy’s inflation rate fell to 6.4% from 7.6% y/y. Germany will release the inflation data today.

Asian markets were mostly bullish yesterday. Japan’s Nikkei 225 (JP225) gained 2.02%, China’s FTSE China A50 (CHA50) gained 0.36%, Hong Kong’s Hang Seng (HK50) added 0.12% on the day, while Australia’s S&P/ASX 200 (AU200) closed up by 1.10% on Wednesday.

Bank of Japan (BOJ) Governor Kazuo Ueda said Wednesday that the Central Bank would see a good reason to change monetary policy if it is “reasonably confident” that the country’s inflation rate will accelerate in 2024 after a period of slowdown. The Bank of Japan expects inflation to slow due to the waning effects of past import price hikes before rising again in 2024, Ueda said at the Central Bank forum. Asked whether Japan could intervene in the currency market to support the yen, Ueda said that the decision fell under the jurisdiction of the Finance Ministry.

S&P 500 (F) (US500) 4,376.86 −1.55 (−0.035%)

Dow Jones (US30)33,852.66 −74.08 (−0.22%)

DAX (DE40) 15,949.00 +102.14 (+0.64%)

FTSE 100 (UK100) 7,500.49 +39.03 (+0.52%)

USD Index 103.01 +0.52 (+0.50%)

• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – US Fed Chair Powell Speaks (m/m) at 09:30 (GMT+3);
• – German Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (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

The US stock indices rose yesterday, helped by positive economic data. Durable goods orders rose by 1.7% in May, well above the expected 1% drop. The US new home sales rose in May to their highest level in more than a year, helped by limited inventory in the secondary market. Purchases of new single-family homes increased by 12.2% to 763,000 year-over-year. Consumer confidence also rose from 102.5 to 109.7 (forecast: 104), a 17-month-high. The US consumer confidence rose on the back of renewed optimism in the labor market. As the stock market closed yesterday, the Dow Jones Index (US30) was up by 0.63%, and the S&P 500 Index (US500) added 1.15%. The Technology Index NASDAQ (US100) closed yesterday positive by 1.65%.

On the other hand, upbeat economic data suggests that the Federal Reserve may have to keep raising interest rates in order to slow demand in the overall economy. Morgan Stanley (MS) said Tuesday that it now expects the Fed to raise its key interest rate by 25 basis points in July, up from an earlier estimate of a pause.

Investors will also be watching closely as ECB head Christine Lagarde speaks alongside Fed Chair Jerome Powell and other global central bank governors at a panel discussion on Wednesday at the ECB’s annual forum in Sintra, Portugal. The topic of inflation and monetary policy will be the center of attention.

Inflationary pressures in Canada continue to decline. Inflation in Canada has slowed to its lowest level in two years. The consumer price index for May declined from 4.4% to 3.4% year-over-year. Core inflation (which excludes food and energy prices) declined from 4.1% to 3.7%. But despite the slowdown in inflation, the Bank of Canada may still consider another rate hike in July if gross domestic product (GDP) and labor market numbers remain excessively positive.

Equity markets in Europe mostly rise on Tuesday. Germany’s DAX (DE30) increased by 0.21%, France’s CAC 40 (FR40) gained 0.43% yesterday, Spain’s IBEX 35 (ES35) added 1.28%, Britain’s FTSE 100 (UK100) closed positive by 0.11%.

Speaking at a Central Bank forum in Sintra, Portugal, ECB President Christine Lagarde pointed out that inflation in the Eurozone is too high and will remain so for a long time to come. The Eurozone faced higher inflation rates after Russia’s invasion of Ukraine, leading to higher energy prices across the bloc. At the same time, the biggest jump in prices was in food. Speeches of the heads of the Central Banks of the US, Britain, Japan, and the Eurozone are expected today.

Sweden’s Central Bank (Riksbank) will meet on June 29. The market expects a 25bp rate hike to 3.75%. The swap market expects a final rate between 4.00% and 4.25% by the end of the year. The Swedish Krona has lost about 3% against the dollar this year and almost 5% against the euro.

Oil prices fell more than -2% on Tuesday on signals that central banks may continue to raise interest rates. But much will also depend on whether China’s oil demand rises in the second half of the year. Chinese Premier Li Qiang said yesterday that China will take steps to revive markets.

Asian markets were mostly on the rise yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.49% yesterday, China’s FTSE China A50 (CHA50) added 0.51%, Hong Kong’s Hang Seng (HK50) jumped by 1.88%, and Australia’s S&P/ASX 200 (AU200) closed positive by 0.56% on Tuesday.

Despite numerous initiatives to support the real estate market in China, stress remains. Two more real estate developers failed to meet their dollar commitments over the weekend. Central China Real Estate, the 33rd largest real estate developer by contract sales, failed to pay its interest rate in dollars before the weekend. It announced it would suspend payments on all offshore debt. The second developer, Leading Holdings Group, is not one of the top 100 Chinese builders. Late last week, it failed to pay its $119.4 million debt in full.

In Australia, the consumer price level fell from 6.8% to 5.6% (forecast 6.1%) in annual terms. The decline in inflation was largely due to falling fuel prices amid weakness in global crude oil markets. Core inflation (which excludes food and energy prices) declined from 6.5% to 6.4%, indicating that the key components of inflation (housing and goods) remain resilient. But lower inflation eases pressure on the Reserve Bank of Australia to keep rates rising.

S&P 500 (F) (US500) 4,378.41 +49.59 (+1.15%)

Dow Jones (US30)33,926.74 +212.03 (+0.63%)

DAX (DE40) 15,846.86 +33.80 (+0.21%)

FTSE 100 (UK100) 7,461.46 +7.88 (+0.11%)

USD Index 102.50 −0.19 (-0.18%)

• – Australia Consumer Price Index (m/m) at 04:30 (GMT+3);
• – UK BoE Gov Bailey Speaks at 16:30 (GMT+3);
• – Japan BOJ Gov Ueda Speaks at 16:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 16:30 (GMT+3);
• – US Fed Chair Powell Speaks at 16:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (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 Monday’s close, the Dow Jones Index (US30) decreased by 0.04%, and the S&P 500 Index (US500) lost 0.45%. Technology Index NASDAQ (US100) fell by 1.16% yesterday. The stock market closed negative again due to recession fears.

Investors are now focused on the next interest rate move. While the Fed halted rate hikes this month, Chairman Jerome Powell said this does not mean the Central Bank is stopping further tightening, with the possibility of two more rate hikes this year, as the Fed is determined to get interest rates back on track to the 2% target rate.

Investors will also be watching closely as ECB head Christine Lagarde speaks alongside Fed Chair Jerome Powell and other global central bank governors at a panel discussion on Wednesday at the ECB’s annual forum in Sintra, Portugal. The topic of inflation and monetary policy will be the center of attention.

Equity markets in Europe traded without a single dynamic on Monday. German DAX (DE30) fell by 0.11%, French CAC 40 (FR40) added 0.29% yesterday, Spanish IBEX 35 (ES35) gained 0.09%, and British FTSE 100 (UK100) closed negative by 0.11%.

Despite Germany’s declining business climate, the Bundesbank said Monday in its monthly report that Germany’s recession will end next spring and gross domestic product will grow slightly in the second quarter. The Bundesbank also said that growth would be supported by the German industry’s ability to weather the continued decline in demand thanks to lower energy prices, the removal of supply bottlenecks, and a full order book.

Gold prices rose slightly on Monday as the dollar declined ahead of the release of key PCE inflation data, which could determine the actions of the world’s major central banks in the coming weeks. Investors will get an update on the possible future trajectory of interest rates Friday after the release of May data on the Personal Consumption Price Index, the Federal Reserve’s preferred measure of inflation.

Natural gas hit March highs, approaching the $3 mark. The main catalyst for this upward move comes from the abnormal heat wave that has affected many southern US states, which has led to revisions in short-term inventory forecasts.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 0.25% yesterday, China’s FTSE China A50 (CHA50) lost 1.49%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.51%, and Australia’s S&P/ASX 200 (AU200) ended Monday negative by 0.29%.

S&P Global lowered its forecast for China’s economic growth this year, highlighting the uneven nature of the country’s recovery from the pandemic. S&P now expects China’s GDP growth to be 5.2% in 2023, down from an earlier estimate of 5.5%. This was the first time the global rating agency had lowered its outlook for China this year, but it followed lowered forecasts by major investment banks, including Goldman Sachs.

Japanese Finance Minister Shunichi Suzuki continued to verbally warn about the yen’s depreciation on Tuesday, saying the government would respond accordingly if currency fluctuations become excessive.

S&P 500 (F) (US500) 4,328.82 −19.51 (−0.45%)

Dow Jones (US30)33,714.71 −12.72 (−0.038%)

DAX (DE40) 15,813.06 −16.88 (−0.11%)

FTSE 100 (UK100) 7,453.58 −8.29 (−0.11%)

USD Index 102.78 −0.13 (-0.12%)

• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – US Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (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 JustMarkets

The US stock indices fell on Friday as technology stocks caused the NASDAQ (US100) to decline and interrupted an eight-week upward move. By the close of the stock market, the Dow Jones Index (US30) decreased by 0.65% (-2.14% for the week), and S&P 500 (US500) lost 0.77% (-2.09% for the week). The Technology Index NASDAQ (US100) closed negative by 1.01% on Friday (-2.64% for the week).

Speaking last week in the House and Senate, Federal Reserve Chairman Jerome Powell said that further rate hikes are likely in the coming months. After that, 10-year bond yields fell a full percentage point below 2-year rates, deepening the inversion of the yield curve that is usually seen as a harbinger of recession.

Fed Richmond President Tom Barkin said he is not sure inflation is on a steady downward trajectory toward the Fed’s 2% target. San Francisco Fed President Mary Daly said two more rate hikes this year is a “very reasonable” projection.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE30) decreased by 0.99% (-2.72% for the week), France’s CAC 40 (FR40) lost 0.55% on Friday (-2.58% for the week), Spain’s IBEX 35 Index (ES35) was down by 1.01% (-1.98% for the week), the British FTSE 100 (UK100) closed negative by 0.54% (-2.34% for the week).

Friday’s portion of disappointing Eurozone business activity statistics may cause a change in sentiment inside the ECB. Eurozone manufacturing activity worsened its decline in June, falling to 43.6 from 44.8 in May, reaching its lowest level in 37 months, a sign that the manufacturing recession is getting worse. Unless demand conditions in the region stabilize and improve soon, the ECB will have a hard time justifying further rate hikes, as a more restrictive stance could trigger a deeper recession.

A look at the yield on UK securities reveals the current problems and points to a recession. Two- and five-year fixed mortgage rates have risen sharply since the Bank of England began raising rates more than a year ago, and repayment costs are skyrocketing. Rates are expected to be even higher in the coming months, consumer spending will fall sharply, and this will hit the UK economy.

Oil prices rose in early trading in Asia on Monday after a failed Russian mercenary mutiny last weekend raised concerns about political instability in Russia and the potential impact on oil supplies from one of the world’s biggest producers.

Asian markets traded lower last week. Japan’s Nikkei 225 (JP225) was down by 2.92% for the week, China’s FTSE China A50 (CHA50) lost 1.63%, Hong Kong’s Hang Seng (HK50) fell by 5.15% for the week, and Australia’s S&P/ASX 200 (AU200) was negative by 1.34% for the week.

The Japanese currency, which is often seen as a safe haven asset, is now coming under renewed pressure from sellers, threatening a surge in the value of imports to hit consumers. Japan’s deputy finance minister for international affairs indicated Monday that the government has not ruled out responding to the yen’s excessive movement. The last time Japan conducted a currency intervention to buy the yen was last October.

S&P 500 (F) (US500) 4,348.33 −33.56 (−0.77%)

Dow Jones (US30)33,727.43 −219.28 (−0.65%)

DAX (DE40) 15,829.94 −158.22 (−0.99%)

FTSE 100 (UK100) 7,461.87 −40.16 (−0.54%)

USD Index 102.87 +0.48 (+0.48%)

• – German Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – Switzerland SNB Chairman Thomas Jordan speaks at 11:50 (GMT+3);
• – Eurozone ECB President Lagarde 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.