InvestMacro

By JustMarkets

At the close of the stock market yesterday the Dow Jones Index (US30) increased by 0.56%, and the S&P 500 Index (US500) added 0.93%. Technology Index NASDAQ (US100) closed Monday positive 1.51%. Investors were confidently buying stocks yesterday ahead of important inflation data today. One of the main reasons for the buying is Goldman Sachs raised its year-end forecast for the S&P 500 to 4500 points from 4000 points. Analysts believe that if incoming data for June and July show that US inflation will decline, there is a high probability that the Fed will finish raising rates this cycle.

The US inflation data for May will be released today. Inflationary pressures are expected to fall, which will increase the likelihood of a pause at tomorrow’s US Fed meeting.

The US federal government’s budget deficit for the first eight months of the fiscal year reached $1.16 trillion, up 191% from a year ago. Growth in interest expense has been the main driver of spending growth so far in the fiscal year. However, that spending declined in May because of lower interest payments on inflation-protected Treasury securities.

Shares of Advanced Micro Devices Inc (AMD) jumped by 8% ahead of a presentation today. The chipmaker is likely to unveil updates to its data center and AI technology.

Stock markets in Europe were mostly up Monday. Germany’s DAX (DE30) gained 0.93%, France’s CAC 40 (FR40) added 0.52%, Spain’s IBEX 35 (ES35) jumped by 0.37%, and the British FTSE 100 (UK100) closed up by 0.11% yesterday.

Jonathan Haskell of the Bank of England’s Monetary Policy Committee said yesterday that the central bank might have to raise interest rates more than once from their current levels in order to get inflation under control. Britain’s economy looks set to avoid recession this year, but deep-rooted problems such as weak business investment will persist, the trade body the Confederation of British Industry said Monday.

The ECB has to balance raising borrowing costs to reduce demand and curb inflation without causing a deep economic downturn. Revised data last week showed that Eurozone GDP unexpectedly contracted by -0.1%, marking the second quarter of contraction and meeting the technical definition of a recession. Investors have new concerns that the region will not handle the aftermath of the war with Russia as well as anticipated, casting doubt on the more optimistic outlook for 2023

Crude oil prices fell by 4% on Monday. It was all due to comments from Iran’s supreme leader on a possible nuclear deal with the United States, which would open Iran’s access to the world market of oil products.

Asian markets traded higher yesterday. Japan’s Nikkei 225 (JP225) increased by 0.52% for the day, China’s FTSE China A50 (CHA50) added 0.45%, Hong Kong’s Hang Seng (HK50) was up by 0.07% for the day, and Australia’s S&P/ASX 200 (AU200) was not trading yesterday.

Most Asian stocks rose Tuesday, following strong gains on Wall Street, as markets bet that the Federal Reserve will suspend its rate hike cycle this week, while an interest rate cut in China also boosted sentiment in the region.

Chinese airliner C919 made its first commercial flight. China plans to build the airliner from its own components, in order to be less dependent on parts from the US and Europe. But in a broader context, import substitution efforts are not yet sufficient. It is estimated that 40% of C919 parts, including the engine, are imported from French Safran and US General Electric.

S&P 500 (F) (US500) 4,338.93 +40.07 (+0.93%)

Dow Jones (US30)34,066.33 +189.55 (+0.56%)

DAX (DE40) 16,097.87 +148.03 (+0.93%)

FTSE 100 (UK100) 7,570.69 +8.33 (+0.11%)

USD Index 103.62 +0.06 (+0.06%)

• – Australia NAB Business Confidence at 04:30 (GMT+3);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – UK BOE Gov Bailey Speaks 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

At the stock market close on Friday the Dow Jones Index (US30) gained 0.13% (+0.31% for the week) and the S&P 500 (US500) added 0.11% (+0.37% for the week). The Technology Index NASDAQ (US100) on Friday closed positive by 0.16% (+0.16% for the week). The rally in US stocks shows signs of investor confidence that the US economy is holding up despite higher interest rates. Recession risks are declining. Some investors have begun to dive into economically sensitive market areas, including mid-cap and small-cap companies, energy and industrial stocks, not just “mega-companies.” Stronger-than-expected job growth and solid consumer spending were among the indicators that bolstered investors’ economic outlook. This week, investors will keep an eye on US inflation data as well as the US Federal Reserve’s monetary policy meeting.

Equity markets in Europe were mostly down on Friday. German DAX (DE30) shed by 0.25% (-0.81% for the week), French CAC 40 (FR40) decreased by 0.12% on Friday (-1.12% for the week), Spanish IBEX 35 (ES35) lost 0.34% (-0.49% for the week), British FTSE 100 (UK100) close negative by 0.49% (-0.59% for the week).

The ECB will hold its meeting on June 15, the day after the Federal Reserve. There is little doubt that Europe’s central bank will raise key rates by a quarter point. The interest rate will reach 4%. The swap market is confident that the ECB’s decision will not be finalized and expects at least one more quarter-point hike at the end of the third quarter.

Thomas Jordan, President of the Swiss National Bank, hints at further rate hikes to combat inflation. Switzerland’s annual inflation rate fell to 2.2% in May, but that is not enough for the SNB as the bank wants to see inflation in the 0-2% range. Analysts and the market expect the SNB to raise interest rates at its June 22 meeting.

The US Treasury yields are gradually rising as the US government continues to sell huge amounts of government bonds. Gold and silver are inversely correlated to government bond yields. And with the US Federal Reserve at the end of its tightening cycle, precious metals have more fundamental catalysts for growth in the medium term.

Oil prices fell in Asian trading on Monday, with the price of WTI dropping back below $70 a barrel after Iran’s leader said the country is open to a deal with the West on its nuclear program, albeit with some reservations. Iran is ready to make a deal only if Iran’s nuclear infrastructure is kept intact. The comments came just days after both Tehran and Washington denied reports of a possible deal. If the deal is completed, it would sharply increase oil supply in the market, sending oil prices plummeting in the face of weak demand.

Asian markets traded higher last week. Japan’s Nikkei 225 (JP225) was up by 1.26% for the week, China’s FTSE China A50 (CHA50) added 0.45%, Hong Kong’s Hang Seng (HK50) increased by 0.47% for the week, and Australia’s S&P/ASX 200 (AU200) was negative 0.32% for the week.

The Bank of Japan (BOJ) is expected to maintain an ultra-soft monetary policy this week and is forecasting a moderate recovery as strong corporate and household spending softens the blow from slowing demand overseas. The central bank may also signal that inflation is exceeding its forecasts, making it more likely to raise its price forecasts when it revises its estimates quarterly.

The Chinese yuan fell to a six-month low against the dollar as major state-owned Chinese banks began cutting interest rates on yuan-denominated deposits. The move foreshadows a broader cut in the central bank’s main lending rate later this month as it struggles to support economic growth.

S&P 500 (F) (US500) 4,298.86 +4.93 (+0.11%)

Dow Jones (US30)33,876.78 +43.17 (+0.13%)

DAX (DE40) 15,949.84 −40.12 (−0.25%)

FTSE 100 (UK100) 7,562.36 −37.38 (−0.49%)

USD Index 103.55 +0.21 (+0.20%)

• – Japan Producer Price Index (m/m) at 02:50 (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 Jobless claims showed a sharp jump yesterday and spurred expectations of a Federal Reserve pause next week. This led to a drop in the dollar index and Treasury yields. Consequently, stock indices, which have an inverse correlation to the dollar index, got a boost. At the close of the stock market yesterday, the Dow Jones index (US30) increased by 0.50%, and the S&P 500 Index (US500) was up by 0.62%. The NASDAQ Technology Index (US100) closed positive by 1.02% on Thursday.

The International Monetary Fund (IMF) on Thursday urged the US Federal Reserve and other global central banks to continue tightening measures to reduce inflation. The report indicates that although inflation is slowing, it is still the most worrisome.

Goldman Sachs Group Inc. is planning a period of sluggish growth and higher inflation, calling it a “mini-stagflation scenario.” Although the US economy is showing resilience, concerns remain among investors that a recession could occur amid stubborn inflation and high borrowing costs. There is uncertainty about the extent of the economic downturn, as many fear that the impact of higher interest rates is not yet fully felt in areas such as private lending and real estate.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE30) gained 0.50%, France’s CAC 40 (FR40) added 0.27% on Thursday, Spain’s IBEX 35 (ES35) decreased by 0.17%, Britain’s FTSE 100 (UK100) closed down by 0.32%.

According to a clear majority of economists, the European Central Bank will raise its key interest rates by 25 basis points on June 15 and again in July before pausing for the rest of the year. In contrast, the US Federal Reserve is projected to remain paused at its June meeting and for the rest of the year.

Inflation in Switzerland remains high, and interest rates must be raised to keep it under control, Swiss National Bank President Thomas Jordan said yesterday. This is Jordan’s last public speech before the SNB’s upcoming interest rate decision on June 22. Economists expect the Swiss central bank to continue raising another 25 basis points, even though the country’s inflation remains among the lowest in the world.

The US and Great Britain signed a new “Atlantic Declaration” on economic cooperation. The countries have agreed to create a new civilian nuclear energy partnership as part of a clean energy cooperation that will include building new infrastructure over the long term and reducing dependence on Russian fuel. The two countries will also begin talks on a critical minerals agreement that will allow some British companies access to tax breaks. These minerals, such as lithium, nickel, cobalt, graphite and manganese, are crucial for the production of batteries for electric cars, smartphones and solar panels.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.85% for the day, China’s FTSE China A50 (CHA50) was up by 1.11%, Hong Kong’s Hang Seng (HK50) ended the day up by 0.25%, India’s NIFTY 50 (IND50) lost 0.49%, and Australia’s S&P/ASX 200 (AU200) ended Thursday negative by 0.26%.

India’s Central Bank kept its key interest rate unchanged for a second straight meeting Thursday. India raised rates by 250 basis points from May 2022.

Fitch Ratings changed its outlook on Australia and New Zealand’s banking sector from “Neutral” to “Worsening”, reflecting stronger constraints on bank earnings and asset quality.

China’s consumer price inflation continued to decline in May, with the producer price index reaching a 7-year low. On an annualized basis, consumer prices rose from 0.1% to 0.2%, but factory inflation (PPI) fell from minus 3.6% to minus 4.6%. The sharp drop in PPI points to a steady decline in manufacturing, indicating that the economic recovery is slowing.

S&P 500 (F) (US500) 4,293.93 +26.41 (+0.62%)

Dow Jones (US30)33,833.61 +168.59 (+0.50%)

DAX (DE40) 15,989.96 +29.40 (+0.18%)

FTSE 100 (UK100) 7,599.74 −24.60 (−0.32%)

USD Index 103.33 −0.77 (−0.74%)

• – China Consumer Price Index (m/m) at 04:30 (GMT+3);
• – China Producer Price Index (m/m) at 04:30 (GMT+3);
• – Canada Unemployment Rate (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.

By JustMarkets

At the close of the stock market yesterday, the Dow Jones Index (US30) gained 0.27%, and the S&P 500 Index (US500) fell by 0.38%. The NASDAQ Technology Index (US100) closed negative 1.28% on Wednesday. According to analysts, hedge funds are fixing their positions on the last rally before the key economic and political events next week.

The US trade deficit widened in April to its highest level in six months as exports declined at the fastest pace since the pandemic began and imports widened. The trade deficit in goods and services rose by $14 billion, or 23%, from the previous month. The broader deficit implies that trade will be subtracted from the gross domestic product in the second quarter. That means second-quarter GDP growth will be between 0 and 1%.

JPMorgan’s experts pointed to the emerging signs of de-dollarization in global foreign exchange reserves and central bank reserves. While the dollar accounts for the lion’s share – 88% of the volume of foreign exchange, and its share in trade accounts also remains stable – between 40% and 50%. However, the share of the US itself in world trade has declined, and the country’s exports have fallen to a record low of 9%. The dollar’s main competitor admittedly remains the yuan, although its international presence remains small: compared to the dollar’s 43% share of SWIFT payments, the yuan’s share is 2.3%.

According to Goldman Sachs, the benchmark S&P 500 index is poised for big gains on the back of the increasing adoption of AI-based technologies in the US. Widespread adoption of AI is expected within ten years. The uncertainty is mainly related to possible productivity gains and the ability of firms to convert AI into increased margins. Nvidia (NVDA) is an example of the potential impact on corporate profits through AI technology.

Following the Reserve Bank of Australia, Canada’s central bank raised its benchmark rate by 25 basis points to 4.75%, the highest level in 22 years, because of growing fears that inflation could get stuck well above the 2% target amid consistently strong economic growth. The tone of the statement was rather hawkish. The Canadian dollar was also supported by data showing that Canadian exports jumped by 2.5% in April to an all-time high in volume.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE30) fell by 0.20%, France’s CAC 40 (FR40) lost 0.09% on Wednesday, Spain’s IBEX 35 (ES35) added 0.57%, Britain’s FTSE 100 (UK100) closed down by 0.05%.

The Turkish lira fell by 7% to a record low as the recently elected government loosened measures to stabilize the currency. The lira came under pressure after President Tayyip Erdogan’s re-election on May 28. It hit a record low of 23.16 against the dollar on Wednesday, bringing its losses so far this year to more than 19%.

Oil prices rose about 1% Wednesday as Saudi Arabia’s plans to significantly cut production more than offset demand problems caused by rising US fuel inventories and weak Chinese export data. The US crude oil inventories fell about 450,000, according to the Energy Information Administration, compared with estimates of 1 million units.

Gold began to catch up to the dollar as central banks bought the commodity in record volumes. Gold now accounts for 15% of total assets compared to 44% for the dollar.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 1.82% for the day, China’s FTSE China A50 (CHA50) decreased by 0.63%, Hong Kong’s Hang Seng (HK50) was up 0.83% for the day, India’s NIFTY 50 (IND50) added 0.68%, and Australia’s S&P/ASX 200 (AU200) was negative 0.16% for the day.

China’s major banks cut interest rates on yuan-denominated deposits on Thursday, which could ease pressure on profit margins and lower the cost of lending, providing some relief for the financial sector and the economy as a whole. State-backed banks cut rates on demand deposits by 5 basis points and on three- and five-year term deposits by 15 basis points.

S&P 500 (F) (US500) 4,267.52 −16.33 (−0.38%)

Dow Jones (US30)33,665.02 +91.74 (+0.27%)

DAX (DE40) 15,960.56 −31.88 (−0.20%)

FTSE 100 (UK100) 7,624.34 −3.76 (−0.049%)

USD Index 104.13 −0.02 (−0.02%)

• – Japan GDP (q/q) at 02:50 (GMT+3);
• Australia Trade Balance (m/m) at 04:30 (GMT+3);
• – Indian Interest Rate Decision (m/m) at 07:30 (GMT+3);
• – Eurozone GDP (q/q) at 12:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (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.