North American News
Impressive comeback: US stocks shake off huge declines to finish solidly higher
- Closing changes as the US returns from holiday
It’s a holiday-shortened US trading week but it’s already had enough drama for many days.
US stocks were down 2% shortly after the open but a drop in yields and oil prices helped convince the bulls (or shorts?) that it was time to buy
Closing changes:
- S&P 500 +0.2%
- Nasdaq +1.75%
- Russell 2000 +0.5%
- DJIA -0.4%
US May factory orders +1.6% vs +0.5% expected
- US factory orders and durable goods orders revisions
- Prior was +0.3%
- Durable goods orders +0.8% vs +0.7% prelim
- Durable goods orders non-defense ex-air +0.6% vs +0.5% prelim
- Durables ex transport +0.7% vs +0.7% prelim
- Factory orders ex-transport +1.7% vs +0.3% prior (revised to +0.6%)
US 2s-10s Treasury Yield Curve Inverts Again, As Recession Fears Build Up
- US Treasury yields plunged on Tuesday on what is seen as a “recession trade” by financial analysts.
- The US Q1 GDP on its final reading contracted by -1.6%.
- The US Federal Reserve Chair Jerome Powell committed to bringing inflation downs, even if the US economy slows down.
Commodities
Gold drops $40 to the worst levels of the year
- Dollar strength is one factor that’s weighing on gold
Gold is down $43 to $1767 as the US dollar surges and recession fears cloud the demand outlook. Earlier today Russia forecast a larger government surplus but said the money won’t be put into FX or gold reserves.
I suspect this move has little to do with news-flow and more to do with technicals and the darkening cloud over risk assets. US equities are down 2% and everything is being sold at the moment. For gold, the fall in Treasury yields should be good but I don’t think we’ll see it translate into gold gains until central banks pivot to something less-hawkish. At some point the USD-fever will crack but right now all the focus is on falling European growth and that’s kept the dollar bid.
Oil is now down $9 from the highs
- Huge swing in oil prices
Oil is doing a nice job of encapsulating the reversal in sentiment today.
Crude was up $3 at the highs but is now down nearly $6. It’s trading at $102.44 at the moment after peaking at $111.45.
EU News
European stock markets struggle, S&P 500 futures down 20 points
- Earlier gains reversed
S&P 500 futures were comfortably higher a couple hours ago but have turned negative as the euro hits a 20-year low.
The market is flagging risks of a euro-zone or global recession. Natural gas prices in Europe continue to spike and the ECB is set to hike rates in July and September.
European stocks are leading the selloff with the Stoxx 600 down 0.5%, FTSE 100 down 1.1% and German DAX down 0.9%.
Right now the price action in FX is more-dramatic than anything happening in the stock market
Other News
UK political Tory resignations are dropping like bombs
In recent trade, UK political Tory resignations are dropping like bombs due to the incompetence of the PM.
Firstly, British Health Secretary Sajid Javid resigned from Prime Minister Boris Johnson’s government on Tuesday, he said in a statement.
We then had news across Twitter that the UK’s Finance Minister Rishi Sunak resigned.
UK PM Boris Johnson says ”it seemed to me that it was ‘reasonable grounds’ for pincher to continue in his post after a complaint was raised, but in retrospect that was the wrong decision.”
”Past complaint against pincher brought to johnson didn’t come ‘anywhere near the threshold of criminality”’
So far, GBP is holding up after the initial 12 pip move to the downside vs the US dollar.
More to come…
Cryptocurrency News
Singapore’s central bank is considering further restrictions on retail crypto trading
The Monetary Authority of Singapore is the coutnry’s central bank.
The government minister who oversees the MAS spoke in parliament on Monday, saying there MAS is thinking through
- placing limits on retail participation in ctrypocurrencies
- place limits on the use of leverage in crypto trading
He added:
- “Since 2017, MAS has consistently warned that cryptocurrencies are not suitable investments for the retail public.”
- “Most cryptocurrencies are subject to sharp speculative price swings. Recent events have vividly demonstrated the risks, with prices of several cryptocurrencies falling drastically.”