North American News
Stock market close: Fourth day of gains
- Closing changes for the main North American markets
- S&P 500 up 58 points, or 1.5%, to 3903 (high of 3914)
- Nasdaq up 2.3%
- Russell 2000 up 2.3%
- DJIA +1.2%
US initial jobless claims 235K vs 230K estimate
- The weekly US jobless and continuing claims
- Initial jobless claims 235K vs 230K estimate
- week moving average 232.5 K vs. 231.7 5K last week
- Continuing claims 1375M vs 1327M estimate. The low watermark for continuing claims was 1306M
- 4 week moving average 1.335M vs. last week’s 1.3185M
- The largest increases in initial claims for the week ending June 25 were in New Jersey (+5,569), Massachusetts (+3,217), Ohio (+2,588), Kentucky (+1,478), and Missouri (+1,375),
- The largest decreases were in California (-2,504), Texas (-2,074), Michigan (-1,683), Pennsylvania (-1,628), and Georgia (-1,606)
Atlanta Fed GDPNow -1.9% vs -2.1% prior
- Slight improvement in the GDP tracker
Commodities
Gold Price Forecast: Bulls move in ahead of the critical NFP
- Gold is correcting from a significant sell-off in the week ahead of NFP.
- The bulls eye a 50% mean reversion but it all comes down to key data on Friday.
The gold price is consolidatred and flat on the day, oscillating around $1,739 after edging up from a nine-month low early on Thursday. The precious metal has climbed from a low of $1,736.58 and has reached a high of $1,749.13 on the day as markets get set for Friday’s US Nonfarm Payrolls data.
The data on Friday will be keenly eyed and the gold price will send on it. The yellow metal has been pressured on the back of recession fears and weak stock markets that have seen investors move into the US dollar and bonds instead. With that being said, Wall Street benchmarks have climbed rose on Thursday, as investors reacted positively to the previous day’s commentary from Federal Reserve offices that the aggressive pace of interest rate hikes could be tempered if growth suffered.
Meanwhile, the dollar index (DXY), which measures the currency against six counterparts, fell after Wednesday’s peak of 107.27, a level not seen since late 2002. Investors are weighing the risks of a recession and whether interest rate hikes will be paused as global demand is under pressure. The Atlanta Fed’s GDPNow model estimates seasonally adjusted GDP growth on an annual basis in the second quarter was -2.1%.
Minutes from the central bank’s June policy meeting, where the Fed raised interest rates by a surprise 75 basis points, showed on Wednesday a firm restatement of its intent to get prices under control. Nevertheless, there was an acknowledgement that the risk of rate increases having a “larger-than-anticipated” impact on economic growth and judged that an increase of 50 or 75 basis points would likely be appropriate at the policy meeting in July.
For Friday, US Nonfarm Payrolls are expected to rise by 268,000 in June after an increase of 390,000 jobs in May, while the unemployment rate is expected to hold steady just above the pre-pandemic level. ”We expect employment to have continued to recover in February following the unexpectedly strong January report—despite the Omicron-led surge in COVID cases,” analysts at TD Securities explained.
”That said, we look for some of last month’s boost to fizzle, though to a still firm job growth pace. Wage growth likely slowed to a still strong 0.5% m/m, as the lower-wage workers affected by Omicron in January returned to work.”The analysts at TDS explained that a miss on the headline might provide a knee-jerk USD pullback, reflecting hopes of further dialing back of central bank hawkishness.”
Crude oil futures settle at $102.73
- Up $4.20 or 4.26%
The price of WTI crude oil futures are settling at $102.73. That’s up $4.20 or 4.26%.
The high price reached $104.48. The low price extended to $96.57 in a active trading day.
US weekly crude oil stocks +8235K vs -1043K expected
- Weekly US petroleum inventory data
- Prior was -2762K
- Gasoline -2497K vs -480K expected
- Distillates -1266K vs +1133K expected
- Cushing +69K vs -782K prior
The private oil survey from API late yesterday:
- Crude +3825K
- Gasoline -1814K
- Distillates -635K
- Cushing +459K
EU News
European major indices close with solid gains
- UK’s FTSE 100 up over 3%
Time flies when you’re back at work. It went so fast that I missed the European equity close. Sharply higher after
The European major indices closed sharply higher led by Italy’s FTSE MIB which rose over 3%. The UK FTSE 100 gain of 1.14% after Prime Minister Boris Johnson’s resignation
Final numbers:
- German DAX, +248.7 points or 1.97%
- France’s CAC +94.32 points or 1.6%
- UK’s FTSE 100 81.31 points or 1.14%
- Spain’s Ibex +173.9 points or 2.19%
- Italy’s FTSE MIB +637.08 points or 3.05%
Other News
Fed’s Waller: Inflation is too high and doesn’t seem to be coming down
- Comments from the Fed Governor
- We need to move to a much more restrictive setting
- We need to front-load rate hikes, large increases early
- After we get to neutral, then we can flatten out increases
- As second half of the year comes in, we’ll be in better position to move according to data
- I support 75 bps in July and probably 50 bps in Sept
- We need to get inflation under control
- Better to err in on side that inflation expectations might be coming unanchored
- Sees jobs report tomorrow in the region of 275K (consensus is 268K)
- It’s not clear we’re going to have a recession despite news on GDP
- I think fears of a recession are overblown
- Economy is reasonably strong
- Effect of balance sheet reduction already priced in
- We have a good shot at a soft landing
- We’re seeing diveregences between GDP and GDI; it’s odd to add 2.5m workers and have GDP go down
- I need to see core PCE come down to 2.5-3% before feeling comfortable on really reducing interest rates
- There’s not a chance he would be comfortable with 3% inflation
- Most of the inflation issue is demand-side driven
- If we can slow growth down for 9 months to a year that would be sufficient to get inflation back down without causing a recession
Cryptocurrency News
JUST IN: This is when Ethereum’s Merge hard fork will be activated
- Ethereum Merge is now imminent, developers successfully completed the Sepolia trial on the public test network.
- The final trial of the Ethereum Merge will be conducted over the next few weeks, before mainnet transition.
- Terence Tsao considers Merge transition a success, assures Ethereum holders no further delays are expected.
Ethereum Merge is closer to the successful completion of the Sepolia testnet. The final step before Ethereum’s transition to Proof-of-Stake is the Goerli test. Protocol developers assured Ethereum holders of no further delays in the Merge timeline.