North American News
S&P Breaks Six-Day Slump with Nearly 1% Gain, Reverses Losing Streak
- The outcome was in the balance earlier
The S&P 500 initially surged 25 points at the opening bell, only to retreat during the first two hours of trading, briefly dipping into negative territory. However, bullish sentiment prevailed as investors bought the dip, propelling the index to a 70-point rally at its peak. Although some selling pressure emerged in the final 90 minutes of trading, it was insufficient to erase the gains, marking a successful session for the index.
Closing changes on the day:
- S&P 500 up 0.8%
- DJIA +0.7%
- Russell 2000 +1.1%
- Nasdaq Comp +1.0%
IMF’s Gopinath says high U.S. deficits fueling demand, global growth, higher rates & USD
- She is not wrong
First Deputy Managing Director of the International Monetary Fund, Gita Gopinath addressed a fiscal forum at the IMF and World Bank spring meetings on Saturday:
- said that US deficits are projected to rise for years with one of the world’s steepest curves for debt
- “The high levels of deficits are also supporting growth and demand in the U.S. that have positive spillover to the rest of the world,”
- “But along with that growth, you’re getting higher interest rates and a stronger dollar and the second two are creating more complications for the world.”
IMF’s estimates that the U.S. deficit for 2024 will reach 6.67% of GDP, rising to 7.06% in 2025 (which is double the 3.5% number in 2015).
Gopinath said the IMF’s annual “Article IV” review of US economic policies will be complete in coming weeks, it’ll recommend that the US
- raise tax revenues
- reform costly Social Security and Medicare programs
Canada March new housing price index 0.0% vs +0.1% expected
Canada March PPI -0.5% y/y vs -1.7% prior
- Canada March 2024 producer price index data
- Prior was -1.7%
- PPI +0.8% m/m vs +0.7% prior
- Raw materials price index -0.5% y/y vs -4.7% prior
- Raw materials price index +4.7% m/m vs +2.1% prior
BMO forecast a rate cut from the Bank of Canada, but trim back on the number of cuts
- BMO project 75bp of cuts in 2024 and the same in 2025
Bank of Montreal expect a June rate cut from the BoC, then another in July, and one more later in the year.
- BOM had been looking for 100bp of cuts this year
BOM also look for 75bp of cuts in 2025
- also down from their previous forecast of 100 bp of cuts
BOM expect further cuts in 2026, and lifted their projection for the BoC neutral rate by 25 bps to 3.00%.
BoC currently:
Commodities
Gold sees near-term momentum get called into question to start the week
- The precious metal is down 1.3% to $2,360 as geopolitical fears ebb
The price action in gold lately has been one that has been hovering just under the $2,400 mark mostly. Buyers tried for a firm break of the key level but ultimately failed to hold a daily close above that. The mood music was also helped by recent geopolitical tensions between Israel and Iran. But as those fears ebb a little now, we’re seeing gold slip back. But has that changed the recent momentum?
Oil bounces around before finishing lower by 29-cents
- WTI crude oil down slightly on the day
Iran-Israel geopolitical risk continued to come out of oil today but the decline wasn’t as bad as feared. WTI finished the day down 29-cents to $82.82, well above the low of $81.85.
It was no-doubt helped by the broader improvement in risk appetite and US dollar selling that emerged halfway through US trading.
Silver is under increasing bearish pressure below support
- Silver building up bearish momentum after breaching $27.57 support level.
- A brighter market mood amid receding geopolitical risks is weighing on Precious metals.
- Silver has scope for further decline, next targets are $26.85 and $26.30.
Silver is going through a deep correction on Monday, with precious metals suffering as concerns about an escalation of the Middle East conflict ebb. The lower US Yields have failed to support demand for the white metal, which has depreciated about 5.7% from Friday’s highs.
EU News
European equities score a win, led by the FTSE 100
- European closing levels
- Stoxx 600 +0.6%
- German DAX +0.6%
- UK FTSE 100 +1.7%
- French CAC +0.2%
- Italy MIB -0.7%
- Spain IBEX +1.5%
Eurozone April flash consumer confidence -14.7 vs -14.4 expected
- Highlights of the April eurozone consumer confidence report
- Prior was -14.9
UK Rightmove House Price Index +1.1% m/m in April (prior + 1.5%)
- UK’s Rightmove April 2024 survey of asking prices
UK Rightmove House Price Index
- +1.1% m/m in April (prior + 1.5%)
- +1.7% y/y (prior +0.8%)
SNB total sight deposits w.e. 19 April CHF 481.3 bn vs CHF 477.9 bn prior
- Latest data released by the SNB – 22 April 2024
- Domestic sight deposits CHF 472.9 bn vs CHF 469.4 bn prior
SNB raises minimum reserve requirement for banks
- The minimum reserve ratio is raised from 2.5% to 4.0%
The change will go into effect from 1 July 2024. At the same time, the central bank announces that:
“Liabilities arising from cancellable customer deposits (excluding tied pension provision) will in future be included in full in the calculation of the minimum reserve requirement, as is the case with the other relevant liabilities. This revokes the previous exception whereby only 20% of these liabilities counted towards the calculation.”
Germany’s industry lobby warns of production slump to continue this year
- Germany’s BDI says that industrial production is likely to decline again in 2024
The industry lobby also notes that exports will stagnate this year, making for a rather uncertain picture for the industry.
“Industry in Germany has not yet recovered from the cost and demand shocks, from moments of extremely high energy prices and from inflation. Despite moderate recovery prospects, we must not delude ourselves. Overall, production figures have been showing a worrying downtrend for years.”
They are forecasting a 1.5% production fall in 2024 with exports to remain flat after having fallen by 1.5% in 2023.
ECB’s Villeroy says Middle East stress should not delay June rate cut, with more to follow
- Villeroy favours a June cut as long as there no surprises before then
Governor of the Bank of France and therefore a European Central Bank Governing Council member Francois Villeroy de Galhau in an interview with French media, Les Echos.
- “At the moment, the conflict is not leading to a marked rise in oil prices. If this were ever the case, we would have to analyse monetary policy for whether this shock is temporary and limited, or whether it is transmitted – beyond commodities – to underlying inflation”
- “Barring surprises, there is no need to wait much longer”
- “It should be followed by further cuts, at a pragmatic pace”
ICYMI: Morgan Stanley forecast 75 bp or rate cuts from the European Central Bank in 2024
- Also expect limited policy divergence between the Fed and ECB
Via a note from Morgan Stanley economists last week, in summary:
- expect 3 25 bp rate cuts from the ECB this year
- say that divergence between the Fed and ECB on rate cuts will be small: “While a certain level of decoupling between the Fed and ECB can occur, we think that it will be limited”
Swiss National Bank Chair Jordan says monetary policy should remained focused on inflation
- SNB Chairman Jordan says debt too high, deficits too big.
Swiss National Bank Chair Jordan spoke with Switzerland’s national broadcaster, Schweizer Radio und Fernsehen (SRF, “Swiss Radio and Television”), saying that in many countries:
- economic growth is too low
- productivity is too low
- the level of debt is too high
- and deficits are too large
Asia-Pacific-World News
PBOC Loan Prime Rates (LPR) remain unchanged at today’s rate setting, as expected
- LPRs set at 3.45% for the one-year and 3.95% for the five-year
US-China trade war ramping up: China slaps a 43% tariff on widely-used US chemical
- Propionic acid
ICYMI from Friday, a Chinese Ministry Of Commerce statement had a new impost on US good.
China has hit imports of propionic acid from the United States with a levy of 43.5%. The chemical is widely used in food, feed, pesticides and medical fields.
The Ministry Of Commerce cited an investigation found the Chinese domestic propionic acid industry was “materially damaged.”
The previous data, Thursday, China’s commerce ministry said it firmly objects to the U.S. raising tariffs and will take all necessary measures to protect its rights and interests.
Tesla slashed prices in the US, Europe and China over the weekend
- TSLA is trying to address plunging sales
Tesla announced price cuts pretty much across the globe:
- the US, Europe, China, the Middle East, and Africa
South Korean trade intensity increased in the first 20 days of April
- Exports and imports both higher y/y
Data from South Korea for trade performance in the first 20 days of April:
- exports +11.1% y/y (led by strong sales of semiconductors, chip exports rose 43% in the first 20 days y/y)
- imports +6.1% y/y
- trade balance deficit of USD 2.65bln
In March exports rose 3.1% y/y.
Vietnam’s Central Bank is to cancel Monday’s gold auction due to a lack of interest
- But the auction will take place on Tuesday
Vietnam’s central bank said on Monday it would cancel its first gold auction in 11 years due to a lack of interest from buyers
The Bank added that the auction was now expected to take place on Tuesday.
Bank of Japan Governor Ueda says Bank will cut back on buying JGBs “irrespective” of data
- And will raise rates if inflation goes up
Bank of Japan Governor Kazuo Ueda spoke at a seminar hosted by the Peterson Institute for International Economics on Friday. ICYMI from Ueda:
- BOJ must maintain loose monetary policy for the time being as underlying inflation remains “somewhat below” its 2% target, and long-term inflation expectations are still near 1.5%
- BOJ will also begin to cut its purchases of Japanese government bonds (JGBs) (timing and extent of the reduction are yet to be determined)
- “Irrespective of what the data will say in the near future, we will like to find a way and timing to reduce the amount of JGB purchases”
- “If underlying inflation continues to go up, we will very likely be raising interest rates”
Cryptocurrency News
Bitcoin price nicks $66K after halving as BTC transaction fees reverse
- Bitcoin price has nicked $66,000, but transaction fees have dropped after peaking at $128 on April 20 halving hype.
- BTC strength at around $60,000 continues to protect the range low of the re-accumulation range around $59,195.
- Swiss Bitcoiners call for National Bank to buy BTC for its national reserves for independence from the European Central Bank.
Bitcoin remains on the watch list of every cryptocurrency market player following the fourth halving on April 20. The event is expected to kick off the next bull cycle, with altcoins standing first in line to enjoy capital overflows. Bitcoin continues to show strength, but not enough to draw in the late bulls, at least for now. The pioneer crypto continues to enjoy the limelight following the successful completion of the halving. Now, data shows that BTC transaction fees are dwindling, which could have a bearing on Bitcoin price.
ICYMI – Bitcoin halving took place over the weekend
- Halving events result in a greatly reduced supply of Bitcoin ahead
The halving took place once block number 840,000 was mined. This happened early in the weekend. The halving has reduced the Bitcoin block mining reward to 3.125 Bitcoins (new Bitcoins are introduced into circulation through these mining rewards.).
MakerDAO whales sold over $9 million in tokens, MKR price takes a hit
- MakerDAO whales sold over 3,000 MKR tokens in the past day.
- Maker supply on exchanges climbed between April 20 and Monday.
- MKR price declined by nearly 2% on Monday.
MakerDAO (MKR) price is down nearly 2% on Monday. The token is experiencing an increase in selling pressure as whales shed their MKR holdings in the past day. Crypto intelligence tracker Spotonchain identified two whale wallets that sold over 3,075 MKR tokens, likely ushering a correction in the asset’s price.
Injective could extend gains with 99% approval on upgrade proposal to reduce inflation
- Injective tokenomics upgrade proposal receives 99% approval ahead of the end of the voting on Tuesday.
- The Injective 3.0 proposal aims to reduce the token’s inflation to make its native token INJ “one of the most deflationary assets to date.”
- INJ price rises nearly 1% on Monday, adding to nearly 10% gains in the past week.
Injective (INJ), a layer-one blockchain that hosts several decentralized finance (DeFi) applications on its chain, looks set to proceed with a major upgrade that aims to reduce the token’s inflation rate. INJ price is up nearly 1% on Monday, building on recent gains, as the proposed upgrade is getting the support of 99% of stakers and validators just a few hours before the voting ends.
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