Round up of today's market news *

North American News

US Major Indices End the Day with Divergent Performances

Dow Industrial Average average lower. S&P near unchanged. NASDAQ higher

The trading day saw a notable shift in investor sentiment as funds flowed out of the Dow Jones Industrial Average and into the NASDAQ index. After closing above the significant 40,000 mark last Friday, the Dow retreated below this milestone in today’s trading session. Meanwhile, the NASDAQ index experienced a surge, closing at a record high, indicating strong investor confidence in the tech sector. The S&P 500 also performed well, finishing the day higher, though it fell just short of setting a new record, with only modest gains. This mixed performance reflects a dynamic market environment with sector-specific movements.

Closing numbers:

Dow Industrial Average average fell -196.84 points or -0.49% at 39806.76.
S&P index rose 4.86 points or 0.09% at 5308.12.The high closing level reached last week was 5308.14
NASDAQ index closed at a record level with a gain of 108.91 points or 0.65% at 16794.87

The small Russell 2000 rose 6.78 points or 0.32% at 2102.49.

Nvidia shares rose $23.01 or 2.49% and $947.80.There was just below the all-time high closing level of $950.02.

Microsoft shares rose $5.13 or 1.22% and $425.34 after announcing new Co-pilot+ PCs.

Palo Alto Networks Forecasts Quarterly Billings Above Estimates

Palo Alto Networks forecast fourth-quarter billings above Wall Street estimates on Monday, a sign that clients are turning to the cybersecurity firm for its integrated software security tools.

Palo Alto Networks $PANW

EPS. vs Forecast
1.32 / 1.25

Rev. vs Forecast
2B / 1.97B

Market Cap: 103.86B

Microsoft Introduces copilot plus PCs

Fastest most AI ready Windows PC ever built. The all-time high close comes in at $429.37

Microsoft’s Nadella introduces the Copilot+PCs. The PC was described as the fastest most AI ready Windows PC ever built

58% faster than M3 MacBook air
Plan to integrate open AI’s latest GPT model
AMD, Qualcomm, Intel Partnership
New copilot app on PCs
Plans to integrate latest OpenAI GPT model

Shares of Microsoft are trading at $425.39 up $5.12 or 1.22%.

United States 6-Month Bill Auction $USD

Actual: 5.160%
Previous: 5.165%

United States 3-Month Bill Auction $USD

Actual: 5.245%
Previous: 5.250%

Cleveland Fed Pres. Mester: Monetary policies restrictive. Neutral rate may be higher

Cleveland Fed Pres. Mester speaking on Bloomberg TV

Monetary policy is restrictive.
Inflation progress stalled in first three months
April CPI report was good news, but too soon to tell what path inflation is on
Labor markets are becoming better balanced
Rebalancing labor market will put downward pressure on inflation.
We need to gather more evidence on inflation path to determine if it sustainably heading toward 2%
In the first part of the year risks that fit is too restrictive and went down.
Inflation risks are tilted to the upside.
I don’t think about potential rate cut in terms of when.
Rate cut depends on progress with inflation.
Lack of progress on inflation was not welcome.
No risk in spending more time gathering data on inflation because the economy is strong.
Monetary policy is moderating demand, but not as fast as expected.
Still think inflation will come down.
But inflation won’t come down quickly.
Policy is well-positioned for risks on either side.
If there is unforeseen deterioration on real side of economy, can cut rates.
Can hold rates or even raise them if inflation against expectations stalls out or reverses.
We have to be careful in monitoring the economy.
Neutral rate may be higher than thought before. I raised my estimate of it in March.
Previously I expected three rate cuts this year, I do not think that still appropriate.

SF Fed Pres.Mary Daly: Not yet confident that inflation is coming down to 2%

SF Fed Pres.Mary Daly speaking

Not yet confident that inflation is coming down to 2%
Expect improvement in shelter inflation, but just not rapid

Fed Gov. Jefferson: Policy rate is in restrictive territory. Inflation still stubborn

Fed Gov. Jefferson speaking

Policy rate is in restrictive territory.
We continue to see labor market come into better balance and inflation decline, though nowhere near as quickly as would have liked
Will assess incoming data, evolving outlook, balance of risks to set appropriate stands of policy rate.
US economy growing at solid pace, labor market remains solid.
Expect consumer spending growth to slow later this year.
Too early to tell if recent slowdown in disinflationary process will be long-lasting.
April’s better inflation reading is encouraging.
Fed staff estimates core PCe prices rose at annual 4.1% in first four months of 2024 with 12 month change at 2.75%.
Long-term inflation expectations show Americans believe Fed will make good on 2% inflation goal.
Restrictive monetary policy has weighed on housing market.
Market rates take a long time to pass through to PCE Housing services prices.
Large increase in market rents during pandemic may keep housing services inflation elevated for a while.
Important not to focus on just one data point.
Too early to say April CPI started a new trend, but was good sign.
The labor market has been quite resilient.
Labor market coming into better balance.
Possible to have continued job growth while disinflation continues.
Wants Fed policy to fulfill both sides of Fed mandate
Job market resilient gives Fed space to maintain focus on lowering inflation.
Cautiously optimistic we can continue our battle with inflation and keep the economy strong

Fed Gov. Barr: Q1 Inflation was disappointing. Did not provide confidence to ease policy

Fed Gov. Barr speaking

Regulators exploring targeted adjustments to existing liquidity rules
Regulators considering requiring larger banks to hold minimum levels of reserves and pre-positioned collateral at discount window
Larger banks would be required to have available liquidity to cover uninsured deposits
Regulators considering restriction on how much banks can rely on ‘held-to-maturity’ securities under liquidity requirements
Regulators reviewing regulatory treatment of certain types of deposits, including those tied to venture capital or cryptocurrency businesses
Q1 inflation “disappointing,” did not provide the confidence needed to ease monetary policy
Fed will need to allow tight policy further time to continue to do its work
Fed in a good position to “hold steady” and watch economy
Vigilant to the risks to both inflation and employment mandates
Current approach “prudent” to manage both sets of risks
Fed does not want to get anywhere close to a balance sheet size that would interfere with controlling the Fed funds rate.
Most funds in private credit market or not from highly leveraged entities in the face no run risk
If private credit markets were to move to an open ended retail structure that would be cause for concern

Fed’s Bostic: It is going to take a while before we are certain inflation is headed to 2%

Remarks by Atlanta Fed president, Raphael Bostic

Data on inflation has been very bumpy
My outlook is that inflation will continue to fall this year and into next year
But we’ve still got a ways to go
Fed is open to all possibilities on economic path
Risks are really balanced right now
Our policy stance is restrictive
Business leaders tell me that things are slowing down, but very gradually
It will take a while for that momentum to play through in the economy

UBS expect the Federal Reserve to cut rates later this year – here’s why

UBS says lower inflation will allow the Fed to cut

Via a Friday note from UBS, analysts at the bank say:

“We continue to believe recent economic data underpin our view that a return of disinflation should allow the Fed to start easing policy later this year”

Geopolitics: US defense secretary Austin wants Israel to carry out more precise strikes

US Defense Secretary Austin speaking and says:

US want Israel to carry on more precise strikes, less destruction of civilian structures in Gaza
Ukraine’s focus should be on a close fight against Russian forces
We will keep confronting the rent support for terrorism proliferation of dangerous weapons, advancements of its nuclear program.
US military continues to work to provide evidence to ICC about war crimes committed in Ukraine
US had no part to play in Iranians and helicopter crash

Top US General:

No plans to bring us trainers into Ukraine
Confident Ukraine has not used long-range US Weaponry inside Russia

Commodities

Gold price approaches all-time high

Gold extends gains, trading at $2,433, just below the all-time high of $2,450.
Softer US inflation report boosts bets on Fed rate cuts with 76% odds for a September reduction.
Investors anticipate two rate cuts by year-end, potentially lowering the Federal funds rate to 4.75%-5.00%.

Gold extended its gains on Monday, yet it trades slightly below the all-time high of $2,450 reached during the Asian session amid increasing expectations that major central banks, including the Federal Reserve, might ease policy during 2024. The yellow metal trades at $2,433, up 0.80%.

Market sentiment is a mixed bag, though slightly positive, with the S&P 500 and NASDAQ 100 gaining, while the Dow Jones is almost flat. This and last week’s softer-than-expected consumer inflation report in the US boosted bets that the Fed could slash borrowing costs as soon as September.

Gold price trends higher despite hawkish Fed commentary

Gold price advances despite higher US Treasury yields and a weaker US Dollar.The US 10-year Treasury note yields 4.437% and is up one-and-a-half basis points from its opening level.DXY gains 0.06% to 104.55.
Last week’s inflation data showed that underlying prices are easing. That reignited traders’ expectations that the US central bank would resume easing policy.However, they must be cautious as Fed officials pushed back against just one reading that inflation is moderating.
Earlier, Fed speakers grabbed the headlines.First, Atlanta Fed President Raphael Bostic said that policy is restrictive and that it would take a while before they could be certain that inflation is headed to 2%.Vice-Chair Michel Barr echoed his words, noting the Fed will need to keep rates higher to “allow tight policy” to continue to do its work.
Recently, Vice-Chair Philip Jefferson said it’s too easy to tell when the disinflation process will resume while stating that the policy rate is restrictive.
As of writing, Cleveland Fed President Loretta Mester approved the latest CPI data and added that the risks of being “too restrictive” had gone down, while inflation risks are tilted to the upside.

Technical analysis: Gold price hits $2,450 as bulls target $2,500

Gold prices remain set to test higher prices after hitting a new all-time high of $2,450, which could open the door to further gains.Traders should know that momentum supports buyers as the RSI continues to aim higher but is not yet at overbought readings.

If the yellow metal breaches the all-time high, the next stop would be $2,475, followed by the $2,500 mark.

Conversely, if gold retreats below $2,400, that could expose the May 13 low at $2,332, followed by the May 8 low of $2,303.Once those levels are surpassed, the 50-day MA at $2,284 will be up next.

Crude oil settles at $79.80

Down $0.26

Crude oil futures are settling at $79.80. Down $0.26 on the day.

IMF: Russian Federation raise gold holdings by 3.110 tonnes to 2.335.93 tonnes in April

The IMF is reporting:

Russian Federation raised Gold holdings by 3.110 times 2,335.93 times in April
China raised gold holdings b 4.977 tonnes to 2,262.52 tonnes

Gold prices today reached a new all-time Intraday high of $2450.10 before rotating back to the downside.

Commodities are in the spotlight as the new week gets underway

It’s not just precious metals that are shining, copper is also surging higher

Gold is up 1% on the day to trade at fresh record highs, keeping around $2,440 currently. The break above $2,400 at the end of last week is being built upon as we get into the new week. Buyers are keeping steadfast and we’re seeing the conviction carry over since March trading.

Meanwhile, silver also briefly surged past $32 earlier but is still up 1.4% on the day around $31.93 currently.

And it’s not just precious metals that are shining. Copper is also another standout over the last two months as futures are eyeing to hold a firm break above $5 per pound. The high earlier touched $5.16 before a slight pullback to $5.05.

Oil – Morgan Stanley expect demand growth greater than normal

Morgan Stanley expect strong demand for energy to persist

Via a note from Morgan Stanley, analysts at the firm expect oil demand to grow at a rate above its historical trend this year.

2024 is arguably the first ‘normal’ year in a while in which oil demand is mostly reflecting slower-moving drivers, such as economic growth, population expansion, government policies and technological change
What we are finding is this: not only is oil demand continuing to grow, but it is doing so at a rate above the historical trend rate.Given the focus on ‘peak oil demand’ in recent years, this is actually somewhat of a surprise.

EU News

European Major indices close higher

German DAX +0.33%
France CAC +0.35%
UK FTSE 100 +0.05%
Spain’s Ibex was 0.10%
Italy’s FTSE MIB -1.6%

Reminder: It is a bank holiday in most of Europe today

But just take note that major markets in the region will still be open for trading

Most major players in Europe will be out. London will be open though, so there is still that at least. But even with major markets in the region being open, liquidity should be thinned out in the session ahead. France, Germany, and Switzerland are all enjoying the long weekend.

Spain Trade Balance $EUR

Actual: -2.00B
Previous: -2.40B

BOE’s Broadbent: It is possible that a rate cut could come this summer

Remarks by BOE deputy governor, Ben Broadbent

Less restrictive rates will depend on how the data is evolving
But rates will have to be less restrictive at some point
It is unclear how long second-rounds effects of inflation could persist

ECB’s Kazāks: It’s quite likely June will be when we start to cut rates

Remarks by ECB policymaker, Mārtiņš Kazāks, to Bloomberg

Data-dependent approach has been an appropriate one so far
Forward guidance is still not a good policy solution given high uncertainty
Baseline scenario is that we are gradually approaching 2% inflation target
This means we can start to cut rates
But process needs to be gradual and we should not rush it

Asia-Pacific-World News

China sets 1 and 5 year LPR rates unchanged as expected

The LPR plays a vital role in determining interest rates for loans and mortgages in China.

1-year Loan Prime Rate 3.45%

expected and prior of 3.45%

5-year Loan Prime Rate 3.95%

expected and prior 3.95%

PBOC sets USD/ CNY central rate at 7.1042 vs. estimate at 7.2162

The People’s Bank of China set the onshore yuan (CNY) reference rate for the trading session ahead.

USD/CNY is the onshore yuan. Its permitted to trade plus or minus 2% from this daily reference rate.
CNH is the offshore yuan. USD /CNH has no restrictions on its trading range.
A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC.

Iranian state media has confirmed no survivors of helicopter crash

The helicopter was carrying Iran’s President Ebrahim Raisi and Foreign Minister

President of Iran Ebrahim Raisi is confirmed to have died.Iranian Foreign Minister Hossein Amir Abdollahian was on board the chopper and confirmed to have died as well.

PIMCO says Federal Reserve and RBA’s next move is more likely a cut rather than a hike

4 elements the banks are watching

Snippet from PIMCO in Australia on the Reserve Bank of Australia and Federal Reserve, highlighting 4 things both Banks see, which will lead to lower rates:

when headline inflation is 8-9% and underlying inflation is at 5-6%, then of course, the inflation part of their mandate takes complete primacy. But now that inflation has moderated a lot and underlying inflation is around 3.5%, closer to target but not quite there, then there’s greater balance between the inflation part of their mandates and employment part of their mandate. They want to lock in or preserve as much of the employment gains as they can that they’ve seen over the last couple of years.
inflation expectations pretty well anchored … have also stayed pretty stable.
the breadth of inflation is diminishing … the number of components driving the strength in inflation is reducing … it’s really down to things like housing, which is more related to supply side issues and not a cyclical representation of strong demand.
the disinflation process has really stalled, but we haven’t seen a reacceleration of inflation.

So I think they’re the four things that were common in both central bank meetings and that’s what you need for central banks to really turn hawkish.

The probability of a hike is lower because they really are focused on preserving those employment gains.
So when you think about the three main scenarios of a rate hike, rates on hold, or rate cuts, the majority of the probability distribution is across the second and third scenarios.

New Zealand’s RBNZ Monetary Policy Shadow Board recommends cash rate on hold this week

Reserve Bank of New Zealand meet on Wednesday

The Reserve Bank of New Zealand is widely expected to keep its cash rate unchanged at the meeting on Wednesday, 22 May 2024.

Statement is due at 2pm New Zealand time (0300 GMT, 2200 US Eastern time)

The New Zealand Institute of Economic Research (NZIER) Monetary Policy Shadow Board has published what it thinks should happen. Comments (in brief) on reasoning:

recommends the RBNZ keep the Official Cash Rate (OCR) at 5.50%
While there is consensus across the Shadow Board members that annual CPI inflation is continuing to ease, the persistence of high domestic inflation remains a concern.Because of this, the Shadow Board believes the OCR should remain unchanged in May. One member also pointed out that the RBNZ should keep the OCR hold in May, given the uncertainty over the Government’s Budget.

As for this week’s meeting the view of the Shadows is the same as the market consensus, on hold @ 5.5%

Shadow Board members agreed that inflation was easing, but there was uncertainty over whether the pace of this easing would be enough to bring annual CPI inflation back within the inflation target band over the coming year.
The general view was that it would be prudent for the central bank to wait to assess how the economy will track over the coming months, given uncertainty over the global growth outlook and the new Government’s priorities.

Japanese firms are starting to pass on rising labour costs to sales prices – BOJ survey

The BOJ releases some findings in relation to its survey in trying to understand better the dynamics of Japanese firms

Many firms said they can no longer hire enough workers if they curb wages
More firms are starting to pass on rising labour costs to sales prices
Many firms believe that an economy where wages and prices both rise is more favourable
Some firms expressed difficulty in hiring amid intensifying price competition

Weak consumption in Japan may further pressure BoJ to raise interest rates, slow yen fall

Bank of Japan pressures

An analysis piece from Reuters on the pressures the Bank of Japan is facing to hike rates sooner and higher:

Consumption, wage, service price data key to rate hike timing
BOJ chief Ueda faced calls to moderate yen falls at govt council
Political pressure to prod Ueda to keep dropping hawkish signals

Cryptocurrency News

Ethereum poised for high volatility as SEC may ‘slow play S-1s’ filings

Ethereum ETFs may not see approval as SEC may “slow play S-1s”.
Grayscale CEO confirms resignation with only a few days left before SEC decides on spot Ethereum ETFs.
Ethereum may test key support levels if spot ETH ETFs are denied.

Ethereum’s (ETH) price movement on Monday reveals traders’ uncertainty following Grayscale CEO’s departure and expectations that the Securities & Exchange Commission (SEC) would deny applications for spot ETH ETFs this week.

Ethereum ETFs face high odds of denial

Ethereum is expected to experience increased volatility this week as the market anticipates the SEC’s response to spot Ethereum ETF applications.SEC must decide whether to approve or deny Van Eck’s spot Ethereum ETF application on May 23 and the Ark 21Shares Ethereum ETF application on May 24.

In an X post, Nate Geraci, President of the ETF Store, gave insight into the SEC approval process of ETFs and how it would affect the upcoming decisions.He stated that the SEC must approve both 19b-4s (exchange rule changes) and S-1s (registration statements) for an ETF to launch.

19b-4s is the filing that national exchanges like NASDAQ or the New York Stock Exchange (NYSE) submit to the SEC to seek approval for listing a new product on their trading platforms. In the context of ETFs, S-1s refer to the initial registration forms detailing how a fund would be managed and track the underlying asset’s price.

Geraci says it’s “technically possible for SEC to approve 19b-4s & then slow play S-1s,” considering their reported lack of engagement.

Another run to Bitcoin all-time high would be completely realistic, for these reasons

Crypto analysts evaluated the market trend and noted the mass creation of meme coins and inflow to Bitcoin ETFs.
While the market’s sentiment may be negative on X, analysts argue that this does not align with capitulation.
Social and on-chain data and meme coin analysis show that another attempt at BTC all-time high is likely.

Crypto analysts at intelligence tracker Santiment provided an overview of the crypto market and compared Bitcoin and meme coin performance with previous cycles, sharing its implications in a recent tweet on X.

Bitcoin could make another attempt to hit its all-time high, according to analysts.

Bitcoin could take another chance at rallying towards all-time high

Analysts evaluated social and on-chain data and trader activity on platforms like X to identify the state of the market. The most prominent observations of the analysts are the large volume creation of meme coins – nearly 20,000 tokens created daily – and the institutional demand for long Bitcoin calls on margin.

Bitcoin funds and Spot ETFs have injected fresh capital, pushing up the mean dollar invested age metric, which estimates the average age of every dollar invested in BTC’s market capitalization. Historically, periods of steep decline are considered a confirmation of a bull market, and reversals signal trend reversals in BTC.

Based on this metric, downtrend is likely inevitable and traders are riding the gains on “borrowed time,” per the report.Unless there is a steep decline, Bitcoin could suffer a correction, but another attempt at an all-time high is likely.

Busy week for crypto

Crypto analyst stated that this week is important for crypto markets as the US Federal Reserve will publish the minutes of the May meeting, NVIDIA earnings result will come out and the Ethereum ETF decision will likely be out. These major events are scheduled to occur alongside May’s PMI data, which will be released by US, China, UK and the Euro Zone.

These economic events of the week could influence crypto prices as seen in previous cycles, where NVIDIA (NVDA) earnings results catalyzed gains in Artificial Intelligence (AI) tokens, and US macroeconomic releases impacted Bitcoin’s cycle.

XRP stays above $0.50 while Ripple backs research on new frontiers in blockchain technology

Ripple highlighted study from its University Blockchain Research Initiative on the latest developments in blockchain.
The research outlines challenges faced by blockchains like XRP Ledger, against fast-evolving quantum computing.
XRP sustained its gains, holds steady above key support at $0.50 on Monday.

XRP price holds steady above the $0.50 key support level and edges higher on Monday, trading at 0.5130 and rising 0.70% in the day at the time of writing.Ripple (XRP) published its research from its University Blockchain Research Initiative (UBRI) on the intersection of blockchain and quantum computing. The May 17 report on Ripple’s website surveys the impact of quantum computing technology and its advancement on blockchains like the XRP Ledger, which is key to future technical developments in the firm’s network.

XRP holders await a ruling in the Securities and Exchange Commission (SEC) vs. Ripple lawsuit on two major issues: the fine to be imposed on the payment remittance firm for allegedly selling securities (XRP) to institutional investors and an injunction on Ripple’s On-Demand Liquidity (ODL) platform, used by clients to manage liquidity.

Ripple supports technical development-focused research

Ripple funds a University Blockchain Research Initiative to aid research and development in new frontiers of blockchain technology.
The payment remittance firm published a report on May 17, highlighting a leading cause for concern among scholars in the sector, quantum computing and its impact on blockchains like the XRP Ledger.
A Deloitte report titled “Quantum computers and the Bitcoin blockchain” shares the concern and reads:
“…the security of cryptocurrencies is threatened by future quantum computers, which are expected to break some of the currently used cryptography algorithms for which there are no clear replacements.”
In other words, advancements in quantum computing pose a threat to Bitcoin and other encrypted blockchains that rely on cryptography for security.
Ripple dives into these issues in its Ripple Insights series.
The SEC vs. Ripple lawsuit is another key catalyst influencing XRP price on Monday.
XRP holders are awaiting a ruling on two major issues: a fine (the SEC proposed a $2 billion fine on Ripple for alleged violations of securities laws and sale of XRP to institutions, Ripple countered with a $10 million offer), and a likely injunction (order to stop) the sale of XRP to institutional investors through its On-Demand Liquidity (ODL) platform.

Tokens with high FDVs, low circulating supply face fierce criticism from crypto community

Crypto community continues to express harsh displeasure about the effects of tokens with high FDVs, low circulating supply.
Binance released a report pointing to VC effect as major cause of a bull market without buy-ins.
Binance has announced that it will support low and medium-valued crypto projects in a bid to fight off high FDVs.

Tokens with high fully-diluted valuations (FDV) have been subject to fierce criticism recently following a series of token unlocks that has caused losses for several investors.As a result, Binance has said in an announcement on Monday that it will give more focus to small and medium-valued crypto projects.

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Round up of today’s market news

ByBilals Tech