Round up of today’s market news

North American News

NASDAQ and S&P 500 Hit Record Highs

• Modest gains ahead of the Nvidia earnings tomorrow after the close

The major US stock indices are closing with gains today with both the S&P and NASDAQ index closing at record levels.Gains were somewhat modest ahead of the Nvidia earnings after the close tomorrow.

The final numbers are showing:

• Dow Industrial Average is up 66.22 points or 0.17% at 39872.00
• S&P index up 13.30 points or 0.25% at 5321.42
• NASDAQ index of 37.75 points or 0.22% at 16832.62

The small-cap Russell 2000 fell -4.144 points or -0.20% at 2098.35.

Nvidia shares rose $6.06 to $953.86 which is good enough for a record close for that stock.

Other winners today included:

• First Solar, +8.03%
• Tesla +11.65% +6.66% (oh no!)
• Corning +2.70%
• Live Nation Entertainment, +2.56%
• Citigroup +2.53%
• Lam Research, +2.33%
• Bank of America +2.16%
• IBM +2.08%

Some losers today included:

• Trump Media -8.66%
• GameStop, -4.41%
• Palo Alto networks, -3.74%
• American Airlines -3.37%
• Shopify, -3.19%
• Roblox, -3.13%
• United Airlines, -2.91%
• Block, -2.84%

Amazon halts orders of Nvidia “superchip” to await updated model

• The FT reports

The FT is reporting that Amazon is halting orders for Nvidia “superchip” to await updated model.

The announcement has reversed the price of Nvidia in premarket trading. Shares were higher and above the all time high of $950 earlier today, but the price has turns reversed and trades down $-11.14 or -1.19% at $936.

Micron now sees FY2024 capital expenditures at $8 billion versus $7 billion previously

• Micron shares are being marked lower by -1.72%

In premarket news, Micron as an asset fiscal year 2024 capital expenditures will be $8 billion versus previous forecast of $7 billion.

Recall how Meta Platform announced that their capital expenditures were to be higher than expected and the market reacted negatively. The market is currently reacting negatively to the micron news with the stock now markdown $2.30 or -1.72%

Fed Gov. Barr: Overall, the US economy is quite strong

• Fed Gov. Barr speaking

• Overall the US economy is quite strong
• The Fed still needs to finish the job on inflation.
• The Fed needs to sit tight for longer than we previously thought.
• Interest-rate risk will continue.Needs to be managed.

Treasury Secretary Yellen: Concerns about China strategy are shared among G-7 finance

• Treasury Secretary Yellin speaking out about China/Russia from bankers meeting

Treasury Secretary Yellen is speaking on China/Russia from meetings in Frankfurt, and says:

• Concerns about China strategy are shared among G-7 finance ministers.
• If we were to use secondary Russian sanctions on banks, we would do so in a judicious manner.
• Not every detail needs to be worked out on Russian asset plan by time of G-7 leaders Summit in Puglia.
• There does not need to be detailed coordination between G-7 countries on China trade actions, but more forceful to speak with China as a group on overcapacity.
• Bankers in Frankfurt meeting expressed very strong commitment to enforcing Russian sanctions stopping flow of military materials to Russia

Fed Gov. Waller: Wants to see several more months of good inflation data

• Fed Gov. Waller speaking in Washington

• Credit card and auto loan delinquency rates suggest some consumers are under stress.
• Will be closely watching how private domestic final purchases fare in the second quarter.
• Wage growth is still a bit higher than desired, but not excessively high.
• Data on spending and the labor market suggest monetary policy is appropriately set to put downward pressure on inflation.
• The economy seems to be evolving closer to what the Fed expected.
• Data suggests inflation isn’t accelerating.
• April inflation data suggests progress toward the 2% target has likely resumed, but progress was modest.
• Further increases in the policy rate are probably unnecessary.
• An exception would be a significant weakening in the labor market.
• Needs to see several more months of good inflation data before being comfortable supporting an easing in policy.
• Timing of rate cuts will be dependent on data. Is the same for other central banks around the world.
• Progress `2% inflation may be a lot slower than we saw last year
• I just don’t see rate hike happening
• probability of recession seems to have disappeared
• 10 year treasury rate has risen, that’s where you see potential effects on tightening.
• Disconnect about how people think about the speed of rate hike versus expected rate cuts.
• Trying to figure out actual lags is so difficult. Makes us a lot more cautious.

Fed Atlanta Fed Pres. Bostic: Fed’s high priority is to get inflation back to 2%

• Fed Atlanta Fed Pres. Bostic speaking

• “I am not in a hurry” to cut rates; want to ensure policy easing is “unambiguous.”
• Would rather wait longer for a rate cut to ensure inflation does not start to bounce around.
• Fed has to be cautious about the first rate move; it may need to be later to avoid stoking “pent-up exuberance” for investment and other spending.
• Though businesses are confident about the economy, they don’t feel they have the same pricing power as even six months ago.
• Upcoming framework review will be “robust” given the number of open questions about the economy and policy.
• No longer hearing about difficulties in supply chains; hope is that goods deflation continues.
• Expecting inflation to decline but “relatively slowly”; would not expect a rate cut before the fourth quarter.
• Fed’s highest priority is to get inflation back to 2%.
• Efficacy of monetary policy may be weaker than in the past, but it is still having an impact.
• Policy is impacting rate-sensitive sectors and delaying investment.
• Businesses are confident in the underlying strength of the economy; the next year or two should see continued solid performance.

Yellen: Global economy has been resilient amid challenging geopolitical landscape

• Remarks by US Treasury secretary, Janet Yellen

• Global financial conditions have eased since last year’s banking sector turmoil
• Risks are broadly balanced

Morgan Stanley’s Wilson says he sees the S&P 500 at 5,400 by Q2 2025

• Wilson has held a persistently bearish view up until now

ICYMI, Morgan Stanley’s Global Strategy Mid-Year Outlook note was published over the weekend.

The change in view from the bank’s chief U.S. equity strategist Mike Wilson has catalysed headlines such as:

• base case is for earnings growth of 8% in 2024 and 13% in 2025, helped by top-line growth and margin expansion
• by the Q2 2025, the 12-month forward price/earnings multiple for the S&P 500 will be 19 times on aggregate earnings for June 2026 of $283, equating to 5,400

Link may be gated here.

Canada April CPI 2.7% versus 2.7% expected

• Canada April 2024 inflation data

• Prior month 2.9%
• CPI MoM 0.5% vs 0.6% estimate

Core measures

• CPI Bank of Canada core y/y + 1.6% vs 2.0% prior
• CPI Bank of Canada core m/m 0.2% versus 0.5% prior
• Core CPI MoM SA 0.0% vs 0.1% prior (revised to 0.2%)
• Trim 2.9% versus 3.2% prior (was expected at 3.1%)
• Median 2.6% versus 2.9% prior (revised from 2.8%)
• Common 2.6% versus 2.9% prior

From the Canada Statistic office:

The Consumer Price Index (CPI) rose 2.7% on a year-over-year basis in April, down from a 2.9% gain in March.Broad-based deceleration in the headline CPI was led by food prices, services and durable goods.

The deceleration in the CPI was moderated by gasoline prices, which rose at a faster pace in April (+6.1%) than in March (+4.5%). Excluding gasoline, the all-items CPI slowed to a 2.5% year-over-year increase, down from a 2.8% gain in March.

On a monthly basis, the CPI rose 0.5% in April, mainly driven by prices for gasoline. On a seasonally adjusted monthly basis, the CPI rose 0.2% in April.

Commodities

Gold retreats after reaching all-time high

• Gold slumps below $2,430, down 0.28% after reaching an all-time high of $2,450.
• Hedge funds increase bullish bets on Gold futures to a three-week high, capping Gold’s losses.

Gold price retraces during Tuesday’s North American session after hitting an all-time high of $2,450. Yet it retreated below the April 12 high of $2,431 as the Greenback recovers some ground. A scarce economic docket keeps traders leaning on Fedspeak, which remained cautious of signaling the beginning of rate cuts.

The yellow metal trades at $2,418, down 0.28% after reaching a high of $2,433. Wall Street indices remain in the green, a headwind for the safe-haven status for the golden metal.Even though it’s sought as a “hedge” for inflation, investors seem reluctant to give away profits from the US stock market.

Gold price falls despite falling US yields following hawkish Fed comments

• Gold price retreats amid falling US Treasury yields and a weaker US Dollar.The US Dollar Index (DXY), which tracks the Greenback’s performance against a basket of six other currencies, is virtually unchanged at 104.64, putting a lid on Gold prices.
• 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.
• Atlanta Fed President Raphael Bostic stated that he is not in a hurry to reduce interest rates and prefers to keep them steady, emphasizing that the Fed’s top priority is still addressing inflation.
• Fed Governor Christopher Waller acknowledged that April’s CPI showed progress but mentioned that he needs to see several months of favorable inflation data before he can support a rate cut.Meanwhile, Michael Barr, the vice-chair of supervision, remarked, “We still need to finish the job on inflation.”
• On Monday, 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.Cleveland Fed President Loretta Mester stated that inflation risks are tilted to the upside.
• Data from the Chicago Board of Trade shows investors are expecting 35 basis points of Fed easing toward the end of the year.

Crude futures settle at $79.26

• Down $0.54 or -0.68%

The price of crude oil futures are settling at $79.26. That is down by $0.54 or -0.68%.

Private survey of oil inventories shows headline crude build vs. draw that was expected

• The inventory data from the private survey is out now, official data follows Thursday morning (US time).
• crude +2.48 million
• gasoline +2.088 million
• distillates -320,000
• Cushing +1.77 million
• SPR +1 million

Silver reaches a technical crossroad

• Silver price has reached a pivotal point in its technical development. 
• There is a possibility of both a continuation to new highs and deeper correction. 
• The trend broadly remains bullish, however, favoring an eventual resumption higher even if a correction unfolds. 

Silver is consolidating in the $31.60s on Tuesday after pulling back from Monday’s eleven-year high of $32.51. 

The pair remains in a short-term uptrend which is biased to extend. It could be forming a Bull Flag continuation pattern.

If Silver price breaks out above the consolidation rectangle on a closing basis it will activate the Bull Flag and continue the trend higher to the next target at $33.83-5. Further bullishness could even see Silver reach $35.34, a key former high.

A break on a closing basis below the current consolidation range’s lows at $30.95, however, would probably signal a deeper correction was unfolding. 

EU News

European major indices close lower on the day

• European markets close down, US indices see slight uptick. Nvidia shares rebound from earlier losses, near all-time highs.

London/ European traders are going home and with declines in their major indices:

• German DAX, -0.22%
• France CAC, -0.67%
• UK FTSE 100 under -0.09%
• Spain’s Ibex -0.04%
• Italy’s FTSE MIB, -0.64%

Eurozone March current account balance €35.8 billion vs €29.5 billion prior

• Latest data released by the ECB – 21 May 2024

• Prior €29.5 billion; revised to €28.9 billion

Looking at the details, surpluses were recorded for goods (€33 billion), primary income (€9 billion) and services (€5 billion). These were partly offset by a deficit for secondary income (€11 billion).

Eurozone March trade balance €24.1 billion vs €23.6 billion prior

• Latest data released by Eurostat – 21 May 2024

• Prior €23.6 billion

From a seasonally adjusted basis, exports were seen up 0.1% on the month while imports fell by 0.1% compared to February.

Germany April PPI +0.2% vs +0.3% m/m expected

• Latest data released by Destatis – 21 May 2024
• Prior +0.2%

Excluding energy prices, producer prices were seen up 0.3% compared to the month before. The year-on-year reading still shows a negative one (-3.3%) but on a monthly basis, we are seeing prices hold up for now.

UK May CBI trends total orders -33 vs -20 expected

• Latest data released by CBI – 21 May 2024
• Prior -23

UK manufacturing orders fell again in May, with the pace being the fastest since November 2022. The only good news perhaps is that the expectations for future price hikes did abate on the month, down from 27 to 15 – its lowest since January.

SNB total sight deposits w.e. 17 May CHF 467.4 bn vs CHF 468.9 bn prior

• Latest data released by the SNB – 21 May 2024

• Domestic sight deposits CHF 459.0 bn vs CHF 460.3 bn prior

Overall sight deposits dropped slightly in the past week but it isn’t anything out of the ordinary. Here’s the recent trend:

Bank of England’s Bailey: Thinks the next move on rates will be a cut

• Bank of England’s Bailey answers questions

• He will consider IMF recommendation of more MPC press conferences along with Bernanke suggestions
• He expects quite a drop in April inflation data
• Question is how long we maintain this level of monetary policy restriction
• Expects next move on rates will be a cut

ECBs Nagel: June rate cut doesn’t mean ECB will cut in subsequent meetings

• ECBs Nagel speaking in a newspaper interview

• June rate cut does not mean ECB will cut rates in subsequent meetings
• wage developments heading in right direction
• no sign of wage price spiral

IMF says BOE should cut bank rate by 50-75 bps this year

• The IMF comments on the UK economy

• But inflation should only return to BOE’s target on a sustained basis in early 2025
• UK economy set for a soft landing, following the shallow recession in H2 2023
• Sees UK GDP at +0.7% after stronger than expected Q1 data (previous forecast was +0.5%)
• Sees UK GDP at +1.5% in 2025 (unchanged)

Asia-Pacific-World News

China State Planner says 50 fixed-asset investment projects worth 320bn yuan approved YTD

• 50 fixed-asset investment projects worth 320bn yuan approved from January to April

The National Development and Reform Commission of the People’s Republic of China (NDRC) is China’s ‘State Planner’

• 50 fixed-asset investment projects worth 320bn yuan approved from January to April’
• 20 approved in April, worth 115bn yuan
• Will speed up the progress of local government special bond issuance and usage

PBOC-backed Chinese media says China should focus policy on boosting consumer demand

• Should pivot away from credit expansion

Via People’s Bank of China financial news outlet in China, an anlsyst pice:

• China should shift policy initiatives towards boosting consumer demand
• policy should move away from expanding credit

PBOC sets USD/ CNY reference rate for today at 7.1069 (vs. estimate at 7.2366)

• PBOC CNY reference rate setting for the trading session ahead

PBOC injects 2bn via 7-day RR, sets rate at an unchanged 1.8%

• 2bn mature today
• thus neutral in OMOs today

RBA minutes: Considered whether to raise rates

• Minutes of the May 2024 Reserve Bank of Australia meeting

Minutes of the May 2024 Reserve Bank of Australia meeting.

Headlines via Reuters:

• Considered whether to raise rates, judged case for steady policy the stronger one
• Board agreed difficult to either rule in or rule out future changes in the cash rate
• Flow of data had increased risks of inflation staying above target for longer
• Board expressed limited tolerance for inflation returning to target later than 2026
• Staff forecasts were considered sound, presented credible path back to target
• Board noted forecasts were predicated on noticeably higher path for the cash rate
• Rate rise could be appropriate if forecasts proved overly optimistic
• Risks around the forecasts were judged to be balanced
• Importantly,inflation expectations remained well anchored
• Reasonable to lookthrough short-term variation in inflation to avoid “excessive fine tuning”
• Labour market had proved tighter than expected, consumer demand weaker
• Financial conditions in Australia were judged to be restrictive
• Risks to global growth had become more balanced, outlook for US and China revised upward

Australia: Westpac consumer confidence index (May): -0.3% to 82.2 (prior -2.4% to 82.4)

• Westpac-Melbourne Institute consumer confidence index

Australian consumer sentiment remains in the doldrums

Via Westpac, their summary points 

• Expectations gradually improving but offset by renewed pressure on finances.
• Budget’s cost-of-living support measures relatively well-received.
• Consumers more uneasy about inflation following Q1 upside surprise.
• Those in line for stage 3 tax cuts plan to save 80¢ of every dollar.
• Job market confidence slips back to long run average levels.
• Housing sentiment remains stuck between extremely weak ‘time to buy’ assessments and strong price expectations.

Earlier today ANZ – Roy Morgan published their weekly Consumer Confidence index

• +1.8 to 82 points last week

Australian telecommunications giant Telstra slashing up to 9% of its workforce

• Up to 2800 job losses – a big hit in Australia

Telstra says it’ll make the majority of the job cuts by the end of 2024.

Local Australian media with the news.

New Zealand global dairy trade prices rise 3.3%

• Average selling price of 3.861/Tonne

New Zealand global theory trade prices rise in the current auction.

• Price index rises at 3.3%
• Average price $3861/Tonnes

New Zealand Treasury says there is no near term turning point seen for the economy

• NZ Treasury are with the consensus expecting no change from the RBNZ this week

From the New Zealand Treasury’s Economic Update, issued late last week:

• Weak housing market, lower food prices and expected inflation highlights low demand
• No turning point in sight amid lower retail spending and sector-wide business activity

Treasury include a forecast for Wednesday’s Reserve Bank of New Zealand meeting, with the consensus:

• Indicators continue to point to low demand heading into the second quarter affecting consumers and businesses alike.
• A convincing drop in inflation expectations, discretionaryspending and normalising patterns of migration will bewelcome news to the Reserve Bank but a rate cut at (this) week’s Monetary Policy Statement is unlikely.
• Furthermore, business sentiment across all sectors show no sign of a turning point in the near term painting a bleak picture at least in the domestic economy.

On China (a major NZ trading partner):

• Weaker-than-expected credit data, along with soft inflation, easing sentiment in manufacturing and services surveys and persistent housing market weakness confirm subdued domestic demand amidst weak consumer confidence.

Japan finance minister Suzuki says he will attend the G7 meeting and discuss “issues”

Japan finance minister Suzuki says he will attend the G7 finance leaders meeting in Italy:

• Will discuss world economy, AI, and other issues
• says the government is watching markets (Suzuki was asked about the rise in long-term interest rates)
• will conduct appropriate bond management policy
• will deal appropriately as needed on FX
• its desirable that FX moves in a stable manner

He adds that at this stage he is more concerned about the negative aspects of the weak yen.

Cryptocurrency News

Ethereum ETF Approval Boosts Ether’s Value; SEC Signals Positive Stance

• SEC’s positive outlook on spot Ether ETFs increases approval likelihood, prompting Ether’s surge to $3832.50. Bloomberg analysts raise approval probability to 75% amidst discussions on expedited 19b-4 filings. .

The likelihood of Ethereum ETF approval has increased as the SEC signals a more positive stance towards spot Ether ETFs, causing Ether’s value to surge.Ether reached as high as $3832.50.

Bloomberg analysts revising the approval probability from 25% to 75% due to increased discussions on expedited 19b-4 filings.

The shift has also spurred a broader crypto rally, with Bitcoin surpassing $70,000 to a high price today of $71,958. The price is off its highs and trading near close for the day however at $70,142.

Cardano ADA’s recent breakout could trigger 15% rally

• Cardano price rally on Monday suggests that a larger bullish move might be in the works.
• On-chain data shows a comeback in investor interest and entry of institutional investors.
• Investors could reaccumulate ADA if it were to fall to $0.456, the 61.8% Fibonacci retracement level.
• A daily candlestick close below $0.42 would invalidate the bullish thesis, possibly triggering a 7% decline to $0.39.

Cardano (ADA) price could be set for a 15% rally after the sharp 7% price increase seen on Monday, technical indicators show.The recent price action of the so-called “Ethereum-killer” has formed a double-bottom technical formation and broke above the key $0.47 resistance, a bullish sign that is also supported by increasing network activity.

Cardano price looks set to rebound 

Cardano price, in the four-hour time frame, broke the resistance level of $0.47 on Monday and has held above it.From May 10 to 15, the RSI posted a bullish divergence with price, or when the RSI shows higher lows and prices form lower lows.This would point to increasing bullish momentum, and a move above the oversold area could work as the catalyst for a fresh long position.

In the first half of May, Cardano price created a peak at $0.47 after bouncing off the $0.42 support level twice. This double-bottom pattern is a bottom reversal pattern and often hints at a potential trend reversal, favoring the bulls. If bullish momentum persists and ADA is able to break the resistance at $0.52 a daily high from April 22 and the monthly pivot level of April – it is likely to rally 15% to $0.60, the high from April 11.

In the event of a decline, the Volume Profile indicator shows that the range between $0.47 and $0.45 is a good support zone. This area harbors the highest traded volume level, making it a good place for investors to buy the dip. To add more credence to this area, the 61.8% Fibonacci retracement level at $0.45 also roughly coincides with this area, making it a high probability reversal zone.

Ondo price poised to break ATH of $1.04

• Ondo price is slowly testing its major support level at $0.63-$0.61.
• Aggressive buyers can consider accumulating around the immediate support zone, which extends from $0.83 to $0.80.
• If the daily candlestick closes below the $0.61 level, the bullish thesis will be invalidated. 

The Ondo (ONDO) price has tried to break its recent all-time high but has failed to do so, and now prices are approaching major support levels.

Ondo price likely to provide accumulation opportunity 

Ondo price attempted to breach its all-time high (ATH) at $1.04 but failed, leading to a correction. Confluence from the volume profile indicator suggests that the $0.83 to $0.80 range will likely serve as a support zone. 

However, the optimal range to accumulate ONDO price would be between $0.630 to $0.618. 

If Ondo price breaches the current ATH, investors can expect a 16% rally to $1.21. 

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