Round up of today’s market news

North American News

Nasdaq and S&P Set New Records as Apple Reaches All-Time High

• Dow and Russell 2000 move lower on the day

The trading day ended with record closes for both the S&P 500 and the Nasdaq, each achieving session highs by the close. In contrast, the Dow and small-cap Russell 2000 indices finished the day lower. Apple saw a significant boost, rising sharply by $14.03, or 7.26%, to reach a new all-time high of $207.15. This surge followed a delayed positive reaction to announcements made at the Worldwide Developers Conference.

At the close:

• Dow Industrial Average was felt -120.64 points or -0.31% at 38747.43
• S&P index rose 14.53 points or 0.27% at 5375.31
• NASDAQ index rose 151.02 points or 0.88% at 17343.55

The small-cap Russell 2000 fell minus 7.26 points at 2024.34

Meanwhile, Nvidia’s shares took a breather, dipping by 0.72%. These mixed movements highlight a dynamic market environment, with tech giants driving major indices to new records while other sectors show varied performance.

Other winners today included:

• GameStop Corp (GME): +22.71%
• AMC Entertainment (AMC): +10.83%
• Apple (AAPL): +7.25%
• First Solar (FSLR): +5.26%
• Palantir (PLTR): +3.13%
• CrowdStrike Holdings (CRWD): +2.69%
• Snap (SNAP): +2.63%
• Broadcom (AVGO): +1.52%
• Uber Tech (UBER): +1.45%
• Roblox (RBLX): +1.40%
• Rocket (RKT): +1.39%
• General Motors (GM): +1.35%
• Snowflake (SNOW): +1.33%
• Corning (GLW): +1.33%
• Shopify Inc (SHOP): +1.30%

Losers today included number of financials. A view of some of the losers today included:

• Citigroup, -3.73%
• PayPal, -3.46%
• American Express, -3.40%
• Deutsche Bank, -3.29%
• Grayscale Bitcoin ETF, -328%
• J.P. Morgan, -2.63%
• Super Micro Computer, -2.45%
• Boeing, -2.43%
• Delta, -2.40%
• Ford, -2.18%

US auctions $38B of 10 year notes at a high yield of 4.438%

• WI level at the time of the auction: 4.458%

• High yield:4.438%
• WI level at the time of the auction: 4.458%
• Tail -2.0 BPs vs 6 month average of 1.1 bps
• Bid to cover: 2.60X vs 6-month average or 2.50X
• Directs: 13.81% vs 6 month average of 17.53%
• Indirects: 74.6% vs 6 month average of 65.42%
• Dealers:11.59% vs 6 month average of 17.03%

US May NFIB small business optimism index 90.5 vs 89.7 prior

• Latest data released by NFIB – 11 June 2024

The reading represents the highest for the year so far, though it remains below the 50-year average of 98 for the 29th month running. For some context, the last time the reading was at or above the average was all the way back in December 2021. Looking at the details, the uncertainty index rose up to 85 points – its highest since November 2020.

Timiraos: Fixation on dot plot obscures ‘remarkable cohesion’ on the Fed’s stance

• Almost everyone on the Fed wants to wait and see.

WSJ Fedwatcher Nick Timiraos is out with his preview of tomorrow’s FOMC decision and he highlights that while there will be differences in the dot plot, the main message from everyone at the Fed is that they want to wait and see on the data and will do what’s necessary after seeing it.

He notes that tomorrow’s CPI report could change some FOMC dots and they’re not due until just before the release.

“There are more signs emerging that the serious labor-market shortages and imbalances of the past three years have resolved without any meaningful increase in unemployment, raising questions over whether the labor market might soften at the margins,” Timiraos writes.

Officials want more evidence that inflation is falling before cutting but don’t want to wait until there are problems in the jobs market.

The main event will be the dot plot though and it will be directly impacted by tomorrow’s CPI report.

“A disappointing inflation report could hold more officials to a projection of no more than one cut this year. A serene report could lead more of them to pencil in two cuts,” he writes.

UBS raises the question of Fed rate hikes after the super-strong jobs report

• UBS says the Federal Open Market Committee (FOMC) is unlikely to raise rates after Friday’s smashing NFP

UBS says a rate hike won’t happen.

• “Overall, we keep our view that the U.S. economy is slowing”
• Rate hikes are unlikely, while the report was stronger than expected but is still not enough to warrant any rate hikes in the near future

UBS is forecasting an FOMC rate cut in September, then one more cut before year-end.

Canada April building permits +20.5% vs +2.2% expected

• Canada April building permits

• Prior was -11.7%
• Residential +21.0% vs -8.3% prior
• Non-residential +19.6% vs -16.7% prior
• Total permit value at $12.8% billion

Commodities

Copper price faces pressure amid lower Chinese demand – TDS

Industrial metals are melting lower amid concerns around Chinese demand, analysts at TD Securities noted.

Copper faces a moderate sell-off

“Reports that Chinese fabricator demand for copper has been muted are weighing on the red metal, particularly as inventories around the globe increase.”

“Physical demand signals have been clashing with extremely bullish money manager positioning for months, and with little signs of tightness materializing, there have been signs these investors have started to unwind their positions.”

“With that said, Commodity Trading Advisors (CTAs) remain comfortable with their length above $9,428/t, however, top Shanghai funds who had bought recently are now liquidating their recent purchases. Elsewhere, CTAs are sellers of zinc and lead on the day, and modest buyers of nickel.”

US crude oil futures settle at $77.90

• Up $0.16 or 0.21%

The price of crude oil futures is settling at $77.90.That is up $0.15 or 0.21%. The high was at $78.33 before rotating back to the downside.

OPEC maintains 2024 oil demand growth forecast in latest report

• The bloc does however trims its estimate of Q1 2024 oil demand by 50k bpd to 103.5 mil bpd

To balance their outlook, they raised to Q2 2024 forecast by 50k bpd instead. That sees the total 2024 world oil demand growth forecast unchanged at 2.25 mil bpd. For 2025, that figure is also left unchanged at 1.85 mil bpd.

EIA raises its forecast for 2024 and 2025 world oil demand

• The latest forecast from the US

• EIA rases forecast for 2024 world oil demand by 180k bpd, now sees 1.1 mbpd increase
• Raises 2025 forecast by 80k bpd, now sees 1.5m y/y increase
• Sees US 2025 output up 470k bpd vs 530k bpd prior

Bank of America says long oil is the best upside hedge into the US election

• BoA says little chance of geopolitical risk deescalating

Writing just before the Monday pop higher for crude, Bank of America analysts says oil prices weren’t reflecting any risk premium at all, “zero”. Said it was trading cheap.

Ahead:

• oil the “best upside hedge for pre-US election geopolitical risk”
• there is “no Goldilocks in Geopolitics as global players not too focused on de-escalation”
• and that oil is the “normal asset winner on unanticipated conflict”

China on gold – waiting and watching

• After China bought zero gold in May, gold bugs say they’ll be back, around USD2,200

China is the world’s biggest official sector buyer of gold.

In May the People’s Bank of China ‘paused’ buying, higher prices cited:

• “China’s data did show a pause,” David Tait, CEO of the World Gold Council (WGC), told Reuters on the sidelines of the Asia Pacific Precious Metals Conference in Singapore. “(But) they are just waiting and watching. If prices correct to the $2,200 per ounce level, they will resume again.”

The World Gold Council “are a membership organisation that champions the role gold plays as a strategic asset”.

Other gold bugs have weighed in also:

• A survey conducted by the Official Monetary and Financial Institutions Forum showed that central banks planned to continue to increase their exposure to gold in the next 12-24 months.
• “Central banks are buying gold and China is the main buyer.Sentiment on gold is bullish because of geopolitical tensions and elections.China is expected to buy more,” KL Yap, chairman of the Singapore Bullion Market Association, said.

Vietnam authorities expected to loosen gold import rules by July/August

• To allow firms to import gold for the first time since 2012

Reuters with the info:

• Vietnam is expected to allow companies to import gold for the first time in over a decade, as it aims to bridge the widening gap between local prices and international benchmarks, an industry official told Reuters
• The Vietnam Gold Traders Association (VGTA) has been in protracted talks with the government over measures to correct the imbalance in supply and demand of gold, Huynh Trung Khanh, the association’s vice chair said
• “The government said they will start official gold imports by July or August. We hope that by July they will allow gold companies to import directly,” Khanh said on the sidelines of the Asia Pacific Precious Metals conference.

EU News

EUR traders – Commerzbank on the French election, Europe “appears gradually more fragile”

• The EUR is a political creation, but what if the politics change?

Commerzbank analysts on the events:

• European unification “appears gradually more fragile”
• “The euro suffers when the question arises as to whether a politically created transnational currency can survive in the long term if the political framework conditions change”
• “So far, the rampant euro skepticism has not caused any significant damage to the euro. However, the risk that this will not remain the case increased yesterday. Only marginally, but to a visible extent”

UK April ILO unemployment rate 4.4% vs 4.3% expected

• Latest data released by ONS – 11 June 2024

• Prior 4.3%
• Employment change -140k vs -100k expected
• Prior -177k
• Average weekly earnings +5.9% vs +5.7% 3m/y expected
• Prior +5.7%; revised to +5.9%
• Average weekly earnings +6.0% vs +6.1% 3m/y expected
• Prior +6.0%
• May payrolls change -3k

ECB’s Makhlouf: I’m not uncomfortable with little-more than one rate cut this year

• Comments from Makhlouf

• I’m not uncomfortable with little more than market pricing of one rate cut this year and 90 bps by the end of 2025
• Future rate decisions no just all about wages, need to keep close eye on particular risks from global and European conflicts

ECB’s Lane: We are not pre-committing to a particular rate path

• Remarks by ECB chief economist, Philip Lane

• Rates are to stay sufficiently restrictive for as long as needed
• There is still high level of uncertainty
• Price pressures are still elevated and is evident in indicators for domestic inflation
• Economic activity is recovering
• Still have many degrees of flexibility to react to upside or downside shocks
• Have a good degree of confidence at arriving at 2% inflation target

ECB’s Villeroy: We have leeway to lower rates before exiting restrictive stance

• Remarks by ECB policymaker, Francois Villeroy de Galhau

• We are monitoring actual inflation data, in particular for services
• Monthly figures will be volatile due to base effects on energy
• This “noise” is not very meaningful
• We are still more outlook driven
• Remains confident that inflation will be back to 2% target next year
• Will reach inflation target along with a soft landing

ECB’s Rehn: Monetary policy has dampened price pressures

• Remarks by ECB policymaker, Olli Rehn

• There has been considerable progress in bringing inflation down to target

Asia-Pacific-World News

World Bank boosts 2024 global GDP growth forecast to 2.6% from 2.4%

• Better growth seen this year

• January forecast was +2.4%
• US growth seen at 2.5% vs 1.6% in Jan
• China seen at 4.8% vs 4.5%
• India seen at 6.6% vs 6.4% prior
• Sees 2.7% global growth in 2025 and 2026
• World Banks says that if interest rates stay higher for longer, then global growth could be 2.4% next year

“The world economy, in short, appears to be in final approach for a soft landing,” the report says.

China premier Li Qiang is to visit Australia later this week

• Li will be arriving in Australia on Saturday in the first visit by a Chinese premier since 2017

During his trip, Li will be visiting Adelaide, Canberra, and Western Australia. He will be meeting with Australian prime minister, Anthony Albanese, as well. For some context, China is still Australia’s largest trade partner and Australia still plays a vital role in supplying China with minerals especially iron ore.

China’s major state-owned banks seen selling US dollars

• The onshore yuan had earlier fallen to a 7-month low

China’s major state-owned banks seen selling dollars for yuan in onshore spot FX.

Reuters report, citing four people with knowledge of the matter.

Bloomberg: Chinese Builder Dexin Receives Liquidation Order From Hong Kong Court

• Medium sized developer

Another one bites the dust in China’s drowning- in-debt property sector.

Bloomberg is gated.

European Commission expected to announce Chinese electric vehicle (EV) tariffs this week

• The European Union cites excessive subsidies as reasons for the import tariffs

The European Commission will announce their tariffs on Chinese electric vehicles (EVs) this week. Info via Reuters, more there.

Australian May business confidence -3 (prior 1.0)

• National Australia Bank Business Survey for May 2024

National Australia Bank Business Survey for May 2024

Business Confidence -3

• prior revised to 2

Business Conditions 6

• prior 7

Inflation indications are not encouraging:

• Quarterly growth in retail prices jumped to 1.6% from 1.0%
• Increases in labour costs and purchasing costs up to 2.3% and 1.9%, from 1.5% and 1.3% previously

NAB comments:

• “Overall, the message here is a mixed one for the RBA
• There are warning signs on the outlook for growth but at the same time reasons to be very wary about the inflation outlook, and we expect the RBA to keep rates on hold for some time yet as they navigate through these contrasting risks.
• We have been wary for some time that the path of inflation from here is likely to be gradual and uneven, and the survey results really reinforce this message”

Australia’s ANZ forecast the first RBA rate cut in February 2025 (from November 2024)

• ANZ pushing their Reserve Bank of Australia rate cut forecast further out

ANZ is one of Australia’s biggest four banks.

Like many others analysts, the bank had been tipping a late 2024 rate cut from the RBA. Persistent sticky high inflation has seen them push that out now from November this year to February next year:

• then a further cut in April 2025
• then one more in Q4 2025

ANZ see 3 cuts on total at this stage, taking the cash rate to 3.6%.

Australia’s other 3 largest banks forecasts:

CBA:

• first cut in November, 4 further cuts in 2025, taking the cash rate to 3.1%

WPAC:

• first cut in November, 4 further cuts in 2025, taking the cash rate to 3.1%

NAB:

• first cut in November, 4 further cuts in 2025, taking the cash rate to 3.1%

BOJ to begin tapering bond purchases at this week’s meeting – poll

• The findings from the latest Reuters poll on economists ahead of the BOJ meeting on Friday

• 20 of 32 (~63%) economists project the BOJ would make a decision on bond buying
• 5 of 32 (~16%) economists project the BOJ would decide in July instead
• 3 of 32 (~9%) economists project the BOJ would decide in September instead
• 49 of 53 (~92%) economists anticipate that the BOJ would hike rates to at least 0.20% by year-end
• 27 of 55 economists see the BOJ hiking next in Q3 2024
• 26 of 31 economists expect Japanese authorities to keep intervening to support the yen currency

Toyota’s vehicle certification misconduct may violate UN standards

• Japanese media, Yomiuri, with the further report

This has been ongoing for some time, irregularities in applications to certify certain models of vehicles. I posted here for background:

Reuters conveying the latest info reported by Japanese media, Yomiri:

Japan’s transport ministry has concluded that six cases of irregularities in vehicle certifications by Toyota Motor may also violate United Nations standards recognised by more than 60 countries and regions

Other Japanese car manufacturers are caught up in this also:

• Mazda
• Honda
• Suzuki
• Yamaha

Japan finance minister Suzuki crossing the news wires, doesn’t mention the yen

• Not yet anyway, no comments attempting support for the hapless JPY

Japan finance minister Suzuki

• says important we continue efforts to achieve fiscal health
• usage of frozen Russian assets needs to be in compliance with international law.

Blackstone is planning to invest $9.6 billion in Japan by 2027

• Blackstone is a huge player in the private equity market

Japan’s Nikkei (gated) with the report. In brief from the article, comments from Blackstone President Jonathan Gray:

• “There are a number of factors that have come together that have really accelerated growth in the Japanese economy as well as investment opportunities”
• “It’s been the return of inflation to the Japanese economy, the strength in the stock market, the policies under Prime Minister Kishida, which have encouraged individual Japanese to move from savers to investors, which we think is very important, the encouragement of companies to focus on return on equity and to look at selling noncore divisions.”

Cryptocurrency News

Bitcoin Tests Crucial Support

• Bitcoin’s price drops, challenging key support area between $66,343 and $67,477

Bitcoin’s price has experienced a sharp decline today, moving down to test its crucial 100-day moving average at $66,723, with a daily low of $66,529. This dip below the 100-day MA places it within a key swing area between $66,343 and $67,477. Breaking below this swing area could significantly bolster seller confidence and control, opening the door for further downward movement. The next major target in this scenario would be the 38.2% retracement level of $60,314, calculated from the January 2024 low, which represents the year’s low point.

Conversely, if Bitcoin manages to stay above the lower boundary of the swing area and rise above $67,477, it could signal a shift back toward bullish momentum, with the path of least resistance leading back to recent highs. This development marks a critical test for Bitcoin’s price, as traders closely watch these levels to determine the next major move.

Crypto community blasts zkSync ahead of airdrop launch

• zkSync is set for its ZK airdrop launch next week.
• Only 695K wallets have been announced as eligible before airdrop.
• After eligibility announcement, several crypto community members have expressed harsh displeasure toward the airdrop.

zkSync’s upcoming airdrop launch stirred a lot of criticism on Tuesday following an announcement that only 695K eligible users would participate.

ZK token airdrop suffers criticism from crypto community

Ethereum Layer 2 network zkSync has launched its native token and is set to airdrop portions to active users within its ecosystem.The protocol is set to airdrop 17.5% of its total supply of 21 billion tokens to 695K wallets.

zkSync announced that a one-time airdrop of 3.675 billion of the total token supply would be sent to eligible wallets, which have already been shortlisted based on early project involvement.

With ZK tokens, users could propose and vote on protocol updates as part of a DAO. The project claims that the community can bring staking and other features to ZK through governance-driven protocol updates.

A portion of the drop will go to wallets that participated through the zkSync Era or zkSync Lite networks before March 24, which marked the first anniversary of the zkSync Era mainnet launch.

Ethereum is the ‘digital oil’ of digital future, says world’s largest bank

• Ethereum is termed the “digital oil” of the digital future by the world’s largest bank, ICBC.
• SEC is yet to provide feedback on ETH ETF S-1s despite expectations of agency’s comments earlier on Friday.
• Ethereum’s recent sell-off may be temporary, considering bullish events on the horizon.

Ethereum (ETH) is down over 6% on Tuesday as the general crypto market is trending downward.Despite the bearish sentiment, the Industrial & Commercial Bank of China has commended Ethereum’s growth, describing it as “digital oil.”

SEC stays mute, ICBC commends ETH

In a recent report, the world’s largest bank, the Industrial & Commercial Bank of China, hailed the growth of Ethereum and Bitcoin. While comparing Bitcoin to Gold due to its scarcity, the bank also termed Ethereum “digital oil,” noting its role in “providing a strong platform” for supporting a host of Web3 innovations.

“Ethereum has been continuously upgrading its technology in terms of security, scalability and sustainability, providing technical power for the digital future,” the report states.

Meanwhile, the Securities & Exchange Commission (SEC) has yet to respond to prospective spot ETH ETF issuers on Tuesday, more than one week after they filed their S-1 registration statements on May 31. Issuers had expected the agency to comment on their filings on June 7. However, they have yet to get any feedback and now expect the SEC to provide comments this week.

The SEC approved spot ETH ETF 19b-4 filings of issuers on May 23.Before spot ETH ETFs can begin trading though, the agency must approve the issuers’ S-1 registration statements.SEC Chair Gary Gensler told Reuters last week that the timing of the S-1 approval depends on how fast issuers respond to the agency’s comments.

While the wait continues, issuers have stated that they plan to market the ETFs as a “producing tech stock” or the “ultimate app store.”

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