North American News
Mega Caps Lead S&P 500 and Nasdaq Higher Despite Mixed Sentiment
The S&P 500 (+0.2%) and Nasdaq Composite (+0.5%) closed near their highs for the day, buoyed by a late-session surge in mega cap stocks such as Apple (+2.0%), Amazon (+3.9%), and Tesla (+4.8%). NVIDIA also recovered from earlier losses to contribute positively. FedEx (+15.5%) saw substantial gains on strong earnings and optimistic FY25 outlook, contrasting with General Mills (-4.6%), which faced a revenue miss.
Market sentiment was mixed, with decliners outnumbering advancers by a 4-to-3 ratio at both the NYSE and Nasdaq. Treasury yields rose, with the 10-year note up eight basis points to 4.32%, despite a solid $70 billion 5-year note sale. Economic data included a below-consensus New Home Sales report for May, highlighting ongoing challenges in the housing market amid higher mortgage rates.
The equal-weighted S&P 500 declined by 0.4%, with eight of its eleven sectors closing lower. The financial sector lagged (-0.5%), while consumer discretionary stocks (+2.0%) led gains. Year-to-date performance showed the Nasdaq Composite up 18.6%, S&P 500 up 14.8%, S&P Midcap 400 up 4.7%, Dow Jones Industrial Average up 3.8%, and Russell 2000 down 0.4%.
Key economic indicators included a slight increase in the Weekly MBA Mortgage Applications Index and New Home Sales of 619K, below expectations but revised higher for April. Despite mixed signals, market focus remains on navigating economic data and sector-specific performances amid prevailing market dynamics.
US 5-year notes sell at 4.331%
- Results of the $70 billion auction
- Prior was 4.331%
- Fed bids for 5-year notes total $2.4 bln
- Bid-to-cover ratio 2.35
- High yield 4.331% vs 4.335% presale WI
- Awards 5.63% of bids at high
- Primary dealers take 13.38%
- Direct 17.7%
- Indirect 68.92%
Amazon Shares Hit Record High, Surpassing $2 Trillion Market Cap
Amazon shares soared 3.1% today, reaching an all-time high and propelling the company’s market capitalization above $2 trillion for the first time. This milestone was achieved as the stock price climbed past $192, with 10.406 billion shares outstanding.
- Valuation Metrics:
- Market Cap: Surpassed $2 trillion.
- Forward P/E Ratio: Approximately 33.5x, based on consensus earnings of $5.74 for next year.
- Earnings Guidance:
- Current Quarter: Expected earnings between $10-14 billion.
This valuation, while significant, aligns with a market increasingly driven by AI and tech growth, making Amazon’s forward P/E ratio relatively reasonable in this context.
US May new home sales 0.619m vs 0.640m expected
- May new home sales
- Prior was 0.634m (revised to 0.698m)
- Sales down 11.3%
- Supply 9.3 months vs April at 8.1 months
US MBA mortgage applications w.e. 21 June +0.8% vs +0.9% prior
- Latest data from the Mortgage Bankers Association for the week ending 21 June 2024
- Prior +0.9%
- Market index 212.0 vs 210.4 prior
- Purchase index 147.8 v 146.0 prior
- Refinance index 552.4 vs 552.7 prior
- 30-year mortgage rate 6.93% vs 6.94% prior
ABN AMRO sees first Fed rate cut by September
- Cites disinflation and a weakening labour market are the reasons
ABN AMRO with some thoughts on the Fed:
- Expected to cut rates starting in September 2024
- Recent macro data indicate a cooling economy, with lower consumption as excess savings are depleted.
- But believes household balance sheets and accommodative financial conditions are expected to provide a floor for economic activity, preventing a deeper recession.
- Reasons for expecting cuts in September is continued disinflation, a normalizing labour market and evidence of an economic slowdown in the US.
- Think as a result the Fed will cut rates more than what markets are currently anticipating
Canada May advance wholesale trade -0.9%
- Canadian early indications on May wholesale trade
- Prior was +2.4%
Commodities
Gold price slumps as US Dollar soars
- Gold drops pressured by strong USD.
- DXY hits new monthly peak at 106.13.
- Fed’s Bowman hints at steady policy and possible hikes if inflation falters.
- Upcoming PCE report expected to show mild inflation decline.
Gold price slumped more than 0.70% on Wednesday as the Greenback soars, ahead of the PCE release report on Friday.Investors are beginning to price out less easing by the Fed, sponsoring the buck’s last leg up. The yellow metal trades at $2,301 after hitting a daily high of $2,323.
EIA US weekly crude oil inventories
- Weekly US oil inventory data
- Prior was -2547K
- Crude Oil +3591K vs -2850K expected
- Gasoline stocks +2654K vs -1024K expected
- Refinery utilization -1.3% vs +0.1% expected
- Distillates -377K vs -1050K expected
- Production unchanged at 13.2 mbpd
- Cushing: -0.226M
Oil private survey of inventory shows build of 0.9M vs. -3.0M expected draw
- This is from the privately surveyed oil stock data ahead of official government data due Wednesday morning out of the US
- Crude +914,000 (exp. -3.0 million)
- Gasoline +3.843 million
- Distillates -1.178 million
- Cushing -350,000
- SPR +1.3 million
EU News
European equity close: Steady selling
- Closing changes for the main European equity bourses
- Stoxx 600 -0.5%
- German DAX -0.1%
- UK FTSE 100 -0.2%
- French CAC -0.7%
- Italy MIB -0.4%
- Spain IBEX -0.7%
Germany July GfK consumer sentiment -21.8 vs -18.9 expected
- Latest data released by GfK – 26 July 2024
- Prior -20.9; revised to -21.0
France June consumer confidence 89 vs 89 expected
- Latest data released by INSEE – 26 June 2024
- Prior 90
UK June CBI retailing reported sales -24 vs 8 prior
- Latest data released by CBI – 26 June 2024
- Prior 8
The UK retail sales balance dips back into negative territory in June, with expected retail sales for July also seen weakening further. The reading for the latter is down to -9 as opposed to -4 for June last month.
Switzerland June UBS investor sentiment 17.5 vs 18.2 prior
- Latest data released by UBS – 26 June 2024
- Prior 18.2
UBS notes that:
“Ahead of elections in France and the US, domestic politics in those countries is the biggest concern. In Switzerland, economic growth is the primary concern. Survey participants expect the Swiss franc to appreciate further against the euro and US dollar.”
Martin Schlegel named new chairman of the Swiss National Bank
- No surprise
Antoine Martin is set to become the new vice-chairman while Petra Tschdin was appointed to the three-member governing board of the SNB.
All appointments are effective Oct 1.
some comments:
- Great honor to be named next Chairman
- Stresses commitment to price stability
ECB’s Panetta says should avoid even “casual forward guidance” on timing of rate moves
- Remarks by ECB executive board member, Fabio Panetta
- ECB could gradually reduce interest rates if outlook holds
- Current macroeconomic picture is consistent with normalisation of monetary stance
- We have reasons to believe that sticky services inflation is not abnormal in any way
ECB’s Rehn: I always knew inflation path would be a bumpy road
- Remark by ECB policymaker, Olli Rehn
- The dynamics of inflation continue to indicate that it will stabilise at target in the medium-term
BNP Paribas on what’s priced into FX markets with upcoming French elections
- Indicators suggest valuations and positioning are not at stretched levels.
- EURUSD valuations are far from having overshot in the move lower.
- Reinforces conviction for appealing risk-reward to hold short EUR exposure.
- Elections compound the scope for downside.
- Positions not near extreme levels, indicating scope for further shorts to be added ahead of the event.
- Recommends EURJPY shorts
Asia-Pacific-World News
PBOC sets USD/ CNY reference rate for today at 7.1248 (vs. estimate at 7.2698)
- PBOC CNY reference rate setting for the trading session ahead.
Russia’s Belousov warns US defense minister Austin of dangers of escalation
- Geopolitics
Russian Defense Minister Belousov warns US Defense Secretary Austin of dangers of escalation of continued US arms supplies to Ukraine, Russian Ministry says.
Australia weighted CPI YY 4.0% vs 3.8% expected
- CPI data for May 2024
- Weighted CPI YY: 4.0% vs 3.8% expected
- CPI SA YY: 4.1% vs 3.8% prior
- CPI SA MM: 0.2% vs 0.2% prior
- CPI Annualized trimmed mean YY: 4.4% vs 4.4% prior
Australia composite leading index -0.01 vs -0.03 prior
- Data for May 2024
- Australia composite leading index -0.01 vs -0.03 prior
RBA’s Kent says recent data reinforce need to be vigilant to upside inflation risks
- Reserve Bank of Australia Assistant Gov Kent:
- Range of measures shows monetary policy is restrictive.
- Policy contributing to slower growth of demand, lower inflation.
- Recent data reinforced need to be vigilant to upside inflation risks.
- Hence, not ruling anything in or out for interest rates.
- Cash rate is above our range of estimates of the nominal neutral rate.
- Financial conditions are particularly restrictive for households.
- Conditions restrictive for smaller businesses, less so for larger.
- Mortgage payments at record 10% of household disposable income.
- Higher rates provide incentive for all households to save more and borrow less.
New Zealand Treasury says weak economy threatens treasury forecasts
- NZ treasury out with some comments on the economy
- Weak economy threatens treasury forecasts
- NZ economist McLeish sees recent data indicating economic weakness
- NZ treasury considers additional spending and revenue solutions
Japan’s top currency diplomat: Seriously concerned about recent rapid yen weakening
- Some tough talk
Comments from Masato Kanda:
- Closely monitoring market’s movement with high vigilance
- Always prepared to respond
- Don’t have specific levels in mind
- Believe that majority view yen weakness as speculative
- Recent yen moves are rapid
- It is certain that current moves are one-sided
Cryptocurrency News
Ethereum Faces Potential 4% Dip Despite Rally Signals Following ETH ETF Updates
- Ethereum could see a 40% rally two months after spot ETH ETF goes live, says StoneX.
- SEC Chair says spot Ethereum ETF approval process “going smoothly.”
- Ethereum may need to shed 4% of its value before staging a comeback.
Ethereum is down 1% on Wednesday following brokerage and financial services firm StoneX predicting a 40% gain for the largest altcoin two months after ETH ETFs go live. Meanwhile, Securities & Exchange Commission (SEC) Chair Gary Gensler provided positive updates that the spot ETH ETF approval process is going smoothly.
40% ETH price growth, ETH ETFs launch
A recent analysis by StoneX predicts that the launch of spot Ethereum ETFs could trigger a 40% growth in ETH’s price two months after they go live. In a wider time frame, StoneX’s model predicts that ETH’s price will be between $2,142 and $12,621 over the next two years.
The company mentioned that its “conservative” predictions are due to the belief that NFTs won’t see more mainstream attention as they did in 2021. The analysis also suggested that video games and real-world assets (RWA) — which many believe will boost TVL and user adoption — may not see tangible growth.
Prospective spot ETH ETF issuers filed their amended S-1 registration statements with the SEC last week following comments from the agency. The SEC approved issuers’ 19b-4 applications on May 23 but also needs to greenlight their S-1s before ETH can begin trading.
The StoneX analysis follows Bloomberg analyst Eric Balchunas’s suggestion that ETH ETFs will capture lower net flows than Bitwise CIO Matt Hougan predicted because “ETH futures ETF were a borderline flop.”
Hougan predicted that spot Ethereum ETFs will attract up to $15 billion in net flows by the end of 2025.He arrived at the $15 billion figure by analyzing Ethereum’s relative market cap compared to Bitcoin, international crypto ETFs volume, Grayscale Ethereum Trust conversion, and the Bitcoin “carry trade.”
Meanwhile, SEC Chair Gary Gensler commented in a Bloomberg event on Tuesday that the process of launching spot Ethereum ETFs is “going smoothly.” He stated that the products going live depend on asset managers making full disclosures in their registration statements.
XRP Remains Below $0.48 as Ripple CEO Responds to SEC Chair’s Recent Crypto Comments
- Ripple CEO Brad Garlinghouse criticized SEC Chair Gensler for his statement that all crypto executives go to jail.
- Gensler shared his thoughts on crypto regulation and the sector’s role in the US Presidential election in a Bloomberg interview.
- XRP is struggling to break above resistance at $0.48 early on Wednesday.
Ripple (XRP) executive Brad Garlinghouse is making headlines for his statement on Securities and Exchange Commission (SEC) Gary Gensler’s remarks on crypto.Gensler said crypto is a field where either the executives are in jail or awaiting extradition.
Garlinghouse slammed the SEC Chair’s statement in a recent tweet on X. The Ripple CEO has faced a lawsuit in California that is set to go to trial for his “misleading statements” in an interview in 2017.
XRP is struggling under $0.48, the altcoin is trading at $0.4723, down 0.69% on Wednesday.
PEPE Holders Net Over $18 Million in Gains in Ten Days, Reducing Value by Nearly 4%
- PEPE whales are distributing their holdings, early Wednesday one whale transferred $14 million in tokens to Binance.
- PEPE holders realized over $18 million in profits in past ten days.
- Meme coin is down nearly 4%, trading at $0.00001248.
Pepe (PEPE) is trading at 0.00001248, down nearly 4% on Wednesday.The frog-themed meme coin noted consistent profit-taking by traders in the past ten days.
Consistent profit-taking typically increases selling pressure on an asset and is likely to push the price lower. On-chain data trackers observed a spike in PEPE deposits to centralized exchanges, contributing to the rising selling pressure.
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