Round up of today’s market news

North American News

S&P and NASDAQ Reach New Highs Amid AI and Tech Sector Surge

A late rally propelled the S&P 500 and NASDAQ to record levels once again, driven by gains in AI and tech stocks. Tesla extended its winning streak to nine days, while Meta Platforms and Amazon faced declines.

Closing Numbers:

• Dow Jones Industrial Average: Down 31.10 points (-0.08%) at 39,344.78
• S&P 500: Up 5.66 points (0.10%) at 5,572.86, marking its fourth consecutive record closing level.
• NASDAQ: Up 50.98 points (0.28%) at 18,403.74, securing its fifth straight record close.
• Russell 2000: Up 11.94 points (0.59%) at 2,038.66.

Key Movers:

• Tesla: Closed higher for its ninth consecutive day, up $1.42 (0.56%) at $252.94, the highest since December 28, 2023.
• Meta Platforms: Down 1.96%.
• Amazon: Down 0.36%.
• Alphabet: Down 0.82%.
• Microsoft: Down 0.28%.
• Apple: Up 0.65%.

Emerging AI Stock:

• Corning: Benefited from the rising demand for fiber-optic products, closing up $4.61 (11.99%) at $43.05.

Chip Sector Surge:

• Super Micro Computers: Closed just under $900, gaining 6.23%.
• Intel: Up 6.15%.
• AMD: Up 3.93%.
• Broadcom: Up 2.5%.
• Taiwan Semiconductor: Up 1.45%.

Investors continue to eye AI-related stocks, with Corning and chipmakers seeing significant gains. Despite mixed performances across major tech giants, the rally underscores robust investor confidence in the sector’s growth prospects.

NY Fed survey on consumer expectations: One year inflation 3.0% vs 3.2% prior

• The survey of consumers from the New York Fed

• 1 year inflation 3.0% vs 3.2% prior
• 3 year inflation 2.9% vs 2.8% prior
• 5 year inflation 2.8% vs 3.0% prior
• Expected home price rise 3% vs 3.3% prior
• Consumers see slower price growth for rent, food, medical care, college and gas
• Expected year-ahead earnings growth best since Sept 2023
• Perceptions of household financial situation lost ground in June
• The mean perceived probability of losing one’s job in the next 12 months increased by 2.4 percentage points to 14.8%

US employment trends 110.27 vs 111.44 prior

• Employment trends lower

“The ETI fell in June, continuing the downward trajectory observed since the measure peaked in March 2022,” said Will Baltrus, Associate Economist at The Conference Board.“June’s ETI downtick signals employment could fall in the second half of 2024. However, the index remains above its prepandemic level, and payrolls growth remains healthy, albeit at a reduced pace compared to the outsized gains experienced during the pandemic recovery. While June’s ETI suggests an aggregate reduction in employment ahead, we anticipate the labor market will only cool modestly.Indeed, as long as companies are willing to retain workers, net nonfarm payrolls are likely to remain positive.

Bank of America doubts over US inflation returning to 2%

• Eyes on shelter inflation

Bank of America say that the confidence of the Federal Reserve seeing inflation returning to 2% will come down to shelter inflation.

BoA cite the importance of the sector due to its weight in core CPI and core PCE inflation. BoA argue that if shelter does not move lower, then achieving 2% core inflation requires very soft goods and non-shelter services prices:

• Achieving this repeatedly over time seems unlikely in our view

BlackRock’s Rieder: generous yielding fixed income assets – historically attractive value

• Says appropriate conditions are unfolding for the Fed to begin reducing its very restrictive Fed Funds rate

Rick Rieder is BlackRock’s CIO of Global Fixed Income.He’s posted up a tweet storm on Friday’s jobs report, in brief:

• there is a very gradual, but persistent, moderation within the broader employment picture
• When you sum up the conditions of these employment indicators and the trend that they clearly depict, in terms of cooling, and a reversion to more of a pre-Covid labor normalcy, this can marry quite nicely to inflationary conditions that have also reverted quite closely to pre-Covid levels.
• the appropriate conditions are unfolding for the @federalreserve to begin reducing its very restrictive Fed Funds rate by 25 basis points

Commodities

Gold Falters as China Halts Purchases

Gold prices stumbled today as news emerged that the People’s Bank of China (PBOC) refrained from buying any gold in June, extending a pause from May’s zero purchases. This unexpected development dashed hopes of a potential breakout seen just last Friday, highlighting the current tug-of-war in the gold market.

While recent gains were driven by global reserve diversification trends, particularly from major economies like China, this cooling off period underscores a pivotal shift. However, amidst deteriorating US economic data and mounting expectations of a September rate cut, coupled with geopolitical tensions, gold retains a fresh catalyst for potential upside.

Despite a standoff since April, where various factors balanced out, the absence of sovereign flows from China adds a cautious note to gold’s outlook moving forward. Investors will closely watch how global economic uncertainties and central bank actions unfold to gauge gold’s next moves in the near term.

Crude oil futures settle at $82.33

• Down -$0.83 or -1.0%

Crude oil stop futures are settling at $82.33. That is down $0.83 or -1.00%.

The high for the day reached $83.32. The low reached $82.10.

Copper bullish price action remains unchanged – TDS

Price action in the base metal complex has successfully fended off Commodity Trading Advisor (CTA) selling pressure in Copper, TDS Senior Commodity Strategist Ryan McKay notes.

Traders cover their recent Copper shorts

“With China’s third plenum on the radar in the coming weeks, markets are keenly focused on the potential for fresh stimulus in the Middle Kingdom that could potentially drive commodity demand. In this sense, top Shanghai Futures Exchange (SHFE) traders have covered their recent shorts overnight, and while the nearest CTA trigger remains to the downside, there is a more of a margin of safety with the trigger sitting at $9,597/t.”

“With our gauge of global commodity demand continuing to weaken, while depressed premiums and surging inventories in the Middle Kingdom argue against fundamental tightness, there are plenty of potential catalysts that could still see prices ease once again.”

“With still bloated money manager positioning on Comex, the lack of evidence supporting current physical tightness, or a disappointment on potential Chinese stimulus, can continue to see these money manager positions unwind.”

People’s Bank of China bought zero gold for a second month in a row in June

• The PBoC paused buying in May, and bought none in June either

Data from China over the weekend showed the PBOC didn’t buy and gold in June, after buying none in May.

The two consecutive month pause comes after the Bank had been a consistent buyer in the 18 months prior. China held 72.80 million troy ounces of gold at the end of June, same as the end of May.

EU News

European bourses close with mixed results

• Italy’s FTSE MIB higher. France CAC does not like the political stalemate

European traders have headed for the exits with mixed results in the major stock indices. France CAC was the worst performer with a decline of -0.63% after their election results ended in a political stalemate. Neither the right nor the left can likely for me coalition government. Investors are not very happy.

The final numbers are showing:

• German DAX, -0.02%
• France CAC, -0.63%
• UK FTSE 100, -0.13%
• Spain’s Ibex, -0.01%
• Italy’s FTSE MIB, +0.17%

Eurozone July Sentix investor confidence -7.3 vs 0.0 expected

• Latest data released by Sentix – 8 July 2024
• Prior 0.3

Germany May trade balance €24.9 billion vs €21.1 billion expected

• Latest data released by Destatis – 8 July 2024
• Prior €22.1 billion

The trade surplus expanded but not in the right way, with exports slumping by 3.6% on the month while imports falling by 6.6% on the month. The details show that exports to China fell by 10.2% on the month while imports from the UK fell by 9.3% on the month. Foreign trade with EU countries was also relatively poor with exports falling by 2.5% and imports by 8.9% respectively.

SNB total sight deposits w.e. 5 July CHF 453.4 bn vs CHF 452.0 bn prior

• Latest data released by the SNB – 8 July 2024
• Domestic sight deposits CHF 444.4 bn vs CHF 443.0 bn prior

Swiss sight deposits have stabilised somewhat in the past few weeks, after having fallen in the months before. Here’s the trend:

ECB’s Knot: There is no reason to cut rates in July

• Remarks by ECB policymaker, Klaas Knot

• The next truly open meeting is in September
• We are comfortable with the progress in disinflation, market pricing on rate cuts

BCC survey shows fewer UK firms plan to raise their prices in the coming months

• British Chambers of Commerce

British Chambers of Commerce (BCC) survey:

• 39% of member companies it surveyed expected to raise prices over the next three months
• down from 46% in its previous survey published in April
• sales and cashflow improved in Q2 2024 to pre-pandemic levels
• share of firms expecting an increase in turnover in the next 12 months rose to 58% from 56% in the April survey
• 75% of respondent firms were still not increasing investment
• BCC survey was based on responses from 4,967 companies – 91% of them with under 250 employees – polled between May 13 and June 10.
• Info via Reuters.

BOE’s Haskel says would rather hold rates until there is more certainty on inflation

• Remarks by BOE policymaker, Jonathan Haskel

• Need more certainty that inflation pressures have subsided sustainably
• Looking closely at labour market conditions and inflation indicators such as services inflation
• Recent wage data is consistent with the idea that “underlying” unemployment rate has risen
• There are considerable second-round effects at play currently, will fade over the coming years

Asia-Pacific-World News

PBOC sets USD/ CNY reference rate for today at 7.1286 (vs. estimate at 7.2640)

• PBOC CNY reference rate setting for the trading session ahead

In open market operations:

• PBOC injects 2bn via 7-day RR, sets rate at an unchanged 1.8%
• 2bn mature today
• thus net neutral

Australian housing finance data for May -1.7% m/m (prior +4.8%)

• Australian Home Loans for May 2024

Australian Home Loans for May 2024 -1.7%, dropping back from the strong performance in April:

• prior +4.8%

Owner – Occupier Loan value -2.0% m/m

• prior +4.3%

Investor Loan Value -1.3% m/m

• prior +5.6%

RBNZ Monetary Policy Review due Wednesday – “not expecting a whole lot”

• Reserve Bank of New Zealand expected to leave its cash rate unchanged at 5.5%

KiwiBank with a forthright preview of the RBNZ meeting this week (Wednesday)

• Any talk of hikes now would be overkill. The data has clearly turned.
• Of course, there are still some hurdles to get through. We still need to see inflation back within the RBNZ’s 1-3% target band. A hard task that should be accomplished in the next few months. But the complete return to 2% is still a 2025 story. Aggressive tightening from the RBNZ has worked. And setting policy today is about influencing the economy over the next 18 months. So, the RBNZ’s sights should be set on the end of 2025, start of 2026. And with that in mind, rate cuts should be considered, not hikes.
• The weakness in the economy should quell domestic inflation pressures. And by our forecasts, we still see inflation falling back within the RBNZ’s 1-3% target band by the September quarter. That should open up the first rate cut in November.
• We will be on the lookout for a material softening in the RBNZ’s forecasts and rhetoric at the August MPS.
• So, what to expect from this week’s RBNZ meeting? Well first thing’s first, this Wednesday we’re getting an MP Review, not an MP Statement. So, we won’t get updates to the RBNZ’s forecasts or OCR track. We just get a policy decision and a one-page statement. The last MP Review in April was just 140 words. So, with that in mind, we’re not expecting a whole lot. The RBNZ should acknowledge the even deeper weakness in the economy. And they must refer to the collapse in business confidence last week.

BOJ maintains economic assessment for 5 of Japan’s 9 regions in latest ‘Sakura Report’

• The assessment for 2 regions were raised while 2 more were cut in the report released today

Here’s the detailed breakdown:

Japan inflation adjusted wages -1.4% y/y in May

• Inflation adjusted wages are ‘real’ wages

Japan’s inflation-adjusted, ie real, wages fell in May for a record 26th straight month, down 1.4% y/y

• April was -1.2%
• falling after inflation wages is dampening household spending, which in turn is making the BoJ’s efforts to normalise monetary policy uncertain
• weak yen and higher commodity prices pushed up the cost of imports

Base pay +2.5% y/y in May

• best since January 1993

Nominal wages, average total cash earnings per worker, +1.9% y/y

• prior +1.6%
• best in 11 months

Overtime pay +2.3% y/y

Cryptocurrency News

US Ethereum spot ETF ruling could come as soon as this week or next – report

• CNBC report

Ethereum held the April low in an earlier slump and is now trading flat.

CNBC reports that a round of filing for spot ether ETFs with the SEC are due today and “approval could come as soon as this week or next.”

Bitcoin Sees Strong Outflows Amid Market Sentiment Shifts

Bitcoin (BTC) grapples with resistance around the $58,500 mark, currently trading up 2.93% at $57,515 on Monday. On-chain metrics reveal significant activity, with over $17.94 million in liquidations on Defi platforms and the highest Exchange netflow outflow of 68,498 BTC since November 23, 2023.

Daily Market Highlights: Bitcoin’s Highest Exchange Outflow in 2024

Monday witnessed notable movement in Bitcoin as the German Government transferred 1,000 BTC, valued at $55.8 million, further fueling market dynamics. Of this total, 500 BTC amounting to $27.9 million were directed to Coinbase and Bitstamp.

Since June 19, the German Government has moved a substantial 13,466 BTC, equivalent to $819.3 million, while retaining 39,826 BTC valued at $2.29 billion. This flurry of transfers has potentially contributed to market uncertainty (FUD), impacting recent price declines.

Friday’s negative netflow of 68,498 BTC, the highest seen since November 23, 2023, reflects significant Bitcoin movement away from exchanges. This trend often signals bullish sentiment, suggesting that major holders may anticipate price increases or prefer long-term holdings over immediate sales.

Investors continue to monitor these developments closely, assessing their implications on Bitcoin’s short-term price trends and market sentiment moving forward.

US$1.2bn in cryptocurrency, DeFi losses in H1 of 2024 due to hacks, scams, & exploits

• Mainly due to phishing attacks

Substantial losses in the crypto and decentralized finance (DeFi) sectors YTD amounting to USD 1.19billion.

• phishing attacks emerged as the most damaging vector, accounting for $497.7 million in losses across 150 incidents.”Q2 2024 experienced the highest losses since Q3 of the previous year, despite a relatively quiet quarter in which the markets mostly consolidated the gains from Q1,”

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