North American News
Modest gains for the US indices
- NASDAQ up 0.4%. Dow up 0.05%
The major US stock indices are ending the day with modest/small gains. The NASDAQ index rose 0.4%. The Dow industrial average rose 0.05%.
A look at the final numbers shows:
- Dow industrial average +16.08 points or 0.05% at 32915.77
- S&P index up 12.86 points or 0.31% and 4121.44
- NASDAQ index up 48.65 points or 0.40% at 12061.38
- Russell 2000 rose 6.831 points or 0.36% at 1889.88
The major indices opened near their session highs, and wander lower through the day. All of the major indices are still closing above their 200 hour moving averages.
- For the Dow industrial average, the 200 hour moving average comes in at 32552.27. The prices been 363 points above that bias defining level
- For the S&P, it’s 200 hour moving averages and 4067.98. It’s price is 54 points above its 200 hour moving average
- For the NASDAQ index, the 200 hour moving average comes in at 11945.26. It’s current price is 61 points above that moving average level
8 of 11 sectors in the S&P index rose with real estate, energy, and healthcare the only negative sectors. The biggest gainer were materials and consumer discretionary
Some of the big gainers today included:
- AliBaba, +7.67%
- Nio, +6.8%
- Alphabet +2.9%
- Amazon +2.25%
- micron, +2.19%
- Lam research, +1.92%
- CrowdStrike, +1.9%
- Tesla, +1.88%
- Roblox, +1.83%
On the downside,
- AMC, -3.78%
- Twitter, -3.69%
- First Solar -3.24%
- Snap, -2.89%
- GameStop, -1.81%
- Paramount -1.1%
The top 3 Dow stocks were
- Travelers, +1.6%
- IBM, +1.16%
- UnitedHealth, +0.96%
The bottom 3 Dow stocks were:
- Amgen, -1.21%
- Salesforce, -1.08%
- Walt Disney, -0.77%
US May employment trends 119.77 vs 120.18 prior
- May 2022 employment trends data from The Conference Board
- Prior was 120.18 (revised to 120.60)
“The Employment Trends Index fell slightly in May, signaling slowing, but positive job growth in the months ahead. The labor market may have less room for more growth with overall employment down only 0.5 percent compared to the pre-pandemic level,” said Agron Nicaj, Associate Economist at The Conference Board. “However, leisure and hospitality and in-person services industries have yet to fully recover job losses incurred since the pandemic. Employment growth is still expected in these industries as consumers continue to shift more spending away from goods and towards services.”
This is an aggregate index of data already released and is not market moving but it’s a useful broad look at US employment.
Commodities
Gold Price Forecast: XAU/USD tumbles to the $1840 zone as US yields jump
- US dollar soars boosted by Treasury yields.
- XAU/USD under pressure, likely to test 1840$.
- Wall Street posts gains, off highs.
Metals pulled back sharply during the American session amid a stronger US dollar and higher Treasury yields. Gold dropped to $1841, reaching the lowest level since Wednesday.
Gold resumes slide
XAU/USD reached a daily high after the beginning of the American session at $1857 and then turned to the downside, resuming the decline that started on Friday from levels above $1870.
Price remains near the lows, with gold under pressure, testing the $1840 support zone. A break lower could trigger more losses targeting the $1830 area (interim resistance at $1837). A recovery above $1850 could alleviate the bearish pressure.
The slide accelerated as US yields jump. The US 10-year yield rose from 2.94% to 3.04%, reaching the highest since May 12, and the 30-year yield hit 3.19%. Treasuries started to slide after the release of the US employment report on Friday. The figures reduced fear about a recession, leaving doors open to the Fed to tighten policy aggressively.
The key report for the week is US inflation on Friday. Next week will be the FOMC meeting, until then markets won’t hear Fed members (blackout period). CPI numbers will likely influence Fed expectations.
WTI backs off from three-month highs near $121, but still well supported amid recent bullish developments
- WTI hit fresh three-month highs near $121 earlier in the session, but has since pulled back to the $118s.
- Oil prices were initially boosted on Monday amid a Saudi hike, China lockdown easing and following last week’s OPEC+ meeting.
Having at one point come within a whisker of hitting the $121 per barrel mark earlier in the day and, in doing, having hit fresh three-month highs, front-month WTI futures have waned in recent trade. WTI was last trading in the $118s and down about $1.50 on the session, with the boost from this weekend’s news about the Saudis upping their Official Selling Price (OSP) to large Asian customers having now faded.
But WTI is still trading more than $7.0 higher versus last week’s lows after OPEC+’s decision to increase the pace of output quota hikes in July and August to 648K barrels per month from 432K. That decision failed to weigh on prices in a lasting way given that the larger output quotas were spread evenly amongst OPEC+ members, many of whom will be unable to substantially lift output in practice (including Russia, who continue to face harsh Western sanctions).
JP Morgan said in a note on Monday that they only think OPEC+ will lift output by a net 160-170K barrels per day in July and August, far below the target announced by the cartel. More broadly, expectations for crude oil markets to remain very tight should keep WTI underpinned in the upper $110s and near $120 for now, especially in light of further announcements over the weekend that major Chinese cities will continue to roll back lockdowns, a boost to demand in the world’s second-largest oil-consuming nation.
Commodity currencies lose ground as the risk mood darkens
- Risk appetite deteriorates
Stocks are giving back gains as Treasury yields continued to push higher. The US dollar is heating up as USD/JPY trades at the best levels since 2002.
The catalyst today is likely the bond market as US 10-year yields are now up 8.3 bps to 3.038%, which is the highest since May 11.
EU News
Major European indices close the day higher
- German DAX moves away from its 100 day moving average
The major European indices are closing higher on the day. The German DAX rose 1.34% and in the process is moving further away from its 100 day moving average and helping to lead the way.
The final numbers are showing:
- German DAX, +193.72 points or 1.34% at 14653.80
- France’s CAC +63.48 points or 0.98% at 6548.79
- UK’s FTSE 100 +75.27 points or 1.00% at 7608.23
- Spain’s Ibex +111.48 points or 1.28% at 8836.29
- Italy’s FTSE MIB +399 points or 1.65% at 24565
Other News
Mexico follows through on threat not to attend Americas Summit in the US
- Lopez-Obrador said Mexico wouldn’t come unless all Americas countries invited
The Summit of the Americas begins Wednesday in Los Angeles but it will be without some large parts of the continent.
The Biden administration decided to bar Cuba, Venezuela and Nicaragua from attending. The move had been rumored and in the run-up, Mexico said it wouldn’t attend unless everyone was invited. Today, Mexican President Lopez-Obrador followed through on his word, withdrawing Mexico from attendance.
Cuba had attended the past two summits.
One stated US goal of the summit was repairing the US reputation in Latin America but given the early returns, that’s a longshot.
For markets, the exclusion of Venezuela is a strong indication that it won’t be further tapped to increase global oil supplies. Last week, the US cleared some Venezuelan cargoes for Europe to displace Russian oil.
Cryptocurrency News
Bitcoin climbs above $31,500 in strong start to the week
- Bitcoin adds to gains
The late-May attempted breakout in bitcoin fell flat but the bulls have reground and are trying again today as the risk picture improves. A rally in tech stocks is giving a lift to all risk assets and bitcoin is participating. For most of the year BTC has traded in step with the Nasdaq but recently it failed to climb in step with the rebound.
Today we may be seeing some of that catch-up trade with bitcoin up more than 6%.
To generate some real momentum, it will need to rally above $32,376, which was the May 31 high.
Binance processed $2.35 billion in illicit funds
In a recent report, Reuters claims that the world’s largest cryptocurrency exchange Binance “served as a conduit for the laundering of at least $2.35 billion in illicit funds” for five years.
