North American News
US stock indices close at session lows
The major US indices are trading sharply lower on the day in closing on the lows. The downside was led by the NASDAQ which fell -2.75%. The Dow industrial average closed down just short of 2.0%.
The final numbers are showing:
- Dow industrial average -638.11 points or -1.94% at 32272.78
- S&P index -97.97 points or -2.38% at 4017.81
- NASDAQ index -332.04 points or -2.75% at 11754.24
- Russell 2000-40.15 points or -2.12% at 1850.85
The top 3 Dow decliners were:
- Boeing, -4.19%
- Walt Disney, -3.8%
- Apple -3.6%
The only gainer in the Dow 30 was Home Depot which rose 0.82%.
Big losers today included:
- Novavax, -17.22%.
- Moderna, -9.76%
- Block, -9.69%
- Beyond Meat, -8.74%
- Alibaba, -8.13%
- Nio, -7.7%
- DoorDash -7.14%
- Roblox, -6.98%
- GameStop -6.93%
- AirBnB, -6.5%
Big gainers included:
- chewy, +2.83%
- Fortinet, +0.99%
- Costco, +0.87%
- Home Depot, +0.82%
- Whirlpool, +0.15%
- Bristol-Myers Squibb, +0.03%
US initial jobless claims 229K vs 210K expected
- US initial jobless claims and continuing claims for the week ending June 4
- Prior report, 200K revised to 202K
- 4 week moving average initial jobless claims 215K vs 207K prior
- Continuing claims 1306K vs 1305K expected
US sells 30-year bonds at 3.185% vs 3.200% WI
- Results of the reopening sale
- Prior was 2.997%
- Bid to cover 2.35 vs 2.38 prior
US household net worth fell to $149.3T in Q1
- US household net worth takes a dip
The Q1 US household net worth fell to US$149.3 trillion.
- Stock market values fell by $3.0 trillion in Q1.
- Real estate added about $1.7 trillion
- Household debt grew by 8.3% annualized in Q1
- business debt rose by 8% annualized
- federal government debt rose by 14.9% annualized
- state and local debt contracted by 3% annualized
Commodities
Gold Price remains vulnerable near 200-day SMA, bears await US CPI on Friday
- Gold Price witnessed some selling on Thursday amid a further rise in the US bond yields.
- Hawkish central banks further contributed to driving flows away from the commodity.
- A softer risk tone, modest USD downtick extended some support and helped limit losses.
Gold Price edged lower on Thursday and was last seen trading around the $1,848-$1,847 region, just above the very important 200-day SMA support. Elevated US Treasury bond yields, bolstered by hawkish Fed expectations, turned out to be a key factor that weighed on the XAUUSD. That said, some intraday US dollar selling, along with a generally weaker risk tone, helped limit deeper losses for the XAUUSD, at least for the time being.
Gold Price weighed down by hawkish central banks
Following a brief retracement during the early part of the week, the 10-year US bond yield climbed back above the 3.0% threshold amid concerns about rising inflation. Crude oil prices climbed to their highest levels since early March amid an improving demand outlook. Apart from this, the global supply-chain disruptions caused by the Russia-Ukraine war and the COVID-19 lockdowns in China could put upward pressure on already high consumer prices. This might force the US central bank to tighten its monetary policy at a faster pace, which remained supportive of the recent rally in the US bond yields.
The European Central Bank also hinted that it intends to raise interest rates by 25 bps in July and left the door open for a potential 50 bps hike in September. In the monetary policy statement, the ECB said that if the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting. This comes on the back of a 50 bps rate hike by the Reserve Bank of Australia and the Reserve Bank of India on Tuesday and Wednesday, respectively, which continued acting as a headwind for the non-yielding yellow metal.
Subdued USD demand, softer risk tone lend support
Meanwhile, the post-ECB buying around the shared currency weighed on the greenback and held back traders from placing aggressive bearish bets around the dollar-denominated XAUUSD. Meanwhile, doubts that major central banks can hike interest rates to curb inflation without impacting economic growth continued weighing on investors’ sentiment. This was evident from the prevalent cautious mood around the equity markets, which could further lend some support to the safe-haven precious metal. Investors might also prefer to wait on the sidelines ahead of the US consumer inflation figures, scheduled for release on Friday.
Focus remains on US CPI
The US inflation report would determine the Fed’s policy tightening path and influence the near-term USD price dynamics. This, in turn, should provide a fresh directional impetus to the XAUUSD, which is often considered a hedge against inflation. According to Joseph Trevisani, Senior Analyst at FXStreet: Even though Fed policy for at least the next two meetings will not be affected by the CPI results for May or June, there is considerable room for a market response depending on the deviation from forecasts. Market risk lies primarily with a higher than predicted inflation number. There are good reasons to suspect that a portion of the May oil and gas price increases were not captured in the analysts surveys that produce the forecasts.
Silver Price Analysis: XAG/USD drops 1.0% following ECB, but well within recent ranges pre-US CPI/Fed meeting
- Silver fell to fresh weekly lows under its 21DMA after a hawkish ECB announcement but remains within recent ranges.
- XAG/USD was last trading near $21.80, down 1.0% as focus turns to Friday’s US CPI and next week’s Fed meeting.
Spot silver (XAG/USD) was trading with a negative bias at weekly lows in the $21.80 per troy ounce area on Thursday, down around 1.0% on the day, in wake of a hawkish ECB policy announcement that saw the bank signal a 25 bps rate hike next month plus the end of QE and a possible 50 bps hike in September depending on the development of the outlook for inflation.
But that still leaves XAG/USD well within recent ranges and support in the form of the 21-Day Moving Average at $21.80 continues to hold. Silver is thus currently close to the middle of a $21.50-$22.50ish range that has been in play since the end of May and traders will be looking to Friday’s US Consumer Price Inflation data and next Wednesday’s Fed meeting to see whether things get shaken up.
Silver bulls will be hoping for Friday’s inflation data to surprise to the downside and reinforce the idea that US inflation has now peaked, thus likely resulting in some further paring back of Fed tightening bets. This would weigh on US yields and the buck, both of which are typically positive for precious metals.
Meanwhile, the Fed is widely expected to raise interest rates by 50 bps at next week’s meeting (and again in July), so this shouldn’t come as a surprise to hurt silver. What will be more important is Fed Chair Jerome Powell’s commentary in the post-meeting press conference on the outlook for rate hikes beyond July.
If he starts sounding a little more confident that inflation is going to fall back from current elevated levels/concerned about the weakening US economy, then that, if CPI also surprised to the downside, could help XAG/USD rally into the $23.00-$23.50 area, where it would run into resistance in the form of its 50 and 200-Day Moving Averages.
EU News
European major indices close down sharply
- Indices fall over -1.4% on the day
The major European indices are all closing lower on the day. The declines are led by the German DAX which is down -1.7% and Italy’s FTSE MIB which is down by a similar amount. A look at the closing levels shows:
- German DAX, -247.19 points or -1.71% at 14198.81
- France’s CAC -90.17 points or -1.4% at 6358.47
- UK’s FTSE 100 -116.81 points or -1.54% at 7476.20
- Spain’s Ibex, -131.5 points or -1.49% at 8711.21
- Italy’s FTSE MIB -122 points or -1.75% at 23813
In the European debt market, benchmark 10 year yields moved sharply higher with the Italian 10 year rising by 22 basis points to 3.696%.
Other News
Goldman Sachs: ECB will raise rates by 50 basis points in September and October
- Expect a 25 basis point hike in July
Goldman Sachs is forecasting that the ECB will hike rates by 50 basis points in September and October. Those hikes, after a 25 basis point hike in July.
Goldman sites the recent euroibor flow that has seen an option put play which would profit from 25bp hike in July followed by 2x 50 hikes in September and October.
Cryptocurrency News
Volatility is about to strike Shiba Inu price, traders beware
- Shiba Inu price trades in a narrow range today against all previous ranges this week.
- SHIB price looks for direction as bulls try to refrain from making new lows for the week.
- Expect a massive big bang in price action as price action gets overcompressed.
Shiba Inu (SHIB) price action sees buyers and sellers getting further pushed towards each other in a narrow bandwidth of just $0.00000031 difference between the high and low of today. This very narrow bandwidth is unmanageable and will soon trigger a retreat by one or other of the parties. Expect to see the dice fall in favor of bulls with a massive jump towards $0.00001708, or a 60% rise.