North American News
US major indices close mixed. Dow closes down for the 5th day in a row. Nasdaq soars
- Nvidia (up 24.38%)
The US major indices are closing mixed with the Dow down for the 5th consecutive day in what was an up-and-down trading day for it. However, the S&P closed higher. The Nasdaq index surged 1.71% as Nvidia led to the flow of funds into it and other AI type stocks.
- Nvidia rose 24.37%
- Microsoft rose 3.85%
- Alphabet rose 2.13%
- Adobe surged 7.19%
The final numbers for the major indices showed:
- Dow industrial average fell -35.27 points or -0.11% at 32764.64
- S&P rose 36.04 points or 0.88% at 4151.27
- Nasdaq rose 213.92 points or 1.71% at 12698.08
- Russell 2000 fell -12.39 points or -0.70% at 1754.60
The S&P remains below the key 100-week MA at 4200 with one more day to go in the week.
US Q1 2023 GDP (second reading) +1.3% vs +1.1% expected
- First quarter 2023 GDP second estimate
- The advance reading was +1.1% vs +2.0% expected
- Q4 final was +2.6% annualized
Details:
- Consumer spending +3.8% vs +3.7% advance
- GDP final sales +3.4% vs +3.4% expected
- PCE prices 4.2% vs 4.2% advance
- Core PCE prices 5.0% vs 4.9% expected (4.9% advance)
- GDP deflator 4.1% vs 4.0% expected
US initial jobless claims 229K versus 245K estimate
- US initial jobless claims and continuing claims for the current week
- Prior week 242K revised to 225K
- For the week ending May 20, initial claims were 229,000, an increase of 4,000 from the previous week’s revised level of 225,000.
- The previous week’s level was revised down by 17,000 from 242,000 to 225,000.
- The 4-week moving average of initial claims remained unchanged at 231,750 from the previous week’s revised average.
- The previous week’s average of initial claims was revised down by 12,500 from 244,250 to 231,750.
- The insured unemployment rate for the week ending May 13 was 1.2 percent, unchanged from the previous week.
- The number of continuing claims during the same week was 1,794,000, a decrease of 5,000 from the previous week’s level of 1,799,000.
- The 4-week moving average of continuing claims decreased by 12,250 from the previous week’s average, resulting in a new average of 1,800,250.
US treasury auctions of $35 billion of 7 year notes at a high yield of 3.827%
- WI level at the time of the auction 3.835%
- High-yield of 3.827%
- WI level at the time of the auction 3.835%
- Bid to cover 2.61X versus six-month average of 2.46X
- Tail -0.8 basis points versus six-month average of +0.9 basis points
- Directs (a measure of domestic demand) 17.3% versus six-month average of 18.8%
- Indirects (a measure of international demand) 72.3% versus six-month average of 66.6%
- Dealers (took the rest) 10.4% versus six-month average of 14.5%
US April pending home sales 0.0% vs +1.0% expected
- US housing data
- Prior was -5.2%
- Index 78.9 vs 78.9 prior
Fed’s Barkin: Some businesses still saying they need to raise prices
- Comments from the Richmond Fed President
- The labor market is ‘quite tight’
- Demand is definitely cooling, in part because it was overstimulated during the pandemic
- Fed rate hikes are also helping to reduce demand
- Data on productivity is moving in the wrong way but much is unknown about covid impacts on hiring and the labor force
Fed’s Collins: A pause on rate action would give Fed space to measure impact
- Collins says Fed may be at or near time to pause
- Fed may be at or near time to pause rate hikes
- Inflation too high but sees promising signs of moderation
- Watching a wide array of data
- Banking sector likely to weigh on demand
- Baseline outlook does not see a significant economic downturn
- Would not be surprised by a modest increase in unemployment
- Inflation decline has been slower than expected
Key excerpt:
While inflation is still too high, there are some promising signs of moderation. I believe we may be at, or near, the point where monetary policy can pause raising interest rates. This will provide an opportunity to more fully assess the impact of the actions taken to date and the general tightening of credit conditions on economic activity. However, I also believe it is important to make each policy decision based on a wholistic assessment of information available at the time – and the next policy meeting will be in mid-June. In the meantime, we continue to monitor a wide range of data – about price developments, labor markets, financial conditions and more – to evaluate how the economy is doing.
Commodities
Silver approaches oversold conditions
- Silver price is on a 4-day losing streak.
- Bears running out of steam near overbought RSI.
- 100 and 200-day SMAs could serve as support and resistance levels in sideways trading period.
Silver price (XAG/USD) trades with 0.57% losses at $22.93 at the time of writing, after bottoming at a low of $22.75 during the early Asian session. The precious metal price is trading in the red for a fourth consecutive day, and buyers should not ignore that technical indicator on the daily chart are approaching oversold conditions.
That being said, the Relative Strength Index (RSI) is just above the overbought threshold while the Moving Average Convergence Divergence (MACD) has been standing in negative territory since mid-April, suggesting that a technical correction may be on the horizon.
In addition, XAG/USD lost the 100-day Simple Moving Average (SMA) for the first time since March and now has its last support at the 200-day SMA at $22.01. So, considering the possibility of an upwards correction, the price can use the mentioned moving averages as support and resistances for consolidating the losses and then entering a period of sideways trading.
Gold reaches lows of March after US data
- XAU/USD falls to $1,940.00, during the American session.
- US GDP is revised up to 1.3% in the first quarter of the year (Q1), while Jobless Claims come in below expectations.
- Core PCE inflation rises by 5% in Q1.
The XAU/USD drops to its lowest level since March 22 due to strong economic data and a high Personal Consumption Expenditures (PCE) inflation. This leads investors to place higher bets on a 25 basis points interest rate hike by the Federal Reserve (Fed) in the upcoming June meeting. Consequently, US bond yields increase, exerting pressure on Gold prices and favoring the US Dollar.
The Gold price, as of the time of writing, is trading at $1,943.62, which is 0.7% below its opening price. Meanwhile, the US Dollar Index (DXY) Index is currently at the 104.22 level, showing a gain of 0.32% today.
The US reports strong economic activity data
The US Bureau of Economic Analysis has reported that the Gross Domestic Product (GDP) of the United States expanded by 1.3% quarter-on-quarter in the first quarter of 2023, surpassing the preliminary estimate of 1.1% which was expected to remain unchanged. In contrast, Jobless Claims for the week ending on May 19 came in at 229k, lower than the consensus of 245k. Additionally, Core PCE inflation increased to 5% quarter-on-quarter in Q1, exceeding the expected rate of 4.9%.
After the Federal Open Market Committee (FOMC) expressed concerns about economic activity, positive US data has led investors to believe that there may be more room for another interest rate hike in the upcoming decision in June. As a result, the CME FedWatch Tool now places a 49.3% probability of a 25 basis points hike, compared to yesterday’s odds of around 36%.
As a reaction, US bond yields are experiencing gains across the curve. The 10-year bond yield rose to 3.79%, marking a 3.22% increase on the day. Similarly, the 2-year yield stands at 4.46%, showing a gain of 2.61%, while the 5-year yield is at 3.87%, reflecting a gain of 3.22%. These increases in bond yields are further pressuring the price of Gold.
WTI crude oil futures tumbles $2.51 to settle at $71.83
- Price fell -3.38% on the day
The price of WTI crude oil futures tumbled $2.51 to settle at $71.83 down -3.38%.
The high price today reach $74.37. The low price was $70.98.
Novak tries to walk back earlier OPEC comments
- Now he says OPEC+ can make decisions at the June meeting if necessary
Russian oil minister Novak is getting the blame for today’s oil price fall after he spoke to a domestic newspaper and doubted that OPEC would lower production at the June meeting.
Now after a few angry calls, no doubt he’s trying to walk the comments back, saying that Russia and OPEC will make a decision then on what’s best for the oil market.
EU News
European equity close: Moderate declines in third day of losses
- The losing streak continues
The AI revolution is happening in the US, not in Europe. Nvidia is holding up the US side of the stock market but not helping Europe as traders are concerned about higher interest rates.
- Stoxx 600 -0.2%
- German DAX -0.2%
- UK FTSE 100 -0.6%
- French CAC -0.3%
- Italy MIB -0.25%
- Spain IBEX -0.4%
Germany Q1 final GDP -0.3% vs 0.0% q/q prelim
- Latest data released by Destatis – 25 May 2023
- GDP (non-seasonally adjusted) -0.2% vs +0.2% y/y prelim
- GDP (working day adjusted) -0.5% vs -0.1% y/y prelim
What initially was supposed to be marginal growth turned out to be flat growth, and is now revised to a contraction in the German economy in Q1. As such, that sees Germany suffer a winter recession.
German finance minister says GDP data have shown surprisingly negative signals
- Remarks by German finance minister, Christian Lindner
It’s more the case that politicians have shown surprising ignorance in reading economic data and the impact of high inflation on the economy.
Germany June GfK consumer sentiment -24.2 vs -24.0 expected
- Latest data released by GfK – 25 May 2023
- Prior -25.7; revised to -25.8
France May business confidence 100 vs 101 expected
- Latest data released by INSEE – 25 May 2023
- Prior 102
UK May CBI retailing reported sales -10 vs 10 expected
- Latest data released by CBI – 25 May 2023
- Prior 5
Bank of England Haskel: Further increases in bank rates cannot be ruled out
BOE Haskel is on the wire’s saying:
- Further increases in the bank rate cannot be ruled out.
- He prefers to lean against the risks of inflation momentum.
- Despite current difficult circumstances, embedded inflation would be worse.
- While some indicators suggest the labor market is loosening, he views it as still very tight in an absolute sense.
- Data shows little evidence of UK inflation being disproportionated due to firms raising prices
BOE’s Haksel: April core inflation was higher than expected
- Comments from Haksel
- Officials didn’t see rise in core inflation
- Rise in UK used car prices is a ‘puzzle’, says it’s hopefully a ‘blip’
Other News
South Africa SARB Interest Rate Decision above forecasts (8%): Actual (8.25%)
DBRS Morningstar places US ratings under review with negative implications
- The US’ AAA rating is placed under review
DBRS Morningstar notes that the review with negative implications “reflects the risk of Congress failing to increase or suspend the debt ceiling in a timely manner”. Adding that:
“While we still expect Congress to raise the debt ceiling before Treasury runs out of available resources, there is a risk of Congressional inaction as the X-date approaches. DBRS Morningstar would consider any missed payment of interest or principal as a default. In such a scenario, the relevant U.S. Issuer Ratings would be downgraded to “Selective Default.” “
GOP’s McHenry: I don’t think a deal will be done today. We are not quite in that zone yet
- GOPs McHenry with a debt ceiling update
GOP McHenry said:
- The debt dealing item’s list is getting shorter
- He is not a pessimistic
- He does not think that there will be a deal done today saying “we’re not quite in that zone yet”
- The work were doing centers on a shorter and shorter array of issues
BOJ’s Ueda: Changing YCC target to 5-year zone from 10-year a possible future tweak
- Ueda talks about tweaking yield curve control
- Shortening duration of BOJ YCC targets to 5-year zone from 10-year would be among options if the BOJ were to tweak policy in the future
- It is possible to keep 5-year yield stable and low even by targeting 10-year yield as long as the shape of the curve is upward
- Japan’s consumer inflation likely to slow ahead but if this projection proves wrong, we will act swiftly
- BOJ must avoid tightening monetary policy prematurely
McCarthy: I take June 1 as the debt ceiling deadline
- That’s an important comment
No one seems to know exactly when the real US debt ceiling deadline is and what can be done to extend it. It depends on tax receipts, the timing of outlays and whatnot.
By declaring that he sees it as June 1 and also that it will take 72 hours to get a deal written up, he sets the deadline for Monday or Tuesday maybe even earlier if he wants the Senate to have some time to wrangle.
Cryptocurrency News
Uniswap price falls to November 2022 lows despite burning $52 million worth of ETH in Q1
- Uniswap price fell below the $5 mark to trade at $4.9, falling to a six-month low.
- The decentralized exchange burnt the highest amount of ETH throughout Q1 and April, suggesting high usage.
- However, UNI price has been on a decline since February, regardless, owing to its correlation with Bitcoin.
Uniswap price has been in decline for more than three months now, extending its fall to the November 2022 lows. The Decentralized Exchange (DEX) token’s trading value is actively descending despite the DEX observing increasing usage. The reason behind this phenomenon goes back to the biggest cryptocurrency in the world, Bitcoin.
Uniswap price sees new lows
Uniswap price trading at $4.9 lost the psychological support level of $5, which was also the lowest point the altcoin fell to in the last six months. Marking a new low on May 24, UNI is currently inching closer to November 2022 lows of $4.8, which, if the cryptocurrency falls through, will bring it to a 12-month low.
The reason this is concerning is that usually, the price decline has a lot to do with its investors. Either token holders tend to act bearishly and sell their holdings to offset their losses during bear markets or disappear from conducting transactions on-chain until the conditions get better.
But neither of the two situations happens to be the case for Uniswap. This is evident in the fact that the DEX has been observing increased activity since the beginning of the year. The month of April recorded the highest amount of ETH burnt in gas fees in comparison to other top protocols on the Ethereum chain.
The combined activity in the first quarter of the year on Uniswap resulted in the burning of over 29,333 ETH in gas, which amounts to more than $52 million.
Like our recently launched pages. Join our community and never miss a beat in the dynamic world of trading.
https://www.facebook.com/BilalsTechLtd
https://www.linkedin.com/company/bilals-tech/
