Round up of today’s market news

North American News

Rallying Towards the Bell: US Stocks Extend Gains as Closing Approaches

• NASDAQ index up near 1%

US Stock Market Indices Show Resilience in Late-Day Surge: NVIDIA Leads with 3.4% Gain to $918.14, Meta Platforms Rises 2.91% to $465.24 Amidst Recent Volatility

As the trading day nears its end, the broader US stock indices are showcasing strength with notable gains. The NASDAQ index is marking a significant upswing of nearly 1%, while the S&P index is also firmly in the green, up by 0.84%.

Driving much of today’s positive sentiment are tech giants like NVIDIA and Meta Platforms, both rebounding from recent dips. Shares of NVIDIA have surged by $30 or 3.4% to reach $918.14, rebounding impressively from a recent low of $756.06 seen earlier in the week around April 15th.

Similarly, Meta Platforms shares are on a notable uptrend, soaring by $13.15 or 2.91% to hit $465.24. This climb comes on the heels of a challenging period following the company’s announcement of better-than-expected earnings but cautionary notes on rising expenses. The stock had previously dipped to a low of $414.50 before beginning its recovery.

These gains are particularly encouraging given the recent market volatility. Last week, Meta Platforms’ shares had risen by 1.96%, showcasing resilience after a steep decline of -7.85% in the prior week. Today’s performance suggests renewed investor confidence in these tech giants despite ongoing market uncertainties.

The final numbers are showing:

• Dow Industrial Average Rich Rose 176.59 points or 0.46% at 38852.26
• S&P index was 52.93 points or 1.03% at 5180.73
• NASDAQ index rose 192.92 points or 1.19% at 16349.25.

The small-cap Russell 2000 rose by 24.95 points or 1.23% at 2060.67.

After the close some earnings showed:

Pallantir:

• EPS $0.08 versus $0.08 expected.
• Revenues $0.634 billion versus $0.63 billion as expected

Lucid:

• EPS $-0.30 versus expected $-0.25
• Revenues $0.173 billion versus expected $0.16 billion
• Delivered vehicles 1967 (up 40% YoY). Expected 1698

Employment trends for April 111.25 versus 112.16 last month (revised from 112.84)

• Employment trends for April 2024

• rior month 112.16 (revised from 112.84)
• Employment trends coming weaker for April at 111.25 versus 112.16 last month

NY Fed Pres: Williams is seeing job growth moderate

• NY Fed Pres. Williams speaks on the economy
• Job growth is moderating
• Fed is looking at totality of economic data.
• Eventually there will be rate cuts
• Balance sheet wind down has gone smoothly
• Balance sheet drawdown haven’t affected markets.
• Consumers still spending, sees GDP 2% – 2.5% range this year.
• Real wages are improving
• Sees signs of more consumer caution on spending
• Economy is still healthy but is growing more slowly
• Inflation would have retreated more swiftly absent Russian war
• Russian war on Ukraine has been big event for global economy

Richmond Fed Pres Barkin: Inflation data this year is disappointing. Job is not done yet

• Richmond Fed Pres Barkin speaking
• Inflation data this year is disappointing. Job is not done yet
• Confident that current restrictive level of rate can cure demand enough to bring inflation to target.
• Don’t see economy overheating, but Fed knows how to respond if it does.
• Data whiplash confirms value of Fed being deliberate
• Given a strong labor market, Fed has time to gain confidence it needs to be sure inflation will fall.
• Businesses are still looking to raise prices if they can, risk is shelter and services keeps headline index above target.
• Businesses have more courage to use price as a lever
• Fed has more time to gain confidence inflation is moving toward 2%
• Demand remains robust
• Still feels like weight of risk is toward inflation.
• The metrics of where neutral rate is has moved up, but feels like current policy is restrictive
• At this point willing to believe that current rates are restrictive enough.
• Hear strongly from business contacts that the labor market is normalizing though some sectors that fell behind in hiring during the pandemic are still catching up.
• GDP growth still seems strong, focused attention now on job market
• Recent data makes you think less optimistically about how quickly inflation gets under control. It is a stubborn road
• Takes a while to corral price setters to think they don’t have a chance.
• Have not yet seen evidence that inflation is on track.
• Tend to imagine the Fed need to take some edge off the demand to finish inflation fight, though some help from supply-side is still possible

Ken Griffin: Sanctions may favor currencies other than the dollar

• Comments from the billionaire founder of Citadel
• Sanctions may favor other currencies than the dollar
• A default cycle is going to happen again
• We need to make the social security sustainable
• We have to think long and hard how to make our social security work for the American people
• Service inflation is concerning and more likely to persist

ICYMI – Warren Buffett’s Berkshire Hathaway cut its Apple stake in Q1 by 13%

• Buffett suggested tax reasons.

Warren Buffett’s Berkshire Hathaway released its first-quarter earnings report on Saturday

• Reported its Apple holdings of around $135.4 billion (circa 790 million shares, which points to the firm offloading around 13% of its stake

Apple is still Berkshire’s biggest holding, but Q1 marks second quarter in a row that Berkshire has trimmed its AAPl holding. In Q4 2023 it sold about 10 million Apple shares (only 1% of its holding).

Weekend – “Yellen counsels caution on currency intervention after surge in yen”

• Yellen didn’t sound unsupportive of Japan’s ‘rumoured’ intervention, but she didn’t sound real keen either

US Treasury Secretary Yellen spoke over the weekend

• “I’m not going to comment on whether they did or didn’t intervene, I think that that’s a rumour.”
• said the yen “did move quite a bit in a relatively short period of time”
• “we would expect these interventions to be rare and consultation to take place”

Commodities

Crude oil settles at $78.48

• Up $0.37 or 0.47%

The crude oil is settling at $78.48. That is up $0.37 or 0.47%.

The price has been in a relatively narrow trading range. The low price average $77.94 more the high price extended to $79.05. The settlement price is toward the middle of that trading range.

Technically, the price today traded above and below its 100-day moving average. The moving average comes in at $78.08. The low price extended below that level but could not sustain downside momentum and is closing back above the level.

Gold continues to hang in there but buyers not able to seize near-term control

• Gold sits up to start the week but faces a familiar resistance region

As the dollar fell on Friday, the precious metal caught a solid bid to $2,320 initially. But only to run up against offers at the 200-hour moving average before being sent back down to $2,280. The weekly low just above that held before price action stabilised but we are still sitting thereabouts over the last one week i.e. in and around $2,300.

Gold is back up by 0.5% to $2,314 but is still facing resistance from its 200-hour moving average at $2,317 currently. Sellers have been showing up close to the key near-term level and that is limiting any further upside for now.

Goldman Sachs boosted its copper forecast to $12,000 from $10,000/ton

• Copper prices have been climbing this year

Goldman Sachs has been unabashedly bullish copper this year and they’ve been rewarded by a strong copper rally so far in 2024.

They’re now boosting their year-end forecast for LME copper to $12,000/ton, a 21% rise from current prices and they continue to see another 50% gain (on average) in 2025. Those forecasts would roughly correspond to $5.40/lb this year and $6.75 next year.

Here’s what they wrote:

The copper market’s path into scarcity has gathered momentum so far this year, with the concentrate segment – which sits just before the metal market-moving into extreme tightness. Lacking any near term mine supply solution, the only way to maintain concentrate market function will be via demand rationing. Whilst the metal market has yet to reflect that upstream tightness, we think the increasing bind on refined supply set against healthy end demand leads to an inevitable deficit path ahead. Short run midstream responses have emerged to the higher LME price signal – particularly in scrap and semis – but these are temporary responses which will abate as economics rebalance and respective inventories exhaust. Our latest supply demand estimates point a 454kt metal deficit for this year (vs 428kt deficit previously) and 467kt metal deficit for 2025 (vs. 413kt deficit previously). With the seasonal surplus phase now at an end, we expect deficit accumulation to build momentum into mid-year and particularly H2 this year. Given visible stocks stand at just over 600kt, the potential still persists for that metal tightening path in H2 this year to take the market to a stockout episode by Q4. Whilst we see a near term phase of price consolidation as most likely, given the physical market digests short term responses to the higher LME environment, this will be relatively brief. Given the larger deficits, we upgrade our year-end target on copper to $12,000/t from $10,000/t, whilst raising our full year forecast average price to $9,800/t (vs. $9,200 previously) and retain our average $15,000/t in 2025.

Saudi Arabia raised the price of its crude oil to Asia, 3rd straight month

• Saudi Aramco raised the June official selling price of Arab Light crude for customers in Asia

Bloomberg cites a price list it has seen, showing price hikes to Asia for a third consecutive month as Saudi Arabia works to tighten the oil market.

• June official selling price of Arab Light crude for customers in Asia up 90 cents to $2.90 a barrel (above the regional Oman-Dubai benchmark)
• estimates were for 60 cent increase
• prices for other lighter and heavier varieties were increased, from May

EU News

European stocks opened the week with gains. Italy and Germany lead the way

• UK is on holiday

The major European indices are closing with gains to start the new trading week. The German and Italian indices led the way:

• German DAX, +0.95%
• France CAC, +0.49%
• Spain’s Ibex, +0.58%
• Italy’s FTSE MIB, +1.06%

in the European debt market, 10 year yields are lower:

• German, 2.47%, -2.4 basis points
• France 2.977%, -2.0 basis points
• Spain 3.25%, -0.2 basis points
• Italy 3.802%, -0.1 basis points.

Eurozone March PPI -0.4% vs -0.4% m/m expected

• Latest data released by Eurostat – 6 May 2024

• Prior -1.0%; revised to -1.1%

Looking at the breakdown:

• Intermediate goods +0.1%
• Capital goods +1.8%
• Durable consumer goods +0.1%
• Non-durable consumer goods +0.4%
• Energy -1.8%

Eurozone April Final Services PMI 53.3 vs. 52.9 expected

• The final reading on the Eurozone Services PMI from HCOB

• Services PMI 53.3 vs. 52.9 expected and 51.5 prior.
• Composite PMI 51.7 vs. 51.4 expeced and 50.3 prior.

Key findings:

• HCOB Eurozone Composite PMI Output Index at 51.7 (Mar: 50.3). 11-month high.
• HCOB Eurozone Services PMI Business Activity Index at 53.3 (Mar: 51.5). 11-month high.
• Service sector recovery drives growth in April, but price pressures build.

Comment:

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“This looks pretty nice. Service providers have now expanded their activity for the third consecutive month, putting an end to the lack of dynamism observed in the second half of last year. Encouragingly, employment has increased at a faster rate, aligning with the uptick in new business and the growth of the order book, which has seen its strongest expansion in eleven months. These trends suggest a growing optimism among service providers, a sentiment further bolstered by business expectations, which are currently at much higher levels compared to the average of the past two years.

“Productivity poses a significant challenge for the services industry and the ECB. Since early 2021, service providers have consistently expanded their staff, even during the weaker phases of 2022 and 2023. This trend suggests that companies, faced with staff turnover, may need to hire multiple individuals to maintain the same level of output, indicating reduced productivity. Meanwhile, the PMI index for operating costs in the service sector, which largely comprises unit labour costs, has continued to increase at a rapid pace over the past twelve months, following a sharp uptick in 2022. The ECB is cognizant of this trend and is likely to proceed cautiously with regards to the extent of rate cuts.

“Service companies successfully passed on a portion of the increase in operating costs, indicating improving demand conditions. It means also that the market structure is characterized by healthy competition without being excessively destructive.

“Spain is outpacing Germany, Italy, and France, with its Services PMI remaining several points ahead of its peer economies. Despite political turbulences, Spain appears to be capitalizing disproportionately on tourism. Moreover, according to the IMF, the Spanish government is less focused on austerity measures compared to other top eurozone economies, meaning less of a break on the economy.”

Eurozone May Sentix investor confidence -3.6 vs -4.9 expected

• The latest investor confidence report from Sentix – 6 May 2024
• Prior -5.9

Germany April final services PMI 53.2 vs 53.3 prelim

• Latest data released by HCOB – 6 May 2024

• Prior 50.1
• Composite PMI 50.6 vs 50.5 prelim
• Prior 47.7

It’s a mild revision to the preliminary estimates as both the German services and composite readings are at 10-month highs. The good news is that activity is picking up with new business also facing an upturn. However, price pressures remain stubborn and will be one to watch in the months ahead. Service firms raised their own prices on the month as cost inflation remains well above the historical trend rate. HCOB notes that:

“Wow, what a jump. The German service sector, which was still in the doldrums at the start of the year, is recovering fast. In an encouraging sign, not only did activity expand at the quickest rate in ten months but there were also recoveries in new and outstanding business as well as employment. With respect to the latter, companies have hired more staff for four straight months, which we see as evidence of firms’ confidence that their business will remain healthy in the near future.

“The outstanding business index has exceeded the 50 threshold for the first time since mid-2023. While this is just a monthly figure, we anticipate that new business will continue to grow, contributing to a sustained rise in outstanding business. This trend can be attributed to increasing purchasing power amid lower inflation and higher wages.

“Service providers continue to grapple with rapid increases in input costs, encompassing wages and energy expenses. Encouragingly, from a corporate perspective, firms have managed to partially pass on these higher costs to their clients. We interpret this pricing power as a further indication of the overall healthiness of the service sector.

“The German economy, long weighed down by the struggles of the manufacturing sector, finds itself back in growth territory thanks to the resilience of service providers. Surpassing the 50 mark for the first time since June 2023, the HCOB Composite PMI signals a positive shift. However, this doesn’t imply that Germany will now storm ahead. Instead, it’s more akin to a gentle breeze. Our GDP nowcast, factoring in the HCOB PMIs among other indicators, projects a modest growth rate of just 0.1% for the second quarter.”

France April Final Services PMI 51.3 vs. 50.5 expected

• The final reading on the France Services PMI from HCOB

• Services PMI 51.3 vs. 50.5 expected vs. 48.3 prior.
• Composite PMI 50.5 vs. 49.9 expected and 48.3 prior.

Key findings:

• France’s service sector back in expansion as demand improves.
• Employment growth accelerates to nine-month high.
• Input price inflation cools, but output charges rise at faster rate.

Comment:

Commenting on the PMI data, Norman Liebke, Economist at Hamburg at Hamburg Commercial Bank, said:

“The French economy is finally growing again. For the first time since May 2023, the HCOB Composite PMI is signalling growth, with an index value of 50.5. Surveyed companies reported that price increases reaccelerated in April, mostly due to higher wages and energy prices. French businesses are also optimistic, with the corresponding PMI for future output being above its historic average. Furthermore, the employment situation improved clearly in April, also showing some signs of optimism.

“Services are keeping the French economy afloat at the moment. The HCOB PMI for business activity in the service sector rose to 51.3, its highest value since May 2023. Improving financing terms, including lower borrowing costs and stronger customer demand were the main reasons reported for better business activity across the services sector.

“Domestic demand rises, and foreign demand falls. The strong uptick in business activity was led by stronger demand – the HCOB PMIs are showing that the demand was only stronger domestically and weaker from abroad. Demand was so strong that outstanding business increased for the first time since July last year.

“Service providers are optimistic. Although the corresponding HCOB PMI for future output expectations moved down a bit, the betterment of the employment sub-index speaks for itself. Rising employment typically signals increased optimism among businesses.”

Spain April Final Services PMI 56.2 vs. 56 expected

• The final reading on the Spain Services PMI from HCOB

• Services PMI 56.2 vs. 56 expected and 56.1 prior.
• Composite PMI 55.7 vs. 55.3 prior.

Key findings:

• Stronger gain in activity, despite slower new business growth.
• Job numbers increase sharply.
• Inflation rates remain elevated.

Comment:

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“Spanish service providers continuously impress with their performance. The HCOB PMI confirms the upswing in the services sector – activity remains consistently positive in April. The associated index remains at a high level at 56.2 points.

“Activity is driven by a consistently high order situation. Despite recent tensions due to high demand for Spanish services abroad, particularly in tourism, leading to domestic political unrest such as protests in Gran Canaria, foreign orders are still growing. Spanish service providers continue to look optimistically towards the future. Although the associated Future Activity index has slightly decreased, it remains above its long-term average.

“On the price front, concerns persist as service providers continue to grapple with rising input costs. There remains hope however as inflation momentum slowed for the second consecutive month. It is pleasing for consumers that this momentum is also reflected in sales prices, allowing companies to implement price increases at a slightly slower pace.”

Italy April services PMI 54.3 vs 54.0 expected

• Latest data released by HCOB – 6 May 2024

• Prior 54.6
• Composite PMI 52.6
• Prior 53.5

Italy’s services sector stays in expansion although there is just a slight easing in activity and new business on the month. Stronger demand conditions is helping in that regard with jobs growth also quickening in April. However, price pressures were stronger as well with input price inflation rising to its highest in a year. HCOB notes that:

“The Italian service sector is thriving and flourishing. In April, the HCOB PMI continued to signal robust growth for the service sector for yet another month, with an index value of 54.3. The outlook remains strong, reflected in a further increase in employment. Robust demand is accompanied by a sharp rise in inflation, however.

“Service providers are grappling with higher wages and energy prices. The ECB will likely pay close attention to the resurgence in the sub-index of input costs for Italian service providers, especially due to the role of higher wage pressures. Although costs are still far from the peak of inflation seen in March 2022 during the energy crisis following the Russia-Ukraine war, concerns about cost resurgence persist.

“The outlook of Italian service providers remains optimistic. Italian services companies have ramped up hiring significantly in April, as indicated by the increased sub-index for employment. This suggests that they are optimistic about future activity. There is good reason for this optimism, as both total (albeit slightly softer than last month) and international orders continue to grow. Confident demand forecasts, expected customer introductions, and new projects were cited by companies as reasons for their overall optimism.”

SNB total sight deposits W.E. 3 May CHF 473.2 bn vs CHF 475.7 bn prior

• Latest data released by the SNB – 6 May 2024

• Domestic sight deposits CHF 461.5 bn vs CHF 467.3 bn prior

It’s a slight drop in Swiss sight deposits but nothing out of the ordinary. The overall levels are holding since the start of the year:

ECB’s Vujčić says rates will be gradually lowered over time

• Remarks by ECB policymaker, Boris Vujčić

• Incoming data has been consistent with projections
• Expects loosening of policy stance but to still stay in restrictive territory

ECB’s Šimkus: Last week’s data were as expected

• Remarks by ECB policymaker, Gediminas Šimkus

• GDP and inflation data were as expected; haven’t changed thinking
• Can afford to reduce restriction
• Expects other rate cuts beyond June
• Sees three rate cuts for this year

JP Morgan trim back estimates for ECB rate cuts in 2024 to 75bp, from 100 previously

• European Central Bank interest rate cut forecast from J. P. Morgan

JP Morgan have maintained their forecast for the first ECB rate cut in June but are now expecting 75bp of cuts in total for this year instead of their previous 100bp of cuts projection.

JPM removed a cut on October from their forecast, now see June and September

ECB’s Lane says Confidence on getting inflation lower is improving

• Hinting at a June rate cut in the works

European Central Bank chief economist, Philip Lane, spoke in an interview in Spanish press, El Confidencial:

• What we said in April was essentially that if our level of confidence in the overall return of inflation to our target improved, it would be appropriate to reduce the current level of interest rates. There are still several weeks until the June meeting, but the April data is important. Both the preliminary estimate of eurozone inflation in April and the published GDP data for the first quarter improve my confidence that inflation will soon return to the target. So today my confidence level has improved compared to our April meeting. But of course we will receive more data between now and June.

Lane also spoke on the euro if the Fed holds while the ECB cuts:

• If the question is whether events in the US, including the decisions of the Federal Reserve , affect the outlook for European inflation and the economy, my perspective here is probably that we should not exaggerate that impact. The US economy and interest rates affect the euro area in different ways, and essentially these mechanisms work in opposite directions. Some consider the possibility of a depreciation of the euro against the dollar, but on the other hand, if the US bond market offers high interest rates, that will put upward pressure on bond yields in Europe, which which would basically have the opposite effect of depreciation. So when those effects are added up, the net impact for the European economy is, for the most part, contained. It is an example in which the impact of the exchange rate must be measured against any impact of the bond market. And we will do this at every meeting before, during and after the summer.

Asia-Pacific-World News

China’s Xi: Wish to ssee an early cease-fire and return of peace in Europe

• China’s Xi meeting with France’s Macron, Von Der Leyen:

China’s Xi in meeting with France’s Macron and von Der Leyen says:

• Both China and France and the EU all wish to see an early cease-fire and return of peace in Europe, and support political settlement of the crisis.
• The three parties need to jointly oppose the spillover and escalation of the fighting, create conditions for peace talks, safeguard international energy and food security and keep industrial supply chain stable
• China has been working vigorously to facilitate talks for peace
• China did not create the Ukraine crisis, nor is it a party to it.
• On the Palestinian – Israeli conflict, pressing task is to realize a comprehensive cease-fire as quickly as possible
• Key priority is to ensure humanitarian assistance.
• Is ready to work with EU to support a more broad-based authoritative and effective international peace conference to resolve Palestinian – Israeli conflict.
• China’s new energy industry has made real progress in open competition and represents advanced production capacity.
• It’s a new energy industry not only increases global supply and alleviates the pressure of global inflation, but also contributes significantly to global climate response and green transition.
• China and EU have excessive common interests and broad cooperation and green and digital transition.
• It is necessary that the two sides properly address economic and trade frictions through dialogue and consultation, and accommodate each other’s legitimate concerns.
• It is hoped that the EU institutions will develop the right perspective of China and adopt a positive China policy.

China’s services PMI expansion slowed a touch in April, but remains solid 

Reuters have a recap of the data from today, here.

• “The strong start to the year is consistent with the Caixin manufacturing and services PMIs, which have remained in expansionary territory for several straight months,” said Wang Zhe, Senior Economist at Caixin Insight Group.

More at that link.

China Caixin Services PMI for March 52.5 (expected 52.5, prior 52.7)

• Private survey PMI from China

Services PMI in line with expectations at 52.5, in expansion for the 16th consecutive month and another sign of economic recovery in China.

• The composite is 52.8
• prior 52.7

Australian job vacancies April 2024 +2.8% m/m (prior -1%)

• ANZ-Indeed Australian job ads

ANZ-Indeed Australian job

+2.8% m/m

• prior -1% in March

For the y/y -6.6%

Australian TD/MI monthly inflation April 2024: 0.1% m/m (prior 0.1%)

• Australia’s privately surveyed monthly inflation gauge comes from the Melbourne Institute of Applied Economic & Social Research at the University of Melbourne:

And for the y/y 3.7%, a two-year low

• prior 3.8%

The core measure, trimmed mean is 0.2% m/m

• prior 0.4% (which was the biggest jump in 3 months)

and 3.2% y/y, its lowest since June of 2022

• prior 3.8%

Australian Treasurer Chalmers says “within reach” of budget surplus

• Chalmers is under pressure to trim fiscal stimulus given sticky high inflation

Australian Treasurer Chalmers remarks via Reuters:

• Second consecutive budget surplus within reach
• This is not the time for scorched earth austerity
• This is not the time to slash and burn in the budget
• We will chart a responsible middle path in budget

RBA meet this week – “History suggests a rate increase is plausible”

• An article in Australian financial media is creating a minor ripple in rate hike expectations

The Reserve Bank of Australia statement is due on Tuesday, 7 May 2024 at 2.30 pm Sydney time:

• 0430 GMT
• 0030 US Eastern time

Capital Economics is opting for a 25bp rate hike:

• “Our forecast is a line ball call, but a 5 per cent chance is too low,”
• “Inflation is proving stickier and stronger than the RBA expected, and is on track to overshoot their target for four years, which is quite long.
• “The labour market and wages in the services sector risks keeping price pressures higher for longer.”

The article in the Australian Financial Review (gated) says

• The RBA has increased interest rates on seven occasions since 1999 when the trimmed mean quarterly inflation has been at least 1 per cent, as it was in the March quarter.
• Two exceptions were in the aftermath of the introduction of the 10 per cent GST in July 2000, when inflation and unemployment were rising, and in 2008 when global financial crisis storm clouds were brewing.

New Zealand data: ANZ Commodity Price Index for April 2024: +0.5% m/m (prior -1.3%)

• The index tracks the prices of 17 of New Zealand’s major commodity exports, including dairy products, meat, wool, forestry products, and seafood.

In New Zealand dollar terms, the index gained 2.7% m/m as the NZD Trade Weighted Index fell 1.0%.

As part of the report are comments from ANZ on shipping prices:

• Global shipping prices generally softened a little through April as easing demand is offsetting ongoing restrictions in key shipping channels.
• Slowing global economic activity has curbed demand for goods, easing pressures in the shipping industry. There has also been an increase in the number of ships sailing, which has helped offset the longer delivery routes as ships avoid the Suez Canal. Indeed, traffic through the Suez Canal is less than half what it would normally be, whilst Panama Canal numbers are back by about a third.

OECD says the Reserve Bank of New Zealand has limited space for rate cuts this year

• Organisation for Economic Co-operation and Development’s (OECD) annual survey

The Organisation for Economic Co-operation and Development’s (OECD) has published its annual survey of the New Zealand economy.

OECD says:

• RBNZ needs to ensure inflation falls to 2% before it cuts rates
• combined with further fiscal consolidation to help curb inflation and restore fiscal headroom
• forecast economic growth of less than 1% for 2024, rising to just under 2 % in 2025
• economic growth has stalled
• said “rebalancing” was under way to counter high inflation and large budget deficits caused by increased spending during the pandemic
• “Monetary policy will need to remain restrictive coupled with further fiscal consolidation to help curb inflation and restore fiscal space,” “The government should set operating allowances and tax policies that will gradually reduce the fiscal deficit to reach budget balance.” any tax cuts needed to be fully funded either by spending cuts or an increase in revenue
• tax reforms should consider a capital gains tax

Reminder – it’s a national holiday in Japan on Monday, 6 May 2024. Markets are closed

HSBC on the yen, “weaker for longer” may be needed

• Says the slump in the JPY is key in helping Japan’s economy recover

HSBC are not wrong. From a note late last week:

• “After years and years of losing competitiveness, exporters are at last feeling the lift from exchange rate realignment. And, one might suspect, an even weaker exchange rate, and for longer, may be needed, to turn the lift into an enduring manufacturing renaissance”
• is boosting Japan’s service sector
• boosting tourism
• helping lift inflation expectations
• “A weaker yen, in other words, is not entirely unwelcome, as long as the decline is orderly. Thus, don’t expect the BOJ to rush into aggressive tightening just because the exchange rate is wobbly”

Cryptocurrency News

Bitcoin defends against downside momentum, MicroStrategy BTC bucket grows to 214,400

• Bitcoin price retracted to $63K range after a strong weekend, buyer momentum has flatlined on daily time frame.
• MicroStrategy now owns more BTC than any public company and country worldwide.
• Blackrock says wall of money is coming to BTC through ETFs from pensions, endowments, and sovereign wealth funds.

Bitcoin (BTC) price is chopping sideways after a strong weekend. Despite elevated risk levels in the cryptocurrency markets, reports indicate that MicroStrategy is arguably the biggest BTC bull. 

MicroStrategy BTC bucket grows to 214,400

Bitcoin price nicked the $64,000 threshold on Saturday, topping out at $64,540. In the early hours of the Asian session, traders experienced the same momentum witnessed during the weekend with Bitcoin price ascending to an intraday high of $65,500. The momentum was short-lived, however, as BTC retracted back to the $63,000 range amid waning momentum.

Meanwhile, reports indicate that MicroStrategy now owns more BTC than any public company or country in the world. At 207,189, the US comes second after the Michael Saylor-led firm MicroStrategy’s 214,400. China is third with 194,000 BTC despite the country’s recent reservations about crypto.

Robinhood gets SEC warning against crypto unit for alleged violation of Securities Act

• Robinhood says it received a “Wells Notice” from the US Securities and Exchange Commission on May 4. 
• The exchange platform has reportedly cooperated with the investigation. 
• The SEC alleges a violation of the Securities Exchange Act in the exchanges’ crypto operations. 

The Securities and Exchange Commission (SEC) is investigating the exchange platform Robinhood Crypto, LLC. The exchange said Monday that it has received investigative subpoenas on crypto listings, custody of cryptocurrencies and platform operations. 

The exchange received a Wells Notice from the SEC in which the US financial regulator alleges a violation of Sections 15(a) and 17A of the Securities Exchange Act of 1934. 

Ethereum traders uncertain following recent price movement, declining CEXs ETH holdings hints at rally

• Ethereum holdings on centralized exchanges continue to decline despite recent whale sales.
• With Robinhood Crypto as the latest recipient of the SEC’s Wells notice, Ethereum spot ETFs look more unlikely.
• Ethereum could see a decline to key support level before attempting a bounce back to the $3,300 key level.

Ethereum’s (ETH) price movement on Monday is leaning toward short traders following investors’ uncertainty in the wider crypto market. However, ETH holdings in centralized exchanges (CEXs) has been on a steady decline following low flows in Hong Kong’s ETH ETFs and Robinhood Crypto receiving a Wells notice from the Securities & Exchange Commission (SEC).

ETH whale sale, declining CEXs holdings, Robinhood Crypto

Ethereum whales could be the determining factor in ETH’s move for a potential rally. Here are the top market movers for the number one crypto altcoin:

• A notable Ethereum whale recently withdrew 7,000 ETH from Lido and deposited them on Binance on Monday following Ethereum’s recent price drop, according to data from Lookonchain. According to their previous transaction, the whale is in profit of more than $16 million. They withdrew 12,906 ETH at $1,890 from Binance and staked in Lido.
   
• Despite the recent whale sale, Ethereum on CEXs has been on a steady decline, dropping from 16% in March to 10.66% on May 5, according to data from Glassnode. This indicates increasing investors’ confidence in the number one altcoin regardless of recent price drops. For example, a whale who lost $4.63 million from an ETH long position opened another long position again on Sunday, according to data from Lookonchain. He withdrew 6,965 ETH from Binance on Sunday and deposited it into Compound, then borrowed 14.5 million USDT.
   
• Hong Kong Bitcoin and Ethereum ETFs saw a total trading volume of $7.72 million at the close of the Asian market on Monday. In comparison, the trading volume of Bitcoin ETFs in the United States on the previous trading day was around $1.88 billion – 268x that of Hong Kong ETFs. In an X post, Bloomberg analyst Eric Balchunas commented on the ETFs’ trading volume, “Yeah, as we advised, don’t expect big numbers in HK vs US.” This further strengthens a previous analysis that Hong Kong’s ETH ETFs would have minimal effect on Ethereum’s price.

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