Round up of today’s market news

North American News

Market Wrap Up: Major Indices Close Mixed with Nasdaq Marginally Lower, Dow Extends 8-Week Winning Streak

• Major indices close higher for the week

In today’s market action, the major stock indices displayed a mixed performance, with the Nasdaq edging down marginally while the S&P and Dow saw gains. The Dow’s upward momentum continued, marking its eighth consecutive week of gains, highlighting ongoing investor confidence in the market.

The S&P 500 index showed strong performance throughout the week, finishing nearly 2% higher, reflecting positive sentiment and broad-based buying across various sectors. This upward movement was not limited to the S&P alone, as all major indices experienced upward momentum this week, indicating a bullish trend in the overall market sentiment.

Despite some volatility and sector-specific challenges, investors remained optimistic about the broader economic recovery and corporate performance, supporting the overall positive trajectory in the stock market.

The final numbers are showing:

• Dow industrial average rose 125.06 points or 0.32% at 39512.85
• S&P index rose 8.62 points or 0.17% at 5222.69
• Nasdaq index-5.40 points or -0.03% at16340.87

The small-cap Russell 2000 fell -13.85 points or -0.67% at 2059.77

For the trading week:

• Dow industrial average rose 2.16% (fourth week in a row higher)
• S&P index rose 1.85% (third week in a row higher)
• NASDAQ index rose 1.14% (third week in a row higher)

University of Michigan consumer sentiment preliminary for May 67.4 versus 76.0 estimate

• University of Michigan consumer sentiment data for the month of May 2024 (preliminary)

• Prior month 77.2
• Consumer sentiment for May (preliminary) 67.4 versus 76.0 estimate. Prior month 77.2
• expectations 66.5 versus 75.0 expected. Prior month 76.0
• current conditions 68.8 versus 79.0 last month
• 1-year inflation expectations 3.5% versus 3.2% last month.Highest since November 2023
• 5-year inflation expectations 3.1% versus 3.0% last month

US federal budget for April surplus $210.00 billion versus $244 billion estimate

• US federal budget for April 2024

• Prior month $-236 billion
• April 2024 surplus $210 billions vs $244B estimate
• April 2023 $176 billion.
• US fiscal 2024 year-to-date deficit $855 billion versus comparable fiscal 2023 deficit of $925 billion
• April budget outlays $567 billion versus $462 billion in April 2023. Outlays are up 22.72% from 2023
• April receipts $776 billion versus $639 billion in April 2023. Receipts are up 21.4% from 2023.
• Social Security up 11%

Chicago Fed Pres. Goolsbee: Feds inflation target acts as an anchor on expectations

Chicago Fed Pres. Goolsbee is speaking ahead of his moderated discussion with CNBC Liesman.

• Fed 2% inflation target next as in anchor on expectations
• Short run inflation expectations aren’t what matters
• Not surprised that one year expectations was higher
• At this time not much evidence that inflation is stalling out at 3%.
• We hit an inflation bulb this year and now we wait.
• We need to sniff the data down.
• We are relatively restrictive on policy.
• Real fed funds rate is as high as it is been in decades.
• I’m hesitant to focus too much on the recent inflation data.
• I think we are restrictive on policy
• Positive supply developments can make it hard to gauge if economy is overheating

Fed is still on track to cut rates this year but timing is uncertain – Bostic

• Remarks by Atlanta Fed president, Raphael Bostic
• I still have that belief that we can lower rates this year
• We’re hearing from pretty much everyone that pricing power is pretty much at its limit
• That should help with further progress on the inflation front
• We are still seeing robust job growth
• It may take a while for labour market conditions to ebb further
• Still sees a single 25 bps rate cut as being likely for this year
• Thinking less of the extent of rate cuts but more on getting the timing right to start the cycle

White House Brainard: Debt ceiling fights have been unproductive

White House’s economic advisor Lael Brainard is speaking and said:

• debt ceiling fights have been unproductive
• It should not cost hundreds of dollars to prepare taxes, expect direct filing to become more widely available
• We should fully pay for any tax cuts extended in 2025
• Biden would not accept outcome that does not preserve current tax breaks for the middle class
• Corporate tax rates are too low for country’s fiscal health.

Fed Pres. Kashkari: Fed is interested in AI because it contributes to productivity

• Minneapolis Fed Pres. Kashkari speaking

• Fed is interested in AI because it contributes to productivity
• Worthwhile to downgrade hype around AI
• Current baseline is that strong productivity rates will moderate
• US has long-term housing supply challenge
• Higher rates will lead to less housing supply in short-term.
• Fed has to get inflation down.
• Low rate not enough by itself to bolster home supply.

Dallas Fed Pres. Lorie Logan: Fed has made substantial progress on inflation

• Dallas Fed Pres. Lorie Logan speaking

• Fed has made substantial progress on inflation, with the labor and economy strong
• it is not a softly ending yet
• 1Q inflation data disappointing.
• There are important upside risks to inflation.
• There are uncertainties regarding if policy is sufficiently restrictive.
• Too early to think about putting rates.
• We need to remain flexible on policy.
• Neutral interest rate level may have risen
• Events of March 2023 have really impacted how we need to think about liquidity risk.
• Critically important that banks have a broad set of funding arrangements, one of them has to be the Fed discount window
• We want to see every bank signed up to discount window.
• We want to see every bank testing the discount window on a regular basis.
• Safe healthy banks use the discount window all the time. That’s a good thing.
• Once banks are signed up, discount window is an easy system to use.

UBS expects US inflation will begin to trend lower soon

• If inflation heads back towards the Fed’s 2% target the outlook for lower rates is bolstered
• “Investors are expecting April’s Consumer Price Index to show that the trend toward slowing inflation—which was interrupted in the first quarter of the year—is resuming”
• “Our view is that inflation will start heading back to the Fed’s 2% target in the coming months”

In the note UBS cite:

• moderating housing costs
• lower consumer spending

Goldman Sachs president Waldron is expecting a soft landing for the US economy

Waldron had a few words on the broader economy, on the prospects for avoiding recession. Speaking with CNBC:

• We’re still subscribers to, generally speaking, a soft landing scenario
• “I would say soft landing doesn’t mean everything is perfect and it lands on a nice soft pillow
• Sometimes you have fits and starts in a soft landing.I think that’s what we’re seeing right now

Yellen says inflation has fallen substantially, but not enough for rate cuts yet

• US Treasury Secretary Yellen

• inflation has come down substantially
• but inflation is not yet where it needs to be
• the US-China relationship has improved decidedly over the past 12 months

Canada April employment change 90.4K vs 18.0K estimate

• Canada April 2024 employment change

• Prior month -2.2K
• Employment change of 90.4K versus -2.2K last month.Highest since January 2023.
• Unemployment rate 6.1% versus 6.2% estimate.Prior month 6.1% The steady reading was the first after 6 consecutive monthly declines
• On a year-over-year basis, the employment rate was down 0.9 percentage points
• Full-time employment 40.1K versus -0.7K last month
• Part-time employment 50.3K versus -1.6K last month.
• On a year-over-year basis, part-time employment was up by 2.9% (+104,000) in April, while full-time employment was up by 1.7% (+273,000).
• Participation rate 65.4% versus 65.3 last month.
• Total hours worked rose 0.8% in April and were up 1.2% compared with 12 months earlier
• Average hourly wages among employees increased 4.7% (+$1.57 to $34.95) on a year-over-year basis in April, following growth of 5.1% in March (not seasonally adjusted).

Further details as employment increased in April in:

• Professional, scientific and technical services (+26,000; +1.3%),
• Accommodation and food services (+24,000; +2.2%),
• Health care and social assistance (+17,000; +0.6%) and
• Natural resources (+7,700; +2.3%)

Population growth drove the Canadian jobs surprise — CIBC

• Analysis of the latest Canadian jobs report

Canada added 90.4K jobs in today’s labour force survey, crushing expectations of an 18.0K gain. However CIBC says the gain is less-impressive than it seems because population growth added 107K people to the labour force in the month.

With that, they continue to see the Bank of Canada cutting rates in June:

While today’s increase in employment was much better than expected, this strength appears to largely reflect a further surge in the base population as the labour force count catches up with the quarterly population tally. With the unemployment rate remaining higher than it was at the start of the year and wage pressures easing slightly,the data is still consistent with a gradual loosening of labour market conditions.We continue to forecast a first interest ratecut at the next meeting in June, although after today’s data that call relies even more heavily on core measures of inflation remaining subdued within the next CPI print.

Commodities

Gold skyrockets over $2,350 amid souring consumer sentiment

• Gold rebounds from daily lows, propelled by a sharp drop in US consumer sentiment and future economic outlook.
• High US Treasury yields weren’t an excuse for Gold’s advance.
• US consumers expect inflation to remain above 3% over a one-year period.
• Fed officials are cautious about rate cuts, with mixed signals from different Fed governors.

Gold prices advanced sharply late in the North American session on Friday, up by more than 1% despite US Treasury bond yields remaining high. The University of Michigan survey showed that Americans had become pessimistic about the economy as Consumer Sentiment plunged to its lowest level in six months.

The yellow metal trades at $2,369 after bouncing off daily lows of $2,343. Friday’s sentiment data and the weaker labor market figures revealed since the beginning of May paint a gloomy outlook for the economy of the United States. Although fears of a pronounced economic slowdown remain low, market participants seeking safety drove the golden metal and the US Dollar higher.

Silver retreats as shooting star looms, sellers eye $28.00

• Silver retreats from a three-week high reached at $28.74.
• Momentum favors bulls in the medium term; but shooting star looming paves the way for a retracement.
• Uptrend to resume with buyers clearing $28.74.

Silver reversed on Friday amid high US Treasury yields and a stronger US Dollar. The grey metal slipped 0.48% and exchanges hands at around $28.19, at the time of writing.

Silver Price: Technical outlook

From a technical perspective, Silver is still upward biased, though the formation of a ‘shooting star,’ can pave the way for a pullback. Even though momentum favors bulls, as depicted by the RSI with readings between 60-70, its slope aims downwards. Therefore, the white metal is bearishly biased in the short term. However, sellers will face solid support levels, like the $28.00 psychological level. Once cleared, the non-yielding metal could dive toward the 38.20% Fib retracement at $27.70, confluence with the April 62 high.

Crude oil futures settle at $78.26

• Down -$1.00 or -1.26%

Crude oil futures are settling at $78.26.That is down -1.0% or -1.26%

The price is settling near the lows for the day. The low for the day reached $78.23. We left for the day was at $79.93.

For the trading week, the price was up $0.40 or 0.52%.

Looking at the daily chart, the price action today traded closely between the 200-day moving average above at $80.03 (the high was $79.93) and the 100-day moving average below. $78.33

Baker Hughes oil rig count -3 to 496

• Baker Hughes rig count for the week ending May 10

The Baker Hughes rig count for the current week is showing:

• Oil rigs down -3 to 496
• Gas rigs up 1 to 103
• Total rigs down -2 to 603

Gold looks to snap back-to-back weekly declines with quick change of pace

• Gold is up another 1% today after closing higher by 1.6% yesterday

Gold is up 1% today, nearing $2,370 now as buyers are looking to build on the jump higher yesterday. The precious metal was bid as the dollar faltered after the weaker US weekly jobless claims data. And that is providing a sudden change of pace for gold after having slumped towards the end of April. It is now looking to snap back-to-back weekly drops with a near 3% gain this week currently.

But amid the move higher here, there is some trendline resistance around $2,372.50 coming up. That will be one to watch before the $2,400 mark comes into play again ahead of key US data next week.

EU News

European indices close higher. German Dax, France CAC & UK FTSE 100 close at record levels

• German DAX as it largest gain for the week since November 2023

The major European indices are closing higher on the day, and higher for the week. Moreover, the German DAX, France CAC, and UK FTSE 100 are all closing and record high levels. Expectations for lower rates are nothing risk-on flows.

A snapshot of the closing levels shows:

• German DAX, Rose 70.24 points or 0.38% at 18756.85
• France CAC rose 26.70 points or 0.33% at 8214.36
• UK FTSE 100 rose 56.85 points or 0.68% at 8438.21
• Spain’s Ibex rose 55.40 points or 0.50% at 11105.49
• Italy’s FTSE MIB rose 318.05 points or 0.93% at 34657.36

For the trading week:

• German DAX rose 4.20% its largest gain since November 2023
• France CAC rose 3.29%, its largest gain since January 22, 2024
• UK FTSE 100 rose 2.68%
• Spain’s Ibex rose 2.31%
• Italy’s FTSE MIB rose 3.06%

ECB accounts: Plausible to be in a position to start easing policy at June meeting

• The ECB releases the accounts of its April 2024 policy meeting
• That is if additional evidence received by then confirmed the medium-term inflation outlook embedded in the March projections
• A few members felt sufficiently confident that the three elements of the reaction function gave grounds for a reduction in the policy rates already at the present meeting
• The risk of undershooting the inflation target and eventually having to pay too high a price in terms of declining activity was now seen as being at least as high as the risk of acting too early and overshooting the target
• Broad consensus to wait until the next monetary policy meeting to see further evidence of, and gain sufficient confidence in, a timely and sustained return of inflation to target
• Members stressed the value of waiting until June for further evidence confirming, or indicating a change to, the outlook
• Members stressed that maintaining a data-dependent approach with full optionality at every meeting was warranted
• Data dependence meant not overly focusing on one data point, as the path many indicators took was likely to be bumpy
• Members felt that markets had understood the ECB’s communication and reaction function and were prepared for the possibility of a rate cut at the June meeting

UK March monthly GDP +0.4% vs +0.1% m/m expected

• Latest data released by ONS – 10 May 2024

• Prior +0.1%; revised to +0.2%
• Services +0.5% vs 0.0% m/m expected
• Prior +0.1%; revised to +0.3%
• Industrial output +0.2% vs -0.4% m/m expected
• Prior +1.1%; revised to +1.0%
• Manufacturing output +0.3% vs -0.4% m/m expected
• Prior +1.2%
• Construction output -0.4% vs +0.5% m/m expected
• Prior -1.9%; revised to -2.0%

The breakdown in terms of contribution is as follows:

• Services +0.40%
• Production +0.03%
• Construction -0.03%

UK Q1 preliminary GDP +0.6% vs +0.4% q/q expected

• Latest data released by ONS – 10 May 2024
• Prior -0.3%

BOE’s Pill: The persistent parts of inflation are falling

• Remarks by BOE chief economist, Huw Pill

• Bank rate can be cut when there is sufficient evidence of a downward path in inflation persistence
• Focusing just on the next BOE meeting is a little ill advised
• We must focus on the underlying components of inflation
• But also on the persistent components, not just the headline rate

UK finance minister Hunt says the economy has turned the corner

• The strong beat on the Q1 GDP figures shows that the UK is no longer in recession

• It has been a difficult few years
• But today’s growth figures are proof that the economy is returning to full health for the first time since the pandemic

Analysts tip a June Bank of England rate cut. Or August

• The Bank of England is moving ever so slowly towards rate cuts

Capital Economics:

“We think some soft inflation and wages data may be enough to prompt it to cut rates at the next meeting in June, if not at the following meeting in August”

HSBC are also eyeing those two months:

• Bank of England has set the stage for a Summer rate cut
• Still a question if it’ll be June or later
• Both the BoE and ECB will cut interest rates before the Federal Reserve does

Asia-Pacific-World News

Pres. Biden is set to quadruple tariffs on Chinese EVs: WSJ

The Wall Street Journal is reporting that Pres.Biden is set to quadruple tariffs on Chinese EVs, keeping the low-cost EVs out of the US market and protecting US EV manufacturing.

Meanwhile, there was report yesterday, that former Pres. Trump hosted oil executives last month looking for $1B of campaign funds in return for a pledge to unwind Pres. Biden’s environmental regulations

• Trump’s promises included ending Biden’s emissions rules that support electric vehicles and stopping the administration’s suspension of permits for new liquefied natural gas exports.

The US will impose tariffs on EVs from China after review

• Batteries and solar equipment also in the crosshairs for new levies

Bloomberg headline saying Biden’s administration is poised to unveil a sweeping decision on China tariffs as soon as next week

• targeting key strategic sectors (including electric vehicles, batteries and solar equipment) with new imposts

Chinese media says home purchases restrictions are unlikely to be completely removed

• Expectations lowering effort this one

Two Chinese provincial capitals lifted all home purchase restrictions on Thursday:

• Hangzhou and Xian

The two will no longer vet the eligibility of potential buyers.

CBA has cut its forecasts for the Australian dollar – central banks key

• AUD to rise, but more slowly

Commonwealth Bank of Australia forecast for AUD/USD at the end of 2024 is 0.69, down from 0.71 previously.

• March 2025 forecast is 0.71, from 0.73 previously.

• “One obstacle to large gains in AUD/USD is the large negative interest rate differential between Australia and the U.S.”
• AUD is well past cyclical lows, though, and the “next big move in AUD/USD will be up rather than down.”
• China economic revival, and more broadly economic bounce globally, will support AUD
• “One upside risk to our AUD/USD forecasts is if the Reserve Bank of Australia increases the cash rate.Until recently, financial markets were partially pricing a rate hike by the RBA before the end of the year.While we disagree with the argument for rate hikes based on our economic forecasts, if we are wrong and the RBA increases the cash rate at least once, AUD/USD could be higher than our new forecasts”

Business NZ Manufacturing PMI (April) 48.9 vs. prior 47.1

• Inching higher but still in contraction

New Zealand’s manufacturing sector has been in contraction for 14 consecutive months.

BusinessNZ comment:

• An overall lack of sales and orders was the dominant theme in comments, along with a struggling economy

BNZ comment:

• PMI this year to date is consistent with manufacturing GDP trailing year earlier levels
• the details were a bit more mixed in April, rather than uniformly weak as has been the case over recent months

Next rate hike could come as early as July, says former BOJ executive

• Eiji Maeda, who was the BOJ’s executive director on drafting policy until 2020, comments:

• It is clear from its communication that the BOJ is eyeing more rate hikes
• The next one could come any time between July and October
• From next year, BOJ will probably keep raising rates once every six months
• But depending on economic and price developments, it could even be once every quarter

Japan’s March Household Spending Data

Japan Overall Household Spending for March 2024

+1.2% m/m

• expected -0.3%, prior +1.4%

-1.2% y/y, also for a beat but down for a 13th straight month

• expected -2.4% and prior -0.5%

Japan’s finance minister Suzuki says is closely watching FX moves

• Suzuki adds that appropriate actions will be taken on FX if needed

Japan’s finance minister Suzuki

• says is closely watching FX moves
• appropriate actions will be taken on FX if needed
• won’t comment on FX levels

Ex-BOJ Watanabe says Bank of Japan must avoid raising interest rates to combat a weak yen,

• Watanabe says that higher borrowing costs would hit consumption and services inflation

Watanabe points to weaker services inflation, which he says suggests sluggish consumption is discouraging firms from hiking prices:

• “The BOJ is probably hoping that services inflation will strengthen.But the data coming out so far aren’t backing up this view,”
• “None of the data we’ve seen so far offer the BOJ pressing reason to raise interest rates any time soon,”
• “If the BOJ raises rates in response to rising goods prices, that will clearly weigh on services spending and hit already weak consumption”
• “Wages will likely keep rising next year, so Japan’s wage dynamics have clearly changed.But prices aren’t moving in a way the BOJ had hoped for.”

Cryptocurrency News

Bitcoin price slumps further from weekly high at $65,550 as American session proves fatal for BTC

• Bitcoin price drops back to $60,660 support level for third time this week.
• Asia has been trying, but American session proved worst performer this week. Europe has been front-running US session selling.
• Billionaire real estate investor Barry Sternlicht says he expects at least one bank failure per week.

Bitcoin this week has displayed notable volatility with the outlook changing as different trading sessions kicked off. The week has been eventful with US election campaigns running on the crypto theme.

US session proves fatal for Bitcoin

In the week ending Saturday, May 11, Bitcoin price started the Asian session with a show of strength, before tables started to turn in the late hours of the European session and worse in the US session.

The commendable performance for the Asian session comes as Hong Kong and China continue to show euphoria over the recently-launched spot BTC and Ether ETFs.

The mania becomes intense following reports that one of the issuers, Chinese fund house Harvest Global Investment, may be considering seeking approval to trade in mainland China via the Connects Program. Notably, mainland China has been the biggest buyer of Hong Kong ETFs in the past three years, making this a huge move.

Binance officially registers with Indian regulator to re-enter $260 billion market

• Binance received official registration from India’s Financial Intelligence Unit after months of tussle with regulators. 
• Binance is the second offshore crypto exchange to receive the anti-money laundering unit’s approval after KuCoin. 
• BNB price wiped out 1% of its value this week.

Crypto exchange Binance has made a comeback to the Indian crypto market after receiving the official registration from India’s financial intelligence agency, according to a report by the local news outlet Moneycontrol. The Financial Intelligence Unit’s (FIU) director gave on Friday a statement on the initial registration of the exchange. 

Binance could soon resume services for Indian crypto users 

India’s FIU had blocked Binance, KuCoin, and seven other global cryptocurrency exchanges for violating local anti-money laundering laws.Following the order of the agency, the mobile applications of these cryptocurrency exchanges were removed from Google’s Play Store and Apple’s App Store for Indian users. 

Reports from a local news outlet Moneycontrol state that Binance is working on resuming its operations in India after the exchange has acquired an official registration with the FIU. The agency’s director, Vivek Aggarwal, said at a workshop conducted by Bharat Web3 Association in New Delhi that KuCoin is fully registered and operational after paying a penalty of INR 3.45 million ($41,303).

Ethereum drops below $3,000 briefly, sees nearly a 5x growth in monthly active addresses since 2022

• Ethereum has seen nearly a 5x growth in monthly active addresses since 2022, reaching 7.6 million.
• Insights from Glassnode show that Ethereum has underperformed Bitcoin in terms of price performance since the recent bull cycle began.
• Ethereum will likely continue trading in key range without a bearish macro event.

Ethereum saw a sharp price decline on Friday as it has nearly 5x user growth since 2022.Glassnode also revealed key data insights that showed Ethereum has underperformed Bitcoin (BTC) in recent times.

Active user growth, declining gas fees, underperforming Bitcoin

Ethereum Layer 2s are about to set a new all-time high in terms of active addresses, with more than 5.2 million monthly active users as of May 5, according to data posted by Leon Waidmann.Combined with monthly active users from the ETH Mainchain, the Ethereum ecosystem would have recorded nearly 7.6 million monthly active users almost 5x active users in 2022.

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