Round up of today's market news *

North American News

US Stocks End Mixed Despite Late Rally; Dow Closes Just Below 40,000

Dow closes at a record level

The major US stock indices experienced a robust rally into the close, culminating in a historic milestone for the Dow Jones Industrial Average, which closed above the 40,000 mark for the first time ever. While the Dow is often perceived as the benchmark index that resonates more with the broader American public compared to the S&P 500 or Nasdaq, reaching the 40,000 threshold signifies a significant achievement in the eyes of many investors and Main Street alike.

Despite being considered the least favored among the major indices, the Dow’s ascent to this symbolic level carries substantial weight and underscores the resilience and strength of the broader market. The achievement of Dow 40,000 is not just a numerical milestone but a symbolic representation of the economy’s recovery and the stock market’s bullish trajectory.

Meanwhile, the Nasdaq and S&P 500 also closed higher for the fourth consecutive week, further solidifying their positions in record territory. The Nasdaq reached a new high closing level of 16,742.39, while the S&P 500 closed at 5,303.14, reflecting the sustained upward momentum across various sectors of the market.

The continued ascent of these indices highlights investor optimism and confidence in the economic recovery and corporate earnings prospects. The latest record highs reaffirm the positive sentiment prevailing in the market despite occasional volatility and uncertainty. As investors remain focused on earnings reports, economic data, and the trajectory of interest rates, the milestone achievements of the major indices serve as a testament to the ongoing strength of the US stock market.

The closing levels:

Dow industrial average rose or 0.34% at 40003.60
S&P index rose 6.17 points or 0.12% at 5303.26
NASDAQ index fell -12.35 points or -0.07% at 16685.97

The small-cap Russell 2000 fell -0.53 points or -0.03% at 2095.71.

For the trading week, the major indices all closed up over 1%

Dow rose 1.24%
S&P index rose 1.54%
NASDAQ index rose 2.11%
Russell 2000 rose 1.744%

For 2024, the broader NASDAQ and S&P index are battling it out for the strongest of the major indices (they are nearly up the same):

Dow Industrial Average is up 6.14%
S&P index is up 11.18%
NASDAQ index is up 11.16%
Russell 2000 is up 3.3%

Market Focus Turns to Nvidia Earnings Amidst Mixed Performance in Semiconductor Sector

Next week, all eyes will be on Nvidia as investors eagerly anticipate its earnings release after Wednesday’s market close. Despite a slight dip of $18.80 or 1.99% in Nvidia shares today, the stock has surged by an impressive 86.74% year-to-date and is just 1.9% away from its all-time high close. The anticipation surrounding Nvidia’s earnings is palpable, with expectations set for significant growth. Analysts project earnings per share (EPS) to come in at $5.58, marking a remarkable 411% year-over-year increase, while revenues are expected to soar to $24.556 billion, reflecting a substantial 241% increase compared to the same quarter in 2023.

Meanwhile, Advanced Micro Devices (AMD) experienced a more mixed performance this week, with shares rising close to 8.25% but still down 27.65% from its February high. Despite this volatility, AMD shares are up 11.57% for the year, outperforming Intel, whose shares have declined by 36.66% in 2024. In contrast, Micron shares have surged by 46.81% year-to-date, while Broadcom shares have risen by 25.0% in 2024.

The semiconductor sector remains a focal point for investors, with Nvidia’s upcoming earnings serving as a key event. While Nvidia’s stock price has seen significant appreciation, supported by impressive gains in EPS and revenues, the mixed performance of other semiconductor companies underscores the sector’s volatility and challenges. As market participants await Nvidia’s earnings report, they will closely monitor the company’s financial performance and outlook, which could have broader implications for the semiconductor industry and the market as a whole.

US Leading Economic Index (LEI) M/M -0.6% vs. -0.3% expected

The latest reading on the Leading Economic Index from the Conference Board.
US LEI -0.6% vs. -0.3% expected and -0.3% prior.

Comment:

“Another decline in the U.S. LEI confirms that softer economic conditions lay ahead,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.

“Deterioration in consumers’ outlook on business conditions, weaker new orders, a negative yield spread, and a drop in new building permits fueled April’s decline. In addition, stock prices contributed negatively for the first time since October of last year. While the LEI’s six-month and annual growth rates no longer signal a forthcoming recession, they still point to serious headwinds to growth ahead. “

“Indeed, elevated inflation, high interest rates, rising household debt,and depleted pandemic savings are all expected to continue weighing on the US economy in 2024.As a result, we project that real GDP growthwill slow to under 1 percent over the Q2 to Q3 2024 period.”

Notably, the LEI 6-month growth rate annualised did not signal a recession for the second consecutive month.Per Conference Board’s note on this indicator: “The chart illustrates the so-called 3Ds rule which is a reliable rule of thumb to interpret the duration, depth, and diffusion – the 3Ds – of a downward movement in the LEI. Duration refers to how long-lasting a decline in the index is, and depth denotes how large the decline is. Duration and depth are measured by the rate of change of the index over the last six months. Diffusion is a measure of how widespread the decline is (i.e., the diffusion index of the LEI ranges from 0 to 100 and numbers below 50 indicate most of the components are weakening).”

“The 3Ds rule provides signals of impending recessions 1) when the diffusion index falls below the threshold of 50 (denoted by the black dotted line in the chart), and simultaneously 2) when the decline in the index over the most recent six months falls below the threshold of -4.4 percent. The red dotted line is drawn at the threshold value (measured by the median, -4.4 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.“

Fed Gov. Bowman monitoring data to assess if policy is sufficiently restrictive

Fed Gov. Bowman speaking

Monitoring data to assess policy is sufficiently restrictive.
Baseline Outlook that inflation will decline further with policy rate steady but sees risks.
Remain cautious in rate change decisions, willing to hike if inflation progress stalls or reverses.
Inflation to remain elevated for some time.
We have not yet seen further progress on inflation this year.
Inflation’s decline in latter half of last year was temporary.
US economic activity may have moderated but consumer services spending strong, business investment strengthened.
Progress on labor market rebalancing has slowed.
Focusing on issues like climate change could distract bank management and supervisors.

Fed’s Bostic says one data point is not a trend, remains resolute, vigilant on inflation

Federal Reserve Bank of Atlanta President Raphael Bostic was early to pour cold water on the idea of multiple, near-term, FOMC rate cuts, and he is still beating expectations down:

Pleased with inflation progress in April but Fed is not yet there
Lower shelter inflation was a significant development
One data point is not a trend
Says remains “resolute” and “vigilant” about inflation
There is still a lot of pricing pressure in the economy
Hearing businesses say they are at the limits of pricing power and not able to fully pass-through input costs
Outlook right now is for continued fall in inflation, which would make appropriate to reduce rates later in the year, but nothing locked in
Have to be open to a broad range of possibilities, with “a number of different scenarios” that could play out
Want to see housing markets “rationalize themselves” and not be a burden on the whole economy
Fed will get to 2%
If Fed moves the goalpost at this point it would undermine the central bank’s credibility
A large literatureshowing that central bank independence improves economic outcomes;would hope officials keep that in consideration
US economy is still quite resilient and robust

Goldman Sachs have shifted their forecasts for PCE inflation up by a tiny margin

April PCE inflation data is not due until the end of this month

Goldman Sachs have raised their forecast for April core and headline PCE estimates by 1bp each

0.26% and 0.27% respectively

ICYMI – JP Morgan’s Dimon says inflation is worse than people think

Still a chance of higher rates ahead

JPMorgan CEO Jamie Dimon spoke with Bloomberg TV on Thursday, sounding very cautious:

“underlying inflation may not go away the way people expect it to”
“there are a lot of inflationary forces in front of us that may keep it a little bit higher than people expect.”

Canada April Teranet-National Bank house price index +5.65% y/y

House prices for the 11-largest Canadian metropolitan areas
Prices up 5.65% y/y
Prices still 3.71% below the May 2022 peak
Prices up 0.01% m/m seasonally adjusted
Prices +1.9% m/m non-seasonally adjusted

Commodities

Silver Shines: Precious Metals Surge with 6% Rally

Big move in silver today, what’s driving it

Silver Bulls Celebrate Major Breakout, Prices Hit Highest Since 2013

Silver enthusiasts have much to celebrate this weekend as the metal experienced a significant breakout today. The rally began with silver surpassing the crucial $30/oz threshold and breaking the February high, which triggered a surge of buying and short covering. This momentum propelled silver prices to soar by 6%, reaching $31.37, a level not seen since 2013.

The technical breakout has created a bullish sentiment among investors, with the next significant resistance level being the mid-2012 high of $35.40. Given the strong upward momentum and increasing enthusiasm for precious metals, reaching this target seems plausible. The rally reflects broader market trends where precious metals are gaining favor as a hedge against economic uncertainty and inflation.

As silver continues to shine, investors and analysts are closely watching for further developments, with the current momentum suggesting more gains could be on the horizon.

Gold price surges above $2,400, eyeing all-time highs

Gold breaks above $2,400, nearing all-time high of $2,431.
Lower April inflation in the US supports Gold’s rally, despite rising Treasury yields.
Fed officials remain cautious, with December 2024 rate cut expectations slightly adjusted to 35 bps.

Gold skyrocketed during the North American session ahead of the weekend as the yellow metal traded above $2,400, posting gains of more than 1.5%.The non-yielding metal extended its advancement and threatened to crack the all-time high of $2,431.

Crude oil for July settled at $79.58

Up $0.84

Crude oil futures settle at $79.58. It’s up $0.84 on the day. The low for the day was at $78.61.

For the trading week, the price is up 1.87%.

On Wednesday, a new low going back to February 26 took the price to the low for the week at $76.72 but the price snapped back higher by the close. Inventory data this week showed a surprise drawdown on Wednesday helping to bottom the price.

The price currently between the MAs is more neutral technically, but with the sellers having their shots this week, the buyers have the control nod heading into the close and the new week. It would now take another move below the 100 day MA to wrestle control back from the buyers.

Baker Hughes oil rigs -1 at 497 in the current week

Baker Hughes rig count for the week ending May 17

Oil rigs: -1 at 497
Nat. Gas rigs unchanged at 103
Total rigs: +1 at 604

EU News

European Stocks Wrap Up Week with Mild Selling Pressure at Close

Closing changes for the main European bourses

On the day:

Stoxx 600 -0.1%
German DAX -0.1%
UK FTSE 100 -0.2%
French CAC -0.2%
Italy MIB flat
Spain IBEX +0.2%

On the week:

Stoxx 600 +0.5%
German DAX -0.3%
UK FTSE 100 -0.1%
French CAC -0.6%
Italy MIB +2.1%
Spain IBEX +2.0%

Eurozone April final CPI +2.4% vs +2.4% y/y prelim

Latest data released by Eurostat – 17 May 2024

Prior +2.4%
Core CPI +2.7% vs +2.7% y/y prelim
Prior +2.9%

France Q1 ILO unemployment rate 7.5% vs 7.4% expected

Latest data released by INSEE – 17 May 2024
Prior 7.5%

ECBs Vasle: Awaiting data and open to possibilities on rate path

ECBs Vasle speaking

Awaiting data and open to possibilities on rate path
Cutting rates in June would be reasonable
Seems to thousand 24 GDP growth to be better than expected.
Really attentive to what’s happening in the US.

ECB’s Schnabel says June rate cut may be appropriate, path after is much more uncertain

European Central Bank Board member Schnabel speaking with Japanese media, Nikkei:

Says depending on incoming data rate cut in June may be appropriate but path beyond June is much more uncertain
Recent data have confirmed that the last mile of disinflation is most difficult
Based on current data, rate cut in July does not seem warranted
With inflation risks still being tilted to the upside, front-loading of easing process would come with a risk of easing prematurely
We cannot pre-commit to any particular rate path due to very high uncertainty
It’s virtually impossible to quantify a change in the natural rate of interest in real time with any reasonable degree of precision
The closer we get to a potentially neutral level, and this could be well above 2%, we need to move even more cautiously
2% target has served us well, a change in the target is not appropriate

Geopolitical shocks are a key risk that we need to watch, and this poses upside risks to the inflation outlook
Over the longer run, geopolitical fragmentation would pose further upside risks to inflation by reducing the efficiency and reliability of global supply chains

Info via Reuters

ECB’s de Guindos sees inflation moving towards 2% goal in 2025

Asia-Pacific-World News

PBOC to lower interest rates on housing fund loans by 25 bps

China continues to look to try and bolster the property sector

The Chinese central bank will lower interest rates on its housing provident fund, adding that it will abolish the lower limit of rates for said fund for first and second homes at the national level. This comes as China’s vice premier is also on the wires commenting:

Must effectively ensure delivery of homes
Local governments can purchase some homes for affordable housing at ‘reasonable prices’
Local governments can purchase existing land
To continue to fend off debt risks of property developers

China April March Industrial output +6.7%y/y (expected +5.5%) Retail sales +2.3%(3.8% exp)

Retail sales, Industrial production, Unemployment rate, Investment data
Unemployment Rate 5.0%
expected 5.2%, prior 5.2%

Factory output beat, unemployment beat.
Retail and investment miss

Domestic consumption, as reflected in that miss for retail sales, is still struggling.

China April new house prices -0.6% m/m (prior -0.3%)

China’s property market

April new house prices in China -0.6% m/m

-0.3% prior

-3.1% y/y

prior -2.2%

New house prices down:

used houses prices down also, -0.9% m/m.

64 cities out of 70 with m/m decreases in sales prices of new homes vs. 57 in March

69 decrease in 2nd-hand vs. 69 in March

Microsoft is asking hundreds workers to consider relocating out of China

Decoupling news. M’soft asking China-based cloud-computing and artificial-intelligence operation staff to consider transferring outside the country,

ICYMI, the Wall Street Journal had the report overnight.

Microsoft has around 700 – 800 employees in its China-based cloud-computing and artificial-intelligence operations to consider transferring outside the country

Journal citing people familiar with the matter.

This comes in the midst of a deterioration in relations between the US and China on tech-related matters, including the US administration placing tighter curbs around China’s ability to develop state-of-the-art AI, such as cutting China off from advanced-chip purchases and equipment.

Reuters has more info here.

New Zealand data: PPI Output +0.9% q/q and inputs +0.7% q/q

Both higher than expected

Producer level inflation holding at elevated levels. Inputs a little lower than in Q4 2023, but outputs up.

Reserve Bank of New Zealand policy meeting preview – (still) hawkish hold expected

RBNZ decision is due Wednesday May 22

The Reserve Bank of New Zealand will hold its key interest rate at 5.50% on Wednesday according to all analysts polled by Reuters.

rates are set to stay on hold through end-September, according to the median view.
ANZ, ASB, and Westpac expect no change until next year
Kiwibank and Bank New Zealand see the first reduction in Q4 this year
“We’re agonizing over the start date, whether it’s November or February, but the direction is pretty clear. Rates will be lower into next year and that’ll help with the rebalancing of the economy and the rebound in asset markets, particularly housing,” said Jarrod Kerr, chief economist at Kiwibank.

Still-high inflation, 4% in Q1, well above the Bank’s 1-3% target, is keeping the RBNZ from cutting:

Singapore Non-oil Domestic Exports (NODX) April 2024: +7.6% m/m vs. +7.9% expected

Improving from a disappointing March

Singapore’s non-oil domestic exports (NODX)for April 2024

-9.3% y/y vs. -10% expected and -20.8% in March
+7.6% m/m vs. +7.9% expected and -8.4% in March

Notable declines in exports of non-electronic products, primarily pharmaceuticals.

The Bank of Japan left its JGB buying amounts the same as the previous operation

There was a flutter lower in USD/JPY the last time when the BoJ cut the amount in the 5-10 tenor

The Yen is higher on this. Bank of Japan buys:

JPY375bln 1-3 Year
JPY425bn 3-5 Year
JPY425bn 5-10 Year
JPY75bnln 25+ Year

Bank of Japan Governor Ueda says he has no immediate plan to sell the Bank’s ETF holdings

Bank of Japan Governor Ueda

no immediate plan to sell BoJ’s ETF holdings
need to spend some time deciding the fate of the Bank’s holdings, including whether to offload them in the future

Bank of Japan may raise rates as soon as June (opinion from ex-BOJ chief economist)

Bloomberg report

Former Bank of Japan chief economist Sekine in a Bloomberg report. In brief:

BOJ may raise its rates as many as three more times this year
Next move potentially coming in June
Sekine citing how much room there is to adjust its “excessively” easy settings

Cryptocurrency News

Bitcoin Surges to $67,000 Amid $120 Million Crypto Market Liquidations

Bitcoin price is up 10% in seven days, shattering $67,000 threshold on Friday.
Over $120 million in total liquidations recorded across crypto market.
$2.1 billion worth of Bitcoin and Ethereum options expire today.
A stable close above $67K would indicate a change in market structure

Bitcoin continues to exhibit strength as the market heads into the weekend. Following the release of the April CPI on Wednesday and multiple reports indicating growing retail and institutional interest in Bitcoin exposure through exchange-traded funds (ETFs), the leading cryptocurrency is closing the week on a high note.

Bitcoin rally liquidates over $120 million in total positions

Bitcoin is trading with a bullish bias, boasting up to 10% in gains over the past seven days.In the last 24 hours, it is up by 2.2%, which is not a mean feat even for the king of crypto.With altcoins taking the same cues, the global crypto market capitalization is up by 2.8% to $2.43 trillion.

With the surge, over $120 million in total positions have been liquidated across the market. This is composed of $83 million in short positions and nearly $40 million in long positions.

A substantial number of cryptocurrency derivative contracts have reached their expiration date simultaneously, a common occurrence that can lead to increased market volatility. These options contracts provide holders the right, but not the obligation, to buy or sell a specific amount of Bitcoin or Ethereum at a predetermined price on a future date. When a large volume of these contracts expires at once, traders often rush to close or adjust their positions, which can cause significant fluctuations in market prices.

This activity can impact the overall sentiment and direction of the cryptocurrency market in the short term. The expiration of these contracts influences traders’ strategies and can result in sharp price movements as the market adjusts. Understanding the dynamics of options expirations is crucial for comprehending the factors driving sudden shifts in the cryptocurrency landscape.

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink social dominance surged to a six-month peak on Friday as LINK holders increased their activity.
LINK traders started taking profits, on-chain data trackers show.
LINK price added 6% on Friday, extending its gains from mid-week.

Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday. Despite the price increase and rising talk about the token, on-chain data suggests that LINK holders have started taking profits, a sign of possible increasing selling pressure ahead.

XRP trades steady as Ripple shares plan to expand services in Africa

Ripple Managing Director of Africa Reece Merrick said that the firm plans to expand into crypto-native services such as custody.
The payment firm plans to expand in Africa by supporting the XRP Ledger program in the region.
XRP is hovering around $0.51 on Friday, broadly unchanged from a day earlier.

Ripple hovers close to $0.51 on Friday, above the psychologically important $0.50 level, as traders await the court ruling of the lawsuit against the US SEC and amid new commitments from the firm to expand its services in Africa.

While Ripple and XRP are best known for payment-remittance services, the firm said it is eyeing expansion into crypto-native services like custody.

Ripple plans to expand services to Africa

Cross-border payment remittance firm Ripple has plans to roll out XRP Ledger and crypto-native services, such as custody, in Africa. Reece Merrick, Ripple’s Managing Director for Middle East and Africa, said the firm is best known for payments but plans to step into “crypto native services” like custody.
Ripple has plans to support the XRP Ledger program in the Middle East and Africa region, in addition to other services provided by the firm.
The payment firm is battling allegations of unregistered securities sale in the SEC’s lawsuit. The legal battle has weighed heavily on XRP price in the past few years and the token’s holders are awaiting the court’s ruling on the lawsuit.No date has been set for the ruling, which concerns the penalties Ripple should face for its sales of XRP tokens to institutional investors, as a judge already ruled in 2023 that other types of sales couldn’t be treated as sales of securities.
The SEC alleges Ripple should pay around $2 billion in fines for its institutional sales of XRP, while the firm argues that the figure should be around $10 million.

Binance helps Taiwan crack a virtual asset money laundering case, BNB sustains above $570

Binance Financial Crime Compliance Department aided Taiwan authorities in a case involving money laundering.
The exchange provided key intelligence and assistance to the Investigation Bureau of Taiwan.
BNB sustained above key support at $570 on Friday.

Binance’s Financial Crimes Compliance (FCC) department joined forces with Taiwan’s Ministry of Justice and helped resolve a case of money laundering worth NT$200 million, or $6.2 million.Binance, which has been accused in several jurisdictions of not providing enough oversight to fight money laundering, said it has previously worked with law enforcement agencies and aided criminal investigations.

The exchange published a press release detailing the investigation on Friday. The suspects were involved in money laundering through digital assets and falsified customer conversation records, remittance proofs and forged identity data.

Binance aids authorities in money laundering case

Binance’s FCC team offered their insights on crypto flows, set up an online meeting with investigators and prosecutors and helped identify suspects in a money laundering case, the exchange said.

In February, Binance shared a training session with the INTERPOL, bringing expertise in blockchain investigation to law enforcement officers. Earlier this month, the exchange collaborated with the Netherlands’ Fiscal Information and Investigation Service to freeze millions of Euros linked to the ZKasino scam.

The exchange announced a launch of a series of law enforcement training programs and plans to cooperate with a dozen different units that include over a thousand personnel in Taiwan.

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Round up of today’s market news

ByBilals Tech