Round up of today's market news *

North American News

S&P and Nasdaq Close Higher

Apple, Alphabet and Microsoft also trade to new all-time highs

The Federal Reserve has adjusted its outlook to include just one interest rate cut in 2024, according to the latest dot-plot. This decision comes with a caveat: Fed members pre-submitted their projections and, despite an opportunity to revise them in light of today’s better-than-expected CPI data, many chose to keep their forecasts unchanged. This leaves room for a potential dovish shift if positive economic trends persist.

However, the Fed also retains the flexibility to continue the “rates will remain steady for longer” narrative. Despite these developments, the stock market demonstrated resilience. Both the S&P 500 and the Nasdaq closed at record highs, although they finished below their intraday peaks. In contrast, the Dow ended the day lower, reflecting a mixed market response to the Fed’s latest projections and economic data.

The closing numbers:

Dow Industrial Average average minus 35.23 or -0.09% at 38712.20
S&P index of 48.71 points or 0.85% at 5421.02
NASDAQ index rose 264.89 points or 4.53% at 17608.44

The small-cap Russell 2000 closed up 32.75 points or 1.62% at 2057.10.

Apple continued its run higher with a gain of 2.86%
Microsoft rose 1.94%
Nvidia gained 3.55%
Meta Platforms rose 0.27%
Amazon-0.18%
Alphabet rose 0.66%
Palo Alto Networks rose 2.18%
Home Depot rose 2.51%
Tesla rose 3.88%
CrowdStrike rose 0.71%

Powell: Regardless of dots, everyone at FOMC would say they’re ‘very data dependent’

Comments from Powell in response to questions

We’re going to have low readings of y/y inflation drop out in H2
Because of that, we get a slight rise in core inflation because of that
If we get more readings like today, it would help
We don’t have a high confidence in forecasts
Regardless of the dots, everyone at the FOMC would say they’re ‘very data dependent’
We are seeing gradual cooling in the labor market as it moves into better balance
There’s an argument that labor gains are overstated but they’re still strong
Our sense is that the rate cuts that were going to take place this year will take place next year
We will have to see where the data light the way
Today was a better inflation report than almost anyone expected
We’ve made pretty good progress on inflation
Wages are still running about a sustainable path
Wages are not the principle cause of inflation but needs them to come down for overall inflation to get back to 2%
It may take ‘several years’ for bulge from higher market rents to filter through
Credit card balances and defaults have been going up but they’re not at high levels
Consumer spending is still growing solidly
Our plan is not to wait for things to break and then try to fix them

Powell: Inflation has eased substantially but is still too high

Comments from the Fed Chair

Recent indicators suggest economy still growing at a solid pace
Consumer spending remains solid
GDP has slowed but private domestic final purchases still growing at same pace as H2 2023
Labor market has come into better balance but April and May jobs data still strong
Unemployment rate ticked up but remains low
A broad set of indicators suggest we’ve returned to where jobs market as on the eve of the pandemic, relatively tight but not overheated
Inflation has eased notably
More-recent readings on inflation have eased somewhat
Repeats that Fed will need greater confidence in inflation to cut rates, though most-recent numbers have showed modest further progress
Will need to see more good data to bolster confidence on inflation
Policy is well positioned
We will continue to make decisions meeting by meeting

Federal Reserve rate decision: Rates unchanged and dot plot shows one cut this year

Highlights from the Federal Reserve rate decision and the summary of economic projections

Here are how the projections compare to the last set of forecast from March 20:

Median at 4.1% vs 3.9% prior Fed funds rate for end-2025
2024 GDP growth median +2.1 vs +2.1% prior
2025 GDP +2.0% vs +2.0% prior
Unemployment rate in 2024 4.0% vs 4.0% prior
Unemployment rate in 2025 4.2% vs 4.1% prior
2024 PCE inflation 2.6% vs 2.4% prior
2025 PCE inflation 2.8% vs 2.6% prior
2024 core PCE 2.8% vs 2.6% prior
2025 core PCE 2.3% vs 2.2% prior

US May CPI 3.3% y/y versus 3.4% expected

US May 2024 consumer price index data

Headline measures:

Prior y/y 3.4%
m/m +0.2% versus +0.3% expected
Prior m/m 0.3%
Unrounded % vs +0.313% m/m prior

Core measures:

Core CPI m/m 0.2% versus +0.3% expected.Prior month 0.3%
Unrounded core 0.163% vs +0.290% prior
Core CPI y/y 3.4% versus 3.6% expected.Prior month was 3.6%
Supercore m/m -0.045% vs +0.422% prior
Supercore y/y +4.8% y/y
Shelter +0.4% versus +0.4% prior month
Shelter y/y +5.4% vs +5.5% prior
Real weekly earnings +0.4% vs -0.4% prior
Food +0.1% m/m vs +0.0% m/m prior
Food 2.1% y/y vs +2.2% y/y prior
Energy -0.2% m/m vs +1.1% m/m prior
Energy +3.7% vs +2.6% y/y prior
Rents +0.4% m/m vs +0.4% prior
Owner’s equivalent rent +0.4% vs +0.4% prior
Motor vehicle insurance -0.1% m/m (still up 20.9% y/y)

US MBA mortgage applications w.e. 7 June +15.6% vs -5.2% prior

Latest data from the Mortgage Bankers Association for the week ending 7 June 2024

Prior -5.2%
Market index 208.5 vs 180.4 prior
Purchase index 143.7 vs 132.3 prior
Refinance index 554.7 vs 432.1 prior
30-year mortgage rate 7.02% vs 7.07% prior

HSBC says hawkish risk around the FOMC, but buy the dip when it comes

Short lived and shallow dip if we get one

HSBC on the Federal Open Market Committee (FOMC) meeting today, Wednesday, 12 June 2024

Analysts at the bank say there is some hawkish risk around this meeting
Expect any subsequent rates volatility is unlikely to “spike to levels from last year, let alone from 2022”
And thus any weakness in risk assets “to be both short-lived and shallow”
Providng a pretty good tacticalentry point back into risk assets

BlackRock’s Rick Rieder still expects a Fed rate cut in September, but conviction not high

And sticky inflation could see longer rates higher

Rick Rieder is BlackRock’s chief investment officer of global fixed income. He spoke with Dow Jones / Market Watch in an interview ahead of today’s Federal Open Market Committee (FOMC) meeting.

Like many, he expects the FOMC’s Summary of Economic Projections (SEP), its “dot plot”, to show two rate cuts expected in 2024, down from 3 projected at the March SEP update. Redier does add, though, that 2 is a “very close call’, saying FOMC members are mixed in the outlooks, and only 1 cut in the projections is possible.

Reider expects the market is likely to “react moderately positively” to projections for two rate cuts

yet “still with a skeptical eye as to whether they will really be able to get that done”
will probably view such a projection as “aspirational on the part of the Fed”
will question whether “they have enough time to get the two cuts in” this year
“I think the first cut would come in September”
“the conviction around it happening can’t be that high”
sees the longer-run rate may “ultimately head to above 3%”, citing deglobalization and spending in areas such as artificial intelligence and infrastructure as creating some stickiness in inflation that leads that rate higher

On Powell’s presser:

“I don’t think [Powell] is going to be dovish in the press conference”
believes Powell will “say we can wait longer” to cut rates

PIMCO expects more US regional bank failures: “The real wave of distress is just starting”

ICYMI on the very high concentration of troubled commercial real estate loans on banks’ books

Bloomberg (gated) had this report that has seemed to slip by a little too quietly. Bloomberg interviewed Pimco’s head of global private commercial real estate team.

Pacific Investment Management Co (PIMCO) expects more regional bank failures in the US because of a “very high” concentration of troubled commercial real estate loans on their books:

“The real wave of distress is just starting” for lenders to everything from malls to offices
high borrowing costs have hammered valuations and triggered defaults
leaving lenders stuck with assets that are tough to sell
larger banks have been disposing of some of their higher quality assets first to avoid deeper losses … “As stressed loans grow due to maturities, however, we expect that banks will start selling these more challenged loans to reduce their troubled loan exposures”

The link to Bloomberg is here (might be gated)

IMF on Bank of Canada, should consider better communication of its monetary policy

International Monetary Fund (IMF)

The IMF with words of advice for the BOC. Reuters with the report, in summary:

strengthening communications could include explanations on how quickly the BoC thinks the policy rate could return to neutral
can also better communicate on how it views market expectations regarding the evolution of the policy rate

The Bank of Canada:

“we certainly share the goal of transparency, and a commitment to look at ways for possible improvements”

Commodities

Gold stays firm after softer US inflation report

Gold trades at $2,318, up 0.13%, supported by lower-than-expected US inflation as Fed holds rates steady.
Fed maintains rates and revises projections, signaling just one rate cut in 2024; Chairman Powell emphasizes need for sustained inflation control.
DXY falls 0.51% to 104.71, enhancing gold’s appeal.

Gold climbed on Wednesday following a lower-than-expected inflation report in the United States (US), which increased the odds of a Fed interest rate cut later in the year.Nevertheless, the Federal Reserve’s hawkish hold and Fed Chairman Jerome Powell’s failure to provide a timetable for rate cuts boosted the Greenback. The yellow metal trades at $2,318, gains 0.13%.

On Wednesday, Fed Chair Jerome Powell stated that they are less confident about inflation than previously “in order to cut.”He added, “If jobs are to weaken unexpectedly, the Fed is ready to respond.” When asked about the day’s US inflation report, Powell mentioned that it is just one report and emphasized the need to see the deflation process evolving toward the Fed’s goal.

IEA lowers global oil demand growth projection for the year

The energy watchdog continues to maintain that supply is due to outpace demand in the longer-term

2024 global oil demand growth forecast lowered by 100k to 960k bpd
2025 global oil demand growth forecast seen at 1 mil bpd amid muted economic outlook
Global oil demand set to peak by 2029 at 105.6 mil bpd
By 2030, oil supply capacity will rise to nearly 114 mil bpd or 8 mil bpd above global demand

EIA weekly US oil inventories +3730K vs -1025K expected

Weekly EIA oil inventory data

Prior was +1233K
Gasoline +2566K vs +0.891K exp
Distillates +881K vs +2147K
Refinery utilization -0.4% vs -0.3% expected
Cushing: -1.593M

Imports up, exports down

UBS reiterated their positive view on gold – buy dips

See multiple supportive factors

Analysts at UBS reiterated their positive view on gold, saying dips should be bought.

Gold dipped late last week on China’s pause in buying in May, the strong NFP, strong earnings, higher US Treasury yields and higher USD
UBS point to a sign of weakness in the jobs report, the jobless rate climbing to 4% & participation coming off

On positive factors:

Say China’s gold buying may be underreported, and other central banks continue to scoop it up – total demand is seen reaching 950-1,000 metric tons in 2024
UBS expect the FOMC to indicate two rate cuts ahead for this year in today’s dot plot
Ongoing geopolitical risks and the upcoming U.S. election are further reasons to buy

Oil private survey of inventory shows a larger headline crude oil draw than was expected

This is from the privately surveyed oil stock data ahead of official government data tomorrow morning out of the US.

Crude oil -2.428 million (-1.75 mil exp.)
Gasoline -2.549 million
Distillates +972,000
Cushing -1.937 million
SPR +.3 million

The European Union is proposing to sanction Russia’s oil-shipping giant Sovcomflot

Sovcomflot tankers have been carrying out ship-to-ship transfers of Russian crude oil.

Sovcomflot tankers have been carrying out ship-to-ship transfers of Russian crude oil.

Bloomberg reporting that the the EU is taking steps to sanction the firm.

EU News

European equity close higher

Closing changes:

Stoxx 600 +1.2%
German DAX +1.5%
UK FTSE 100 +1.0%
French CAC +1.1%
Italy MIB +1.4%
Spain IBEX +0.7%

Germany May final CPI +2.4% vs +2.4% y/y prelim

Latest data released by Destatis – 12 June 2024

Prior +2.2%
HICP +2.8% vs +2.8% y/y prelim
Prior +2.4%

UK April monthly GDP 0.0% vs 0.0% m/m expected

Latest data released by ONS – 12 June 2024

Prior +0.4%
Services +0.2% m/m
Prior +0.5%
Industrial output -0.9% m/m
Prior +0.2%
Manufacturing output -1.4% m/m
Prior +0.3%
Construction output -1.4% m/m
Prior -0.4%

Looking at the breakdown contribution, services was up (+0.19%) and that is offset by falls in production (-0.11%) and construction (-0.09%) on the month. All in all, this will continue to keep the BOE on its toes as price pressures continue to hold up for the time being.

BOE seen cutting rates in August – poll

The findings from Reuters’ latest poll on economists – 12 June 2024

63 of 65 economists expect BOE to cut rates starting August
All economists polled expect there to be no change to rates later this month
35 of 65 economists see two rate cuts by the BOE for this year
24 of 65 economists see three rate cuts by the BOE for this year
Only 3 of 65 economists anticipate more than three rate cuts by the BOE for this year

Bank of France cannot comment on political situation, says Villeroy

Remarks by ECB policymaker and Bank of France governor, Francois Villeroy de Galhau

Even before the snap election announcement was made, we already warned on the hazards surrounding the political environment in France

Villeroy does reassure that inflation will continue to stay on track regardless though. And that he foresees French inflation falling back below 2% next year.

France’s Macron calls for democratic parties to unite to form a governing pact

The French president remarks in his press conference

Citizens have expressed their concerns and difficulties through the latest votes
We must bring a democratic response
It is a historic moment for France
There is a need for dialogue and how best to serve the French people
Calls for social democrats, Greens, and Christian democrats to unite for a governing pact
I do not want to hand the keys of power to the far-right in 2027

Asia-Pacific-World News

China May CPI +0.3% y/y (expected +0.4%) and PPI -1.4% y/y (expected -1.5%)

CPI and PPI data from China for May 2024

CPI and PPI data from China’s National Bureau of Statistics (NBS) for May 2024

CPI -0.1% m/m

prior +1.0%

CPI +0.3% y/y

expected +0.4%, prior +0.3%

PPI +0.2% m/m

prior %

PPI -1.4% y/y

expected -1.5%, prior -2.5%

China is considering banning banks distributing hedge fund products

Bloomberg reporting the chatter

Bloomberg with the report saying that China is considering banning banks distributing hedge fund products.

Chinese banks are a major source of distribution of hedge fund products.
The products are usually offered in the form of trust products, these are subsequently invested into the funds.

PBOC sets USD/ CNY mid-point today at 7.1133 (vs. estimate at 7.2558)

PBOC CNY reference rate setting for the trading session ahead

PBOC injects 2bn via 7-day RR, sets rate at an unchanged 1.8%

2bn mature today
a net neutral in Open Market Operations (OMOs)

China may introduce additional measures to boost housing market in Third Plenary Sessions

These session will be held in July

The third plenary session of the 20th Communist Party of China (CPC) Central Committee will be held in Beijing in July.

There is talk about from China sources that the government may introduce additional measures to boost the housing market in these Sessions.

Treasurer Chalmers says visit of China’s Premier Li to Australia an important opportunity

Australian Treasurer Chalmers

Australian Treasurer Chalmers remarks:

visit of China’s Premier Li to Australia an important opportunity
says he sees underlying weakness in China’s economy
Says China’s economy won’t be recovering immediately
says Australia’s economy is not going to experience stagflation
calls for quicker moderation of inflation

Recapping the inflation data from Japan earlier via Reuters

Reuters report on an analyst take:

“Consumer inflation may not slow much as wholesale price rises re-accelerate, and energy prices are seen rising sharply towards this summer” as government subsidies to curb utility bills end in June, said Takeshi Minami, chief economist at Norinchukin Research.”But the BOJ will need to wait for wages to rise and help consumption recover” before raising rates again, he added.

Japan PPI (May) +0.7% m/m (expected +0.4) and +2.4% y/y (expected +2.0%)

The PPI is also referred to as the Corporate Goods Price Index, its published by the Bank of Japan.

The data shows a big jump for PPI both m/m and y/y. If it translates into higher consumer level inflation the Bank of Japan will be happy.

JP Morgan says Japanese stocks have room to go a lot higher

JP Morgan Private Bank

A report from analysts at JP Morgan Private Bank outline a favorable view for equities in Japan:

“In our view, share prices do not yet fully reflect the market’s full potential.
Although Japanese stocks currently trade in the midrange of their valuations over the past 15 years, global positioning remains underweight Japanese equities”
We think multiples could move higher as global investors come to appreciate the structural shifts underway.
Sectors that stand out to us include financials, consumer discretionary (excluding autos), technology, industrials and real estate.”
corporate governance reforms are now strongly encouraging structural change focusing on efficiency and profitability
this will result in companies returning more value to shareholders

Bank of Japan left its Japanese Government Bond purchase amounts unchanged

In today’s scheduled bond buying operation

There was speculation that the Bank of Japan will trim back JGB purchases in its announcement from Friday’s meeting.

Cryptocurrency News

Ethereum poised for recovery following increased exchange outflows

Ethereum whales bought about 240K ETH after its recent price dip.
Coinbase Advanced witnessed ETH outflows worth over $1 billion in the past 24 hours.
Ethereum is looking to enter into key price range following reduced inflation.

Ethereum (ETH) is up more than 3% on Wednesday following huge exchange outflows, increased whale buying pressure and the US Consumer Price Index (CPI) for May reporting reduced inflation.

Massive outflows, Spot ETH updates

After Ethereum’s recent dip, whales who hold between 10K to 100K ETH bought over 240K ETH worth about $840 million, according to data. Despite the market downturn, this buying activity may be due to bullish events on the horizon like the expectation of spot ETH ETF approvals in the coming weeks.

Following this, about 336K ETH valued at $1.17 billion was withdrawn from Coinbase Advanced, according to data. This marks the fifth time in 2024 that the exchange has seen a single-day outflow of 150K ETH and above. If the outflow isn’t an internal exchange movement, it could signify highly bullish momentum for Ethereum.

Some analysts noted that a similar activity occurred on Coinbase before spot Bitcoin ETFs went live. Hence, the move may be from whales or institutions anticipating a rise in ETH’s price when/if spot Ethereum goes live in the coming weeks.

Meme coins among largest gainers following crypto market recovery after lower CPI inflation data

US CPI data showed positive feedback on inflation, causing the meme market to begin a recovery.
Top industry voices show displeasure toward meme tokens despite continued rallies.
PEPE, DOG, GME, BODEN among top gainers in the meme category.

Meme coins saw double-digit gains on Wednesday amid criticism from key crypto industry voices. Their rise follows the release of US CPI data revealing a drop in inflation, beating analysts’ expectations.

Meme tokens surge following CPI report

The US BLS released CPI data for May on Wednesday. The CPI declined to 3.3%, lower than estimates of 3.4%. The reduced inflation sparked fresh hopes for the US economy but also impacted the price of several meme coins. Following the announcement, many meme tokens began to see a rally.

The “crypto president” says he wants all remaining Bitcoin “to be made in the US”

Trump has dubbed himself to be the “crypto president” earlier this week

He’s now saying that he wants all remaining Bitcoin “to be made in the US”, whatever that means. He’s probably trying to promote the idea that he will be an advocate for Bitcoin miners.

Biden’s administration has come down hard on crypto-related activities, so Trump is trying to use this as a platform to get on the good side of the wider voter base.

Follow 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/

https://t.me/Market_Moving_News

Round up of today’s market news

ByBilals Tech