Round up of today's market news *

US Stocks Defy Morning Slump with Afternoon Rally, Marking Another Record Day

Closing changes in the main North American markets

S&P 500 +0.8%
Nasdaq Comp +1.0%
DJIA +0.5%
Russell 2000 +0.7%

June US Empire Fed manufacturing -6.00 vs -9.00 expected

The New York-area survey of manufacturing

Prior was -15.6
New orders -1.0 vs -16.2 prior
Prices paid +24.5 vs +33.7 prior
Employment -8.7 vs -5.1 prior
Six month index +30.1 vs +14.5 prior (two year high)

Fed’s Harker: I think one cut is appropriate but could change depending on data

Philly Fed President Patrick Harker speaks on the economy

If my economic forecast plays out, I think one cut would be appropriate this year
Two cuts or none also ‘quite possible’ depending on data
More data is essential to come to a decision on rate cuts given choppiness so far this year
Over the ensuing months I will continue to closely monitor data on inflation, labor markets and economic activity
Keeping rates where they are for a bit longer will help get inflation down and mitigate upside risks
Latest inflation data quite promising but falls short of confidence needed
Long-term stubbornness of shelter inflation remains a concern, as does service sector inflation
Last week’s CPI data very welcome but overall progress on inflation in recent months has been modest
I still forecast slowing but above-trend growth, modest rise in unemployment rate and long glide back to 2% inflation

Fed’s Kashkari says its reasonable that rate cut could come in December

Kashkari reiterates the median projections is for 1 rate cut, that it’ll be towards the end of the year

Minneapolis Federal Reserve President Neel Kashkari spoke on Sunday, US time, with US media, CBS’ “Face the Nation”.

We need to see more evidence to convince US inflation is heading to2%
US economy is stronger than in other countries that are cutting rates
Job market has performed better than expected
May be more cooling in labor market yet to come, hope it will be modest
Reasonable that rate cut could come in December
We are in a very good position to take our time, get more data, before making a decision on rate
Median projection is for one cut, that’s likely to be toward end of the year
We are in a high pressure economy in some dimensions, but some signs it’s cooling
Net effect of immigration in long-run on inflation is hard to judge
Best thing Fed can do for housing is to get inflation down

Evercore raised year-end forecast on S&P500 Index to 6,000 (and 7000 possible by end 2025)

“The pandemic changed everything” – more stimmy, cash. Now AI, slowing inflation, growth & Fed cuts ahead.

From an analysis note issued Sunday (US time):

raised year-end forecast on the S&P 500 Index to 6,000
7000 possible by end 2025
estimate for the index’s per-share earnings in 2024 and 2025 to $238 and $251, respectively (imply a 8% and 5% profit growth)
- says the $238 EPS pushed price to earnings to 25 (trailing basis), elevated by historical standards but short of the 28 level during the dot-com peak
“The pandemic changed everything.Record stimulus, elevated cash balances and low leverage support the consumer. Then came AI.Today, GenAI’s potential in every job and sector is inflecting.The backdrop of slowing inflation, a Fed intent on cutting rates and growth support Goldilocks.”

Canada May housing starts 264.5K vs 246.5K expected

Canadian housing starts for May 2024

Prior was 240.2K (revised to 241.1K)
Single detached +2%
Multi-urban starts +13%

Gold starts off the week on the back foot

Fed officials signal only one rate cut in 2024 via Minneapolis Fed’s Neel Kashkari.
Upcoming US economic data releases, including Retail Sales and Industrial Production, to influence Gold price.
Precious metals traders await US Retail Sales and Industrial Production on June 18.

Gold prices retreated on Monday after Fed officials decided to keep rates unchanged and revised their expectations on rate cuts from three to one later in the year.Therefore, the yellow metal trades at $2,317, down 0.63%, after retreating from the daily high of $2,332.

WTI crude oil rises back above $80 in a $2 climb

Big day for the oil bulls

After an OPEC-induced dip earlier this month, oil prices have rebounded, with WTI crude oil closing up $1.88 at $80.33 per barrel. This marks the highest settlement since late April and is just below May’s intraday high of $80.62. Despite a recent unexpected increase in US oil inventories, there is speculation that this trend may reverse sharply. The oil futures market is showing bullish signs, with a stronger backwardation indicating robust near-term demand and market undersupply. Front-month contracts are trading 60 cents above the second month, and this pattern extends out for a year.

However, some broader market signals are less encouraging. Cyclical stocks are underperforming, and bond markets are rallying, suggesting a cautious economic outlook. In China, recent data painted a mixed picture: retail sales exceeded expectations, but industrial output fell short, and house prices continued to decline. These factors highlight the complex and uncertain economic environment surrounding the oil market.

Copper and Aluminum set to slide on short-term – TDS

The industrial metals continue their descent from their recent euphoric highs, Ryan McKay, Senior Commodity Strategist at TDS, notes.

Copper is losing ground, Aluminum to see demand above $2,454/t

“With few signs of physical tightness, and increasing inventory levels across the globe, Copper remains at risk given macro traders have already built an extremely bloated long position. There are early signs of money managers unwinding their large long positions.”

“At the same time, the recent length accumulated from top Shanghai Futures Exchange (SHFE) funds has also been reduced heavily in the overnight session. Commodity Trading Advisors (CTAs) joined the selling party in Copper, however the margin of safety before the next round of selling remains at $8,990/t.”

“Additionally, we’re seeing China’s Aluminum supply hit record levels. While the metal could see modest buying activity from CTAs above $2,454/t, there is a more significant trigger that could see funds liquidate approximately 10% of their historic max position below $2,389/t.”

EU News

European equity ebbs and flows into the close

Closing changes:

Stoxx 600 +0.1%
German DAX +0.4%
UK FTSE 100flat
French CAC +0.9%
Italy MIB +0.8%
Spain IBEX -0.4%

Italy May final CPI +0.8% vs +0.8% y/y prelim

Latest data released by Istat – 17 June 2024

Prior +0.8%
HICP +0.8% vs +0.8% y/y prelim
Prior +0.9%

SNB total sight deposits w.e. 14 June CHF 453.5 bn vs CHF 459.8 bn prior

Latest data released by the SNB – 17 June 2024

Domestic sight deposits CHF 445.3 bn vs CHF 450.1 bn prior

Swiss government raises 2024 economic growth forecast slightly

The latest economic projections by the Swiss government – 17 June 2024

2024 GDP growth forecast seen at +1.2% (previously +1.1%)
2025 GDP growth forecast seen at +1.7% (unchanged)
2024 CPI forecast seen at +1.4% (previously +1.5%)
2025 CPI forecast seen at +1.1% (unchanged)

ECB’s Lane: We should not be too sensitive to monthly inflation data

Remarks by ECB chief economist, Philip Lane

Need to differentiate between noise and signal
We will see bumps in inflation, can deal with that
We are seeing significant wage increases in some countries
Cost pressures to be more muted next year
That will not resolve immediately, need more than a month
We won’t know a lot more about services inflation momentum by July
But every meeting is a live one
We will have a lot of survey data at the next ECB meeting in July
If we get welcome surprises on inflation or economy weakens by more than expected, then we can cut rates more quickly
A really big move would matter for CPI forecast
But these are not big movements
Do not think policy divergence with the Fed is any more of an issue than it was before
The peak effect of rates on inflation hasn’t occurred yet

ECB’s Kazaks says mustn’t allow inflation to remain above 2% into 2026

Kazaks spoke at a conference

He said that while uncertainty remains high, his policymaker colleagues are are confident that disinflation is proceeding, which allows a less restrictive policy approach. But, that could change if upward price pressures were more stubborn:

“Currently I think we are still on the path to 2% in the second half of 2025, and I would really hope that we would do it by that time,”
“We should not drag this problem into 2026”
“If data show that reaching our target is being pushed out beyond 2025, then of course the restriction level needs to be maintained for longer so that we can avert those kind of outcomes.”

Asia-Pacific-World News

China interest rate cuts face internal and external constraints

The weak yuan is a big constraint

China interest rate cuts face internal and external constraints, state media says in a front-page article. Reuters citing Chinese state media outlet, Financial News:

China still has room tolower interest rates, but its ability to adjust monetary policyfaces internal and external constraints
“Objectively speaking, further interest rate cuts face ‘double constraints’ both internally and externally,” the newspaper said.”Internally, commercial banks’ net interest margins continue to narrow.Externally, the yuan exchange rate is also a factor that needs to be considered.”

China May Industrial output +5.6% y/y (expected +6.0%) Retail sales +3.7% (3.0% exp)

Retail sales, Industrial production, Unemployment rate, Investment data

Unemployment Rate Urban Area 5.0%

prior 5.0%

Property Investment YTD for May -10.1% y/y

expected -10.0%, prior -9.8%

China May new home prices -0.7% m/m and -3.9% y/y

Home prices continue to drop, at a faster rate than the month before

China May new home prices

-0.71% m/m

prior -0.58

-3.9% y/y

prior -3.1%

Used home prices -1.0% m/m

prior -0.94%

People’s Bank of China set MLF rate at 2.5% (expected 2.5%, prior 2.5%)

Medium-term Lending Facility (MLF) left at 2.5%, as expected

The PBoC has kept the 1-year MLF interest rate unchanged at 2.5%

injects 182bn yuan vs. the 237bn maturing (thus a 55bn yuan drain in MLF from the banking system)
for 1 year

China’s CSRC announces more curbs on short-selling

Further restricitons announced by the China Securities Regulatory Commission (CSRC)

The China Securities Regulatory Commission (CSRC) issued a statement on Sunday:

said it’ll further evaluate and refine rules for margin trading and securities lending
will add to regulation of “illicit” short-selling

UBS says China expects an intensifying trade war if Trump wins 2024 election

“Trump is now threatening to impose a tariff of 60 per cent on all imports from China”

UBS economist Ning Zhang says China is bracing itself for a trade war with the US under a second Trump presidency.

In an interview with The Australian during a visit to Australia, Mr Zhang said China was bracing itself for a trade war with the US that could harm its economy if Donald Trump won the November election.
And China’s concern about a potentially more hostile relationship with a Trump administration was one of the factors behind its strategy of having a more friendly relationship with other countries such as Australia, New Zealand and the European Union, he said.
“The bottom line is that China wants to make more friends,” he said. “Better bilateral trade has benefits for both sides.”
Mr Zhang said Donald Trump’s proposed tariffs on goods from China were significantly higher than the measures he took as president and could potentially cause much more harm to the Chinese economy.Instead of imposing additional tariffs of 25 per cent on $US250bn ($380bn) of Chinese exports to the US as he did last time, Trump is now threatening to impose a tariff of 60 per cent on all imports from China.Mr Zhang estimated that this could cut Chinese economic growth – which UBS predicts will come in at around 4.9 per cent this year – by more than one percentage point in 2025.

Australian jobs data (May) – ANZ private survey -2.1% m/m and -18.1% y/y

ANZ-Indeed Australian Job Ads

Some local Australian data, ANZ-Indeed Australian Job Ads for May 2024:

-2.1% m/m
-18.1% y/y

Says ANZ on the release:

-23.9% from its peak in November 2022
still more than 20% above pre-pandemic levels
“The (revised) ANZ-Indeed Australian Job Ads series shows a softening over 2024, with an 8.2% fall since the end of last year.Other data also show the labour market is cooling, but only gradually”

New Zealand Dollar forecasts revised lower

New Zealand Institute of Economic Research (NZIER) survey of economists

Their broader summary for the NZ economy, saying that the latest NZIER Consensus Forecasts:

show a further downward revision to the growth outlook for the coming year
Forecasts of annual average GDP growth for the years ending March 2024 and March 2025 have been revised lower to 0.2 percent and 0.6 percent, respectively.
The revisions suggest a further weakening in the growth outlook for the coming year, given the New Zealand GDP has already declined for two quarters in a row. The dampening effects of higher interest rates on demand are expected to continue to drive a slowing across the New Zealand economy. Over the longer term, the migration-led population growth is expected to support a recovery in demand.

New Zealand service PMI for May 43.0 (prior 46.6)

New Zealand dollar traders data of interest

Business NZ chief executive Kirk Hope:

as bad as it can get for the sector, reaching contraction levels greater than during the Global Financial Crisis of 2008/09
May result well below the long-term average of 53.3

BNZ’s Senior Economist Doug Steel:

“the speed of decline is as worrisome as its size over the past three months. There is weak and then there is very weak. Overall, this tells of a services sector in reverse, at pace”.

BOJ likely to trim bond buying by ¥2 trillion per month, says former policymaker

Remarks by former BOJ policymaker, Makoto Sakurai

BOJ may raise rates to 0.5% by end of next year
That is if economy and prices move in line with forecasts
BOJ likely to forgo raising rates in July and wait at least until September

Japan Core Machinery Orders (April) -2.9% m/m (vs. expected -3.1%)

Soft data again from Japan, though the y/y is a little better

Japan Core Machinery Orders (April)

-2.9% m/m

first m/m fall in 3 months
expected -3.1%, prior +2.9%

+0.7% y/y

expected -0.4%, prior +2.7%

BOJ governor Ueda says will scrutinise FX moves, impact on prices

Remarks by BOJ governor, Kazuo Ueda

Service prices will continue to rise moderately
That reflects the increase in wages

Cryptocurrency News

Bitcoin Approaches $65,000 Amid Persistent Selling Pressure

Early gains reverse

Bitcoin has experienced a steady decline over the past 12 hours, dropping 0.7% for the day and hovering near the critical $65,000 level. It is approaching last week’s low of $64,924, and breaking this support could push it to a one-month low, despite record highs in US equities. This trend may indicate a broader weakening in risk assets, with the market’s recent rally driven mainly by a few stocks, notably Nvidia (NVDA), while the broader market, including the Russell 2000, lags behind.

Bitcoin’s repeated failures to sustain levels above $70,000 suggest vulnerability, particularly if there is widespread selling in equities or a downturn in risk assets. This week, the key event to monitor is Tuesday’s retail sales report. While weak retail sales could raise hopes for Fed rate cuts, it might also heighten concerns about a slowing economy and the risk of the Fed falling behind, potentially leading to a recession. Thus, Bitcoin’s performance could be an indicator of broader market sentiment and potential equity market weakness.

Ethereum Dip Presents Buying Opportunity as Canada Launches Second Staked ETH ETF

Canada-based Purpose Investments announces conversion of its Ethereum Capital Corporation into staked Ethereum ETF.
Conversion sees Canada embracing Ethereum staking ahead of US after SEC signals discomfort with concept.
Ethereum price’s recent downtrend could prove a good buy-the-dip opportunity.

Ethereum (ETH) resumed its downward trend on Monday after a slight weekend recovery following the launch of the Canada-based Purpose Investment Staked ETH ETF.

Purpose Investment launches staked ETH ETF

In a press release on Monday, Purpose Investment announced the conversion of its Ether Capital Corporation to Purpose Ether Staking Corp ETF. The move comes after its shareholders voted to approve the corporation’s conversion into an ETF actively managed by Purpose.

“By using advanced staking capabilities developed at Ether Capital and working with our custodial partners at Gemini to develop an institutional-grade ETF ether staking framework, we’re providing investors with a powerful tool that combines the benefits of staking with the robust oversight, transparency, and liquidity that an ETF structure provides,” says Vlad Tasevski, Purpose’s Head of Asset Management, Institutions and Investors.

According to the press release, the ETF will begin trading on the Chicago Board Options Exchange (CBOE) under the ticker ETHC.B.

With the ETHC.B launch, Canada will get its second staked ETH ETF after 3iq launched ETHQ last year. Meanwhile, the US Securities & Exchange Commission (SEC) has signaled that it’s uncomfortable with staking after prospective spot ETH ETF issuers updated their applications to remove words related to the concept.

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Round up of today’s market news

ByBilals Tech

North American News