Round up of today's market news *

North American News

Major Indices Surge to Session Peaks as S&P 500 Climbs Past 5,500 Mark

Dow Industrial Average average closes higher as well

The major US stock indices closed higher today, with the S&P 500 and NASDAQ both reaching record levels. The Dow Jones Industrial Average also climbed, edging closer to its all-time high of 40,003.02. The market-cap weighted S&P 500 rose by 0.4%, while the equal-weighted S&P 500 saw a 0.2% gain.

Market breadth improved significantly, with advancers outnumbering decliners nearly 2-to-1 on the NYSE and 11-to-10 on the NASDAQ. Treasury yields remained steady, with the 10-year note yield down three basis points to 4.45% and the 2-year note yield down four basis points to 4.73%.

Investors are looking ahead to a slew of economic data releases tomorrow, including:

7:00 ET: Weekly MBA Mortgage Index
8:15 ET: June ADP Employment Change (expected 163,000; previous 152,000)
8:30 ET: Weekly Initial Claims (expected 235,000; previous 233,000), Continuing Claims (previous 1.839 million), and May Trade Balance (expected -$76.0 billion; previous -$74.6 billion)
9:45 ET: S&P Global U.S. Services PMI (previous 55.1)
10:00 ET: June ISM Non-Manufacturing Index (expected 52.5%; previous 53.8%) and May Factory Orders (expected 0.3%; previous 0.7%)
10:30 ET: Weekly crude oil inventories (previous +3.59 million)
12:00 ET: Weekly natural gas inventories (previous +52 bcf)

Additionally, Constellation Brands (STZ) is set to report earnings before the market opens tomorrow.

Other winners today included:

Rivian Automotive (RIVN): +6.90%
Paramount Global B (PARA): +5.72%
AMD (AMD): +4.18%
AMC Entertainment (AMC): +3.47%
Super Micro Computer (SMCI): +3.08%
GameStop Corp (GME): +2.79%
Bank of America (BAC): +2.32%
Shopify Inc (SHOP): +2.23%
Western Digital (WDC): +2.21%
Alibaba ADR (BABA): +2.06%

Some losers today included:

First Solar (FSLR): -3.08%
Chewy (CHWY): -2.38%
Bitcoin Futures (BMC): -2.24%
Grayscale Bitcoin (GBTC): -2.20%
BTC/USD: -2.16%
CrowdStrike Holdings (CRWD): -2.01%
Papa John’s (PZZA): -1.81%
Corsair (CRSR): -1.59%
Robinhood, -1.49%
Zoom, -1.47%

Other big names:

Nvidia -1.31%
Apple +1.62%
Amazon +1.42%
Meta Platforms +0.96%
Alphabet +1.23%
Microsoft +0.56%

JOLT May job openings 8.140M vs 7.910M estimate

The US JOLTS job openings report for May 2024

Prior month revised to 7.919M from 8.059M previously reported
JOLTs job openings moves higher to 8.140M which is higher than the 7.910M estimate.
Vacancy rate 4.9% versus 4.8% last month.
Quits rate 2.2% versus 2.2% last month

Details of the job openings:

Job openings on the last business day of May: 8.1 million (little changed)
Year-over-year decrease in job openings: 1.2 million
Job openings rate in May: 4.9% (little changed)
Decreases in job openings:
- Accommodation and food services: -147,000
- Private educational services: -34,000
Increases in job openings:
- State and local government, excluding education: +117,000
- Durable goods manufacturing: +97,000
- Federal government: +37,000

Hires details:

Number of hires in May: 5.8 million (little changed)
Year-over-year decrease in hires: 415,000
Hires rate in May: 3.6% (little changed)

Separations details:

Total separations in May:
- Number: 5.4 million (little changed)
- Year-over-year decrease: 424,000
- Rate: 3.4% (unchanged)
Quits in May:
- Number: 3.5 million (little changed)
- Year-over-year decrease: 550,000
- Rate: 2.2% (seventh consecutive month)
Layoffs and discharges in May:
- Number: 1.7 million (little changed)
- Rate: 1.0% (unchanged)
Other separations in May:
- Number: 309,000 (little changed)

Tesla Q2 deliveries 444K vs 439K expected

Second quarter delivery data from Tesla

Shares of Tesla were lower in the pre-market but rebounded into positive territory on this headline, up 4%.

Q2 production 410.8K vs 433.3K in Q1
Deliveries 444K vs 387K in Q1
Deliveries down 5% y/y

There were whisper numbers as low as 423K that got louder after reporting 71K deliveries in China in June. That was down 24.2% on a year-over-year basis and compares to BYD at 340K, up 35.2% y/y.

Powell: The labor market is still strong, though we’ve seen a continued rebalancing

Comments from Powell at Sintra

We want to see more progress on inflation
The latest data shows we’re on a better path on wages
We would like to see more data like we’ve seeing
The latest PCE at 2.6% shows ‘really significant progress’
“We just want to understand that the levels we’re seeing are a true reading on what’s happening in underlying inflation”
We have the ability to take our time and get this right
If we go too soon, we could undermine the work we’ve done on inflation
Risks are coming much more into balance now

Goldman: We continue to see a FOMC cut in September. Lazard sees 3 rate cuts in 2024

FOMC projections after they return to disinflationary reversal

Two strategists are out with their projections for FOMC rate cuts in 2024:

Lazards strategists Temple still sees three cuts by the end of the year
Goldman Sachs expects the FOMC to cut rates by 25 basis points in September, followed by quarterly cuts to a terminal rate of 3.25% – 3.5%.

Fed’s Goolsbee: I see some warning signs the real economy is weakening

Remarks by Chicago Fed president, Austan Goolsbee

Restrictive rates for too long is a problem
There are some warning signs in the jobs market
We are putting emphasis on jobs reports and price data
There has been a string of improved inflation readings in the US
It feels like the path back towards 2%
If inflation returns to normal, rates will too
I still think the ‘golden path’ is possible
Higher inflation this year has mostly looked like a blip, or a bump in the road
If you take a step back, the arc of inflation is clearly down
Goods are basically back to pre-pandemic inflation, services are a bit higher ‘but within shooting distance’, the whole puzzle is housing, which is partly just mechanical
If we used European measures on housing inflation, we would already be at 2%
The evidence is that there was a lot more immigration than we thought a year ago. That makes me cautious on over-interpreting the non-farm payrolls number
I don’t like tying our hands, it completely depends on how inflation goes
The unemployment rate is up but it’s still just 4%

WSJ on rising US yields, cite “potential Republican sweep in November”

The Journal says yields rose:

with investors and analysts pinning the move largely on the fiscal implications of a potential Republican sweep in November
A basic rule of thumb for investors is that deficits are always likely to be larger if either Democrats or Republicans control both chambers of the Congress in addition to the White House

JP Morgan with a warning note on US stocks – see a potential reversal

Another day, another warning note from JPM in brief:

There is no safety net anymore
market is positioned long
Vix is at lows, potentially underpricing risks
valuations look stretched
economic growth is slowing
credit spreads are extremely tight — this is as good as it gets

Canada June S&P Global manufacturing PMI 49.3 vs 49.3 prior

The June 2024 manufacturing survey from Canada

Prior was 49.3

Commenting on the latest survey results, Paul Smith, Economics Director at S&P Global Market Intelligence said:

“The performance of the Canadian manufacturing economy remained subdued in June, with output, new orders, employment and purchasing all falling since the previous month. Panelists noted that underlying market demand remained soft, whilst also commenting that sales were perhaps weaker-than-expected – resulting in the accumulation of some excess inventory at their plants.

“A positive from the latest survey is that price pressures appear broadly contained, with costs rising at a softer pace than in recent months and charges increasing only modestly. However, limited pricing power is broadly a function of weak demand and a competitive marketplace, and with firms noting that prices remain too high for many clients, confidence in the future has subsequently softened to its lowest level of the year so far.”

Commodities

Gold Prices Decline as US Yields Strengthen Despite Powell’s Dovish Signals

Gold falls 0.28%, reacting to Powell’s ECB forum remarks.
Powell is cautiously optimistic on disinflation, emphasizes need for more progress before rate cuts.
US Dollar fluctuates in familiar range.
Strong US labor data: Job vacancies exceed expectations, highlighting economic resilience.

During the North American session, gold prices fell as traders assessed Federal Reserve Chair Jerome Powell’s remarks at the European Central Bank forum in Portugal. Despite Powell adopting a somewhat dovish tone, US Treasury yields remained robust. The US dollar experienced minor fluctuations but stayed within its usual range, with gold slipping to $2,324, down 0.28%, dipping below the $2,330 mark amid strong labor market data.

The US Bureau of Labor Statistics reported 8.14 million job openings for May, surpassing both forecasts and April’s figure of 7.919 million, which had been the lowest in three years. Meanwhile, US manufacturing sector activity showed mixed results. Investors are now turning their attention to the upcoming release of service sector data on Wednesday.

According to the FedWatch Tool, the probability of a 25-basis-point rate cut by the Federal Reserve in September has risen to 63%, up from 58% on Monday. Additionally, the December 2024 fed funds rate futures indicate expectations of a modest 36 basis points policy easing by year-end.

Crude oil futures settle at $82.81

Down $0.57 or -0.68%

The price of WTI crude oil futures are settling at $82.81.That is down $0.57 or -0.68%.

The price moved lower after trading to a two-month high to $84.38 earlier in the day. That was just $0.08 from the April 26 high target at $84.46. On the downside, the 61.8% retracement of the move down from the April high to the June low comes in at $81.84.

On the demand side, U.S. gasoline consumption is expected to peak with increased travel for the Independence Day holiday, forecasted to be 5.2% higher than in 2023.

Recently, oil prices have been supported by OPEC+ extending oil output cuts until 2025.

Copper is under selling pressure – TDS

Red Metal is under selling pressure influenced by price action in the base metal complex, TDS Senior Commodity Strategist Ryan McKay notes.

China hoards Copper inventories

“Price action in the base metal complex continues to stave off CTA selling pressure in Copper, however the higher selling trigger, now at $9,422/t, is becoming more of an entrenched risk for the Red Metal.”

“With our gauge of global commodity demand continuing to weaken, while depressed premiums and surging inventories in the Middle Kingdom argue against fundamental tightness, top traders in Shanghai Futures Exchange (SHFE) have taken on a net short position.”

“While the fundamental situation certainly looks promising in the years to come, the lack of evidence supporting current physical tightness can continue to see these money manager positions unwind.”

EU News

European equity markets close lower

Closing changes for the main European bourses

Stoxx 600 -0.4%
German DAX -0.7%
UK FTSE 100 -0.6%
French CAC -0.3%
Italy MIB -0.75%
Spain IBEX -1.4%

Eurozone June preliminary CPI +2.5% vs +2.5% y/y expected

Latest data released by Eurostat – 2 July 2024

Prior +2.6%
Core CPI +2.9% vs +2.8% y/y expected
Prior +2.9%

Eurozone May unemployment rate 6.4% vs 6.4% expected

Latest data released by Eurostat – 2 July 2024
Prior 6.4%

UK shop price inflation in June rose at the lowest rate since October 2021

Eyes on the election this week

British Retail Consortium (BRC) data for June 2024

0.2% m/m vs. 0.6%in May
the smallest increase since October 2021

Comment from the report:

“This will be of help to shoppers as they plan their household budgets for essential goods and services,” said Mike Watson, head of retailer and business insight at NielsenIQ, which provides data for the BRC.”With uncertainty around discretionary spending, we expectthe intense competition across the marketplace to keep price increases as low as possible this summer.”

ECB’s Lagarde: We are very advanced in disinflation

Comments from the ECB President

Everyone in the economy can decide our reaction function
Inflation is heading in the right direction
Question is whether there are permanent changes in services inflation
We don’t need to have services at 2%, it depends on the weights in the index
We need to make sure second-round effects are ‘out of the window’
The rising number of trade restrictions is worrisome
It is very likely that we will go back to ultra-low rates

ECB’s Vasle: We can cut rates further if things go as expected

Remarks by ECB policymaker, Boštjan Vasle

But we need more data to confirm inflation trajectory
Must be careful not to declare victory too soon
Labour market is very important for next steps
Labour market is still tight, causing wage pressure

ECB’s Centeno: Every meeting is open for us to make a decision

Remarks by ECB policymaker, Mario Centeno

As confidence builds, ECB can look at every meeting in making a decision
There is confidence that inflation will hit 2% target next year
Our baseline projections have proved to be quite solid
We must be prudent on rates
Still hesitant on growth assessment
Monetary policy must aid with economic recovery

ECB’s Muller: We can probably cut rates again before year-end

Remarks by ECB policymaker, Madis Muller

But should not rush in doing so
We can cut more if baseline projections hold
Must be patient with further rate cuts
There is a risk of underestimating inflation stickiness

ECB’s de Guindos: We are not following a pre-determined path on interest rates

Remarks by ECB vice president, Luis de Guindos

Uncertainty remains high
We have to be very prudent
Inflation will have its ups and downs this year
Economy is to be stronger in 2H than it was in 1H

ECB’s Wunsch: There is room for second rate cut barring any major negative surprises

Remarks by ECB policymaker, Pierre Wunsch

A small deviation from the projections would not change this view dramatically
There is probably a premium in waiting for a meeting with new forecasts i.e. September
But I would not make that a condition
Decision to cut rates one more time is a relatively easy one
But subsequent moves should only come once inflation is closer towards the 2% target

Asia-Pacific-World News

PBOC sets USD/ CNY reference rate for today at 7.1291 (vs. estimate at 7.2774)

PBOC CNY reference rate setting for the trading session ahead

In open market operations:

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

300bn mature today
thus a 298bn drain

Increasing speculation of a PBOC RRR cut this month or next

To boost liquidity, supporting bond buying, and also to help address low inflation

There are some expectations about of a People’s Bank of China (PBOC) Reserve Requirement Ratio (RRR) cut this month, or in August, to boost long term liquidity and support bond buying.

Chinese state media, Securities Daily, cite the chief economist at CITIC Securities, saying that the PBOC may adopt measures such as lowering the reserve requirement ratio (RRR) to provide sufficient liquidity to the market

In view of the current level of excess reserves and the potential pressure to issue government bonds, it is possible that the RRR cut will be implemented in July or August.
It is not ruled out though that the PBOC will provide liquidity through open market operations or relending.

Head of macroeconomics for Asia-Pacific at UBS Global Wealth Management said the PBOC may further cut the RRR and interest rates in the remainder of the year to address low inflation

Targeted low-cost lending facilities to support housing inventory acquisition would also be likely

“Leaning towards forecasting a hike at the RBA August meeting”

Forecast for what’s next from the Reserve Bank of Australia

A snippet this morning from ING:

The minutes of the June RBA meeting need scrutinizing for any talk of rate hikes.
We know they were talked about, the question is, what is the trigger?
We are leaning towards forecasting a hike at the August meeting.

RBA – a material rise in inflation expectations could require significantly higher rates

Reserve Bank of Australia June meeting minutes

Reserve Bank of Australia June meeting minutes. Headlines via Reuters:

The RBA Board judged the case for holding rates steady stronger than for hiking
Needed to be vigilant to upside risks to inflation, data suggested upside risk for May CPI
Economic uncertainty meant it was difficult to rule in or out future changes in policy
Recent data not sufficient to change outlook for inflation returning to target by 2026
Judged still possible to bring inflation to target while keeping employment gains
Board saw downside risks to the labour market, vacancy rates pointed to weakness
Unemployment rate could rise quickly as it had done in the past
Continued rapid rise in business insolvencies would be negative for jobs
Wise to give little weight to upward revisions to household consumption
Q1 GDP growth had been very weak, wage growth looked to have peaked
Hike might be needed if board judged policy was not “sufficiently restrictive”
August forecast round would allow staff to carefully judge spare capacity in economy
Judgements about spare capacity were very uncertain, should be treated with caution
Inflation expectations still anchored, but market premia had drifted higher
A material rise in inflation expectations could require significantly higher rates

Australian inflation expectations have jumped their highest in 9 months

Plenty for the RBA to chew over

The weekly ANZ / Roy Morgan survey of consumer confidence tends not to move the Australian dollar upon release, so it pretty much drifts by more or less unmentioned.

However, it also includes measure of inflation expectations and, given the sticky, high nature of Australian inflation, check this out from the ANZ report:

Inflation expectations recorded their largest weekly increase in 9 months, rising 0.4pts to 5.2%

New Zealand GDT price index -6.9%

Share fall in the latest dairy auction
Whole milk powder -4.3%
Average price $ 3,782

KiwiBank “sticking to our call for cuts to begin in November” – “avoid economic scarring”

KiwiBank response to the terrible business confidence numbers, on top of everything else

KiwiBank note, these the main points:

Business confidence deteriorated in the June quarter. High interest rates are weighing on demand, with more businesses seeing a decline in trading activity. Weak-to-miserable growth remains the outlook.
The most important read in the report involves pricing. And it was all-round good news. Cost expectations have eased, and pricing intentions have softened.
The most striking read was the deterioration in labour demand. The same proportion of firms as during the GFC are now cutting headcount. And more look to do the same in the coming months.
The QSBO adds further support for our call for RBNZ rate cuts sooner rather than later. We’re sticking to our call for cuts to begin in November.

New Zealand Q2 business confidence collapses further, to -44% (prior -25%)

New Zealand Q2 business confidence

New Zealand Institute of Economic Research (NZIER) quarterly survey of business opinion

44% of firms surveyed expected general business conditions to deteriorate compared with 25% pessimism in the previous quarter
net pessimism has been shown in the results of this survey since the third quarter of 2021

New Zealand Building Permits (May 2024) -1.7% m/m (prior -1.9%)

New Zealand Building Consents for May 2024

New Zealand Building Consents for May 2024 come in at -1.7% m/m

the prior revised to -2.1%

BOJ expected to trim monthly bond purchases by ¥16 trillion in first year – survey

This according to the latest survey conducted by Reuters from 25 June to 1 July

That should roughly translate to monthly purchases of around ¥4.65 trillion, down from the current pace of around ¥6 trillion. As for the second year, the survey respondents expect the monthly purchases to fall further to average around ¥3.55 trillion.

Putting everything together, that should translate to a reduction of around ¥45 trillion over a two-year period once the BOJ begins the tapering process.

Japan finance minister Suzuki make some yen comments

Watching FX moves with vigilance

Won’t comment on FX levels
No change in the government’s stance on FX
The market has been driven by various factors, including sentiment, speculation
Closely watching FX moves with vigilance

South Korean June CPI +0.2% m/m (expected +0.1%) +2.4% y/y (expected +2.7%)

The y/y rise is the slowest since July of 2023
The core measure came in at +2.2% y/y

Cryptocurrency News

Ethereum ETFs Poised for Historic Success Following Gemini’s $5 Billion Inflow Forecast

Ethereum ETFs set for $5 billion in net inflows, says Gemini.
Ethereum Foundation shed its holdings again, bringing its total sales since January to 2,266 ETH.
Ethereum may decline to $3,378 to target a $3.75 million liquidation pool.

Ethereum (ETH) dropped over 1.4% on Tuesday following another sale by the Ethereum Foundation. However, a recent report from crypto exchange Gemini presents an optimistic outlook for ETH ETFs, predicting significant inflows.

Gemini’s Bullish ETH ETF Forecast Amid Foundation’s Sell-Off

According to Gemini’s report, spot Ethereum ETFs could attract around $5 billion in net inflows within their first six months of trading. The analysts suggest that, together with the conversion of Grayscale’s Ethereum Trust, these ETFs could manage total assets between $13 billion and $15 billion in that timeframe.

The report further details that a net inflow of $7.5 billion would be seen as a “significant upside surprise,” while anything around $3 billion would be underwhelming. Gemini analysts also foresee these inflows potentially boosting the ETH/BTC ratio by 20%, from its current lows to 0.067.

“Considering international ETF markets, strong on-chain dynamics, and unique factors like a robust stablecoin environment, there’s a favorable risk-reward scenario for an ETH catch-up trade in the coming months,” said Gemini.

Chainlink poised for a rally as whales buy dips

Chainlink’s price bounced from the weekly support level at $13.15 and extends recovery on Tuesday.
On-chain data shows that whales have accumulated 2.08 million LINK in the past seven days.
A daily candlestick close below $12.59 would invalidate the bullish thesis.

Chainlink’s (LINK) price bounced from the $13.15 support level last week and extends recovery above $14.50 on Tuesday. According to Lookonchain data, over the past week, 54 new whale wallets withdrew 2.08 million Oracle tokens valued at $30.28 million from Binance, suggesting less selling pressure on Chainlink’s price and expecting more gains in LINK are likely.

Ripple escrow unlocks one billion XRP on Monday

Ripple escrow timelock expired on Monday, and one billion XRP tokens were unlocked.
The one billion token unlock is part of Ripple’s unlocks scheduled till January 2025.
XRP hovers around $0.48 on Tuesday, adding more than 1% to its value on the day.

Ripple (XRP) escrow unlocked 1 billion tokens on Monday as part of the planned unlock until January 2025.XRP hovers around $0.48 early on Tuesday, adding more than 1% to its value on the day.

With no new developments in the SEC vs. Ripple lawsuit, market participants closely watch escrow unlocks and on-chain metrics to identify where XRP is headed next.

Ripple unlocks 1 billion XRP from escrow, social dominance rises

As part of scheduled routine unlocks, the escrow timeline for 1 billion XRP tokens expired on Monday, according to Bithomb data.
The unlock occurred in three tranches of 400 million, 100 million, and 500 million XRP, respectively.
As seen in previous instances in February and May, the scheduled unlocks do not significantly impact the XRP price.
On-chain data from crypto tracker Santiment shows that social dominance, a metric used to identify the relevance of XRP among traders, hit a three-month peak.
The rise in social dominance of an asset is associated with increasing mentions on social media and higher demand for XRP among traders.
XRP holders realized over $63 million in losses on Monday, a large negative spike in the Santiment’s Network Realized Profit/Loss (NPL) metric. This is consistent with capitulation among retail traders and signals a recovery in the altcoin is likely.

Legal action against Roaring Kitty of GameStop for securities fraud has been dismissed

Keith Gill is Roaring Kitty. The suit against him has been binned

Reuters has more here.

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Round up of today’s market news

ByBilals Tech