Daily Market News by Golden Brokers

[Ariff Azraei]

DAILY MARKET NEWS – 12-06-2024​

China's consumer inflation was reported to remain steady at 0.3% in May, matching the previous month's rate. However, the underlying trend suggests the necessity for Beijing to take extra measures to improve domestic demand and support the uneven economic recovery across sectors. The producer price index declined to 1.4% in May, down from 2.5% in April. Economists warn that deflationary pressure remains an issue, with the slight improvement in producer prices driven by commodity prices rather than domestic demand. China also stopped buying gold in May after an 18-month shopping spree that saw prices climb to record highs.

EQUITY

Wall Street has seen indexes reach new record highs, although the Dow fell slightly. Apple's stock price climbed 7% after unveiling its AI strategy, although industry players warned of privacy and security concerns. Oracle's has also benefited from its new partnerships with OpenAI and Google Cloud for AI infrastructure, albeit missing quarterly earnings. Asian markets were mixed, with Chinese stocks slipping on potential U.S. trade sanctions targeting Chinese chip resellers supplying Russia.

GOLD

Gold remained flat on Wednesday, awaiting the FOMC and the May inflation report. The market is divided on whether the Fed will cut rates once or twice this year, with attention focused on the central bank's updated economic projections and Chair Jerome Powell's press conference. Buying pressure has also subsided with the Chinese central bank pausing its gold purchase.

OIL

Oil prices stable on Tuesday after brent rebounding from 4-month lows to above $80 a barrel. The U.S. Energy Information Administration (EIA) raised its global oil demand growth forecast for 2024 to 1.1 million barrels per day, up from its previous estimate of 900,000 bpd. Similarly, OPEC maintained its outlook for solid global oil demand growth this year, driven by increased travel and tourism in the summer.

CURRENCY

The greenback steadied above 105.2 ahead of the US inflation report and FOMC. The index had gained over 1% since Friday, supported by job data, changing expectations to only one rate cut from the Fed this year, with a September move becoming less likely. The Japanese yen’s further weakened against the dollar, with the Bank of Japan expected to keep interest rates untouched. As the 2024 US election season approaches, rising tensions between China and the US could be a negative factor leading to a creep-up in the dollar against the offshore yuan.

 

[Ariff Azraei]

DAILY MARKET NEWS – 13-06-2024​

Two big news stories swept across the market yesterday, the first being the consumer inflation rate that came in lower than expected and the federal reserve with another pause with another month to complete a full year of static rates. However, they did reduce their projected rate cuts for 2024 to just one quarter point mitigation, down from the three cuts estimated in March. The central bank acknowledged "modest further progress" towards its 2% inflation target even as the market pointed out the complexity of job data last week. Fed Chair Jerome Powell emphasised that a single rate cut would have little impact on the economy, and that the overall policy path was more important.

EQUITY

The stock market shrugged off the hawkish comment from Fed Chair Powell and clocked in cheeky gains, with the S&P 500 topping 5,400 for the first time in its history. The technology sector led the gainers among sectors, while energy posted the steepest loss. Nike shares fell 2.3% after a trademark application for "footware" was dismissed by the European Union court. However, the market is supported by Oracle, which surged by 13%, after the software maker gave an outlook for annual growth.

GOLD

Gold prices declined after an initial leg up from CPI data following the Federal Reserve's updated economic projections, with only one interest rate cut expected for the remainder of 2024. This revision came against lower inflation data for May. This hawkish stance led to a stronger dollar and higher bond yields, which weighed on gold prices. However, some analysts argue the Fed's projections may already be outdated given the improving inflation numbers, and Goldman Sachs has reinstated confidence in two rate cuts.

OIL

Oil prices reacted to the U.S. Federal Reserve's decision to delay rate cuts until December rather inversely compared to other commodities. The decision impaired expectations for higher economic growth and oil demand. Additionally, higher U.S. crude and fuel inventories weighed on the market, further complicating the demand outlook. In calm waters, Houthi militants continued their attacks on international shipping in the Red Sea, taking responsibility for recent watercraft and missile strikes, although they no longer bear weight on the market.

CURRENCY

The U.S. dollar was volatile yesterday; it initially fell on lower U.S. inflation data but later recovered its losses after the Fed's hawkish stance with its projection. However, markets still expect nearly two rate cuts in 2024 on the basis of lower inflation growth and job data. The yen remained under pressure ahead of the BoJ policy meeting on Friday, expecting a reduction in bond purchases. The market now looks for a clue in the Producer Price Index (PPI) and jobless claims for the next catalyst.

 

[Ariff Azraei]

DAILY MARKET NEWS – 14-06-2024​

The Labour Department reported that new unemployment benefit claims reached a 10-month high in May while producer prices in May fell below expectations, raising hopes for a Federal Reserve interest rate cut in September despite the Fed's changing forecast in its latest meeting. The unemployment rate increased to 4% in May, but Fed Chair Jerome Powell said labour market conditions are back to pre-pandemic levels, while Treasury Secretary Janet Yellen sees the job market as more normal now, with slower wage growth and higher labour force participation. A deeper dive into the data shows that it was driven by lower energy costs and a drop in wholesale gasoline prices, while service costs remained unchanged.

EQUITY

The U.S. stock markets continued their record-breaking streak, while Asian stocks fell as the U.S. inflation-driven rally wound down, with Chinese markets hit hardest after the European Union applied up to 38% tariffs on major electric vehicle makers. Tesla is up 3% after shareholders approved Elon Musk's $56 billion pay package and the company's relocation to Texas after a Delaware court initially blocked the pay package.

GOLD

The gold market has gone through strong volatility in response to the producer price index and jobless claims. The Fed's updated interest rate projections strongly resisted the dollar weakness suggested by the unexpected fall in U.S. producer prices in May. The market's reaction to these developments has been mixed, with traders currently seeing a 60% probability of a rate cut in September.

OIL

Oil prices snapped on Thursday but were on track for their best week in over two months, with both Brent and WTI crude futures gaining more than 3%. This trend was supported by solid projections for crude and fuel demand, with OPEC maintaining its forecast for relatively strong growth in global oil demand for 2024, while Goldman Sachs doubled down on U.S. fuel demand for the upcoming summer. Additionally, Russia pledged to meet its output obligations under the OPEC+ agreement after exceeding its quota in May.

CURRENCY

The U.S. dollar gained on the Fed's hawkish stance after its recent meeting with an updated forecast of only one interest rate cut this year, pushing out the start of rate cuts to possibly December. This contrasts with other major central banks that have already begun easing, leading to policy divergence that supports the dollar. The Bank of Japan maintained its current bond-buying pace but announced plans to start trimming purchases in the future.