DAILY MARKET NEWS - 06-03-2024

Ariff Azraei

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The U.S. Treasury Department announced new initiatives on Tuesday to boost affordable housing. Updated rules will allow state and local governments to use remaining "American Rescue Plan" funds for affordable housing projects serving families earning up to 120% of the area median income. Emergency rental assistance recipients can also use leftover funds for predevelopment and acquisition costs to build affordable rental units for very low-income families. The Treasury also extended financing support through the Federal Financing Bank to lower capital costs for housing developed via a risk-sharing initiative with HUD and state agencies. These measures aim to address housing supply by increasing the nation's stock of affordable homes through construction, rehabilitation, and preservation efforts.


Mega-tech stocks weighed on major U.S. indexes, with the Nasdaq shedding 1.65% over iPhone sales contracting in China and a regulatory blockade on AI chip exports to China. However, retailer Target soared over 12% after an uplifting earnings report, contrasting with Stitch Fix's 21% plunge on a worse outlook. All eyes are on Fed Chair Jerome Powell’s two-day testimony, aimed at discussing key issues like the federal funds rate and the impacts on labour and housing markets, and addressing public concerns about inflation.


Gold prices eased to $2126 as investors awaited critical economic data and speeches from central bank officials. Investors expect the Federal Reserve to cut interest rates in June this year and run off equity overvaluations that usually crash during cutting sessions, boosting gold's appeal as a safe-haven asset. Gold's recent rally has also been attributed to speculative betting and physical demand from China and India.


The crude oil market remains range-bound, despite OPEC+'s extension of voluntary production cuts. Weak demand from China offset the cartel's efforts. Traders await further clarity on the Fed rate trajectory and upcoming China trade balance data. Africa's tycoon, Aliko Dangote, aims to set up a London-based trading firm to manage crude supply for Nigeria's largest refinery with 650K bpd processing capacity to address fuel shortages and secure crude purchases.


The dollar edged lower after data showed slower growth in U.S. services industry, with investors positioning ahead of a busy week featuring the ECB rate decision, Fed Chair Powell's congressional testimony, and U.S. jobs data. Bitcoin surged to a record high before sharply retreating. Australian dollar struggled as recent GDP data showed just 0.2% growth in Q4, with rising mortgage rates and high taxes limiting consumer spending.​