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Early Morning Call: AUD jumps as RBA hikes cash rate to 4.1%

A survey published last Friday said economists expected the Reserve Bank of Australia to stay put, forecasting the cash rate to reach 4.1% only by end of the third quarter.

 Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Tuesday 06 June 2023

Indices overview

US equity markets ended the session lower on Monday evening. The S&P 500 was up in the first part of the day and the market hoped the index would end the day in bull market territory.

In APAC, indices mostly rose. Australia’s S&P/ASX 200 lost ground as Australia's central bank unexpectedly raised interest rates by a quarter point, taking the cash rate to 4.1%. A Reuters survey published last Friday said economists expected the Reserve Bank of Australia (RBA) to stay put, forecasting the cash rate to reach 4.1% only by end of the third quarter (Q3).

A hawkish RBA added in its statement that some further tightening could be required to tame inflation, currently pointing at 7% year-on-year (YoY).

The labour market also remains tight: the unemployment rate is at its lowest point in nearly half a century. The reaction of the Australian dollar was instantaneous. The currency jumped to a two-week high against the greenback, a four month high against the New Zealand dollar, and a six month high against the yen.

Macroeconomics

British retail sales unexpectedly slowed in May to a seventh-month low, according to the British Retail Consortium (BRC). Spending at BRC's members' stores rose 3.9% year-on-year, below the 5.2% recorded in April. The actual reading also missed an estimate of 5.2%.

This weak consumption trend is unlikely to change in coming months according to the BRC Cchief executive, Helen Dickinson. Food was the only area where consumers spent more last month, because of two bank holidays and the long weekend of King Charles' Coronation.

Shoppers reined in spending on non-essential items. The latest official figures revealed that food price inflation remained near a 46-year high at 19.1% and show little sign of coming down in the near future. This gives ammunition to the Bank of England (BoE) to continue to tighten.

The Bank of England reiterated it will keep raising interest rates if inflation looks persistent. The bank is expected to increase to 4.75% from 4.5% at its next meeting on June 22, the market currently sees interest rates peaking at 5.5% later this year.

In Germany, factory orders fell by 0.4% in April month-on-month (MoM), after -10.7% in March. Economists had anticipated a 3% rise. Retail sales in the eurozone are expected to increase by 0.2% in April MoM after a 1.2% drop in March.

Apple

Apple unveiled at its annual developer conference yesterday what CEO Tim Cook called "the first Apple product you look through, not at". Called the Vision Pro, it is a new virtual reality headset, that investors already see as the group's riskiest bet since the introduction of the iPhone. Why? First because of its price. Starting at $3,499, it's more than three times the cost of the priciest of its competitors, the Meta Quest Pro. Risky also because Apple enters a market that is crowded with devices that are struggling to gain traction with consumers.

Currently, the virtual reality market is dominated by Meta, which controls about 80% of the market, and many see this latest Apple venture as the next episode of years of clashes between the two companies. Apple said it has been working with Adobe and Microsoft to put their apps on the new headset. Set for release early next year in the US, owners will also have access to Disney+ streaming service and Apple TV+.

Besides the headset, Apple unveiled a new 15-inch MacBook Air and a powerful chip called M2 Ultra. It hardly excited investors though. The stock set a new all-time high ahead of the launch but ended the session down on the IG platform.

 

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Charting the Markets: 06 June

Dow and Nasdaq 100 look to move higher but Hang Seng struggles. EUR/USD volatility diminishes while AUD/USD rallies on RBA rate hike and USD/JPY slips. And Brent crude oil slips while gold and silver stabilise.

 

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 06 June 2023

 

 

 

 

 

 

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Early Morning Call: Europe indices hesitant as Australia GDP, China exports dampen mood

Australia's economy grew at the weakest pace in a year and a half last quarter while in China, exports shrank much faster than expected in May - 7.5% year-on-year.

 Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Wednesday 07 June 2023 09:03

APAC overview

APAC equity markets were mixed on Wednesday after economic data in Australia and China dampened the mood of investors. Australia's economy grew at the weakest pace in a year and a half last quarter. Gross domestic product (GDP) rose 0.2% quarter-on-quarter (QoQ), easing from 0.6% in the previous quarter.

Consumers have become increasingly selective in terms of their spending, privileging essential goods and services. Household consumption rose only by 0.2% in the first three months of the year, contributing 0.1% percentage points to GDP.

Back on March 21st, at the end of the first quarter, the Reserve Bank of Australia (RBA) considered that its monetary policy was then in restrictive territory. Indeed, the latest GDP data showed that rising interest rates have started to bite. Minutes after the release of GDP data, Australia's Treasurer Jim Chalmers said inflation was proving more stubborn than hoped for, supporting the recent RBA decisions.

Since that March meeting, the RBA has hiked its cash rate twice more, taking it to an 11-year high of 4.1%, and is still saying more tightening may be required.

In China, exports shrank much faster than expected in May, by 7.5% year-on-year (YoY). It was the largest decline since January. Imports fell too, albeit at a slower pace of 4%. This is yet another indication that China's manufacturing sector is struggling to recover. This poor export performance reflects weak demand for Chinese goods. Some economists now believe that in that context of global weakness, China needs to rely more on domestic demand. This adds pressure on government to boost domestic consumption.

Macroeconomics

In the UK, the Halifax house price index stayed unchanged in May compared to the previous month, down 1% YoY. In Germany, industrial production rose by 0.3% in May MoM, after a 2.6% drop the previous month.

Are we up for an interest rate hike in Canada? A majority of economists don't think so, but they expect one at the Bank of Canada's (BoC) subsequent meeting in July. The last time the Bank of Canada raised its overnight rate was on January 25. The Bank decided to hold rates at its last two meetings, as it considered borrowing costs restrictive enough to bring inflation down.

Canadian inflation peaked earlier than most economies in June last year at 8.1% and has since declined to 4.3% in March. But then we had a rebound in April to 4.4%.

The BoC has room to raise interest rates sooner rather than later. Canada's economy has been fairly resilient so far this year. GDP growth for the first three months hit 0.8% QoQ, and the unemployment rate has been stuck at a 49-year low for the past five months.

Equities

Boeing warned on Tuesday evening it could be forced to slow deliveries of its 787 Dreamliner. The American aircraft maker discovered a new production flaw, and now needs to inspect all 90 jets in its inventory, and believes it will take two weeks to fix each aircraft.

The SEC crackdown on the crypto industry is escalating. The US securities regulator issued a lawsuit against Coinbase on Tuesday, the second in two days against a major crypto exchange. On Monday, the SEC targeted Binance, the world's largest cryptocurrency exchange. The two cases are of a different nature. The SEC accused Binance and its CEO Changpeng Zhao of operating a "web of deception". As for Coinbase, the regulator considers it is operating illegally because it failed to register as an exchange.

If successful, these lawsuits could trigger a major change in the crypto world, asserting the SEC's jurisdiction over it. So far, the industry's argument is that tokens do not constitute securities and should not be regulated by the SEC.

 

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Charting the Markets: 07 June

Indices grind higher. EUR/USD, GBP/USD and USD/CAD struggle to make headway. And WTI and gold trade in low volatility while wheat slips back.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 07 June 2023

 

 

 

 

 

 

 

 

 

 

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Look Ahead to 8/6/23: eurozone, Japan growth; US initial jobless claims; Crest Nicholson, MITIE earnings

Growth is in focus as investors await eurozone and Japan GDP data, plus keep an eye out for US initial jobless claims ahead of the Fed monetary policy meeting next week. Crest Nicholson and MITIE post results.

Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Wednesday 07 June 2023

 

 

 

 

 

 

 

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Early Morning Call: hesitant start for FTSE 100 amid warnings of further slowdown in housing market

Crest Nicholson posted a slump in half-year profit down to £20.9 million, from £52.5 million a year ago.

 Jeremy Naylor | Analyst, London | Publication date: Thursday 08 June 2023 09:27

APAC overview

European equity markets opened mostly lower on Thursday, after a negative session in the Asia-Pacific region. On Wednesday, only the Dow Jones ended the session higher by 0.27%.

Japan's economy grew more than initially thought in the first quarter (Q1). Final estimates show the Japanese economy expanded 0.7% quarter-on-quarter (QoQ), after a preliminary reading of 0.4% and economists' forecast for a 0.5% increase. On an annualised basis, GDP rose 2.7%, up from an estimated 1.6%.

This upward revision was mainly driven by domestic demand, which contributed 1% percentage point to the revised growth. Capital spending rose 1.4%, upgraded from 0.9%.

In Australia, the trade surplus narrowed in April to A$11.2 billion, below the market forecast of A$14Bln. It was the smallest trade surplus since January, dragged down by a fall in exports. Shipments shrank 5% from the previous month to a nine-month low of A$56Bln. Total exports to China, Australia's largest trade partner, fell 15.4% from a month earlier.

Central banks

Following the Reserve Bank of Australia's (RBA) surprise hike on Tuesday, Reuters released a snap poll, revealing that economists have also revised their expectations. A large majority of them, 20 out of 26, now think the RBA will hike its key interest rate once more by the end of September to 4.35%. Nearly two-thirds, 16 of 26, however expect the RBA to hold fire at its next meeting on July 4.

And after the RBA on Tuesday, the Bank of Canada (BoC) surprised the markets on Wednesday with an increase of its overnight rate to 4.75%, its highest level since May 2001, sending the Canadian dollar to a one-month high against the greenback.

Since January, the central bank had been on hold to assess the impact of previous hikes. The BoC took the opportunity to raise interest rates sooner rather than later, after the inflation uptick in April. Canada's economy has been relatively resilient so far this year. GDP growth for the first three months hit 0.8% QoQ, the unemployment rate has been stuck at a 49-year low for the past five months.

In its statement, the Bank of Canada said that "monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2% target." Markets and analysts immediately forecast yet another 25 basis point increase next month.

The Federal Reserve (Fed) is the next major central bank to decide on its rates. The two-day meeting will be held next week on Tuesday and Wednesday. For now, Fed Funds implied rates show a 33% chance of a 25 basis point hike, up from 22% yesterday.

Equities

On the UK equity market, Crest Nicholson warned of a further slowdown in the housing market. The British housebuilder posted a slump in half-year profit down to £20.9 million, from £52.5Mln a year ago. Crest Nicholson says demand is dampened by higher mortgage rates and broader economic worries.

Mitie posted a record full year revenue of £4.05 billion. Profit before tax more than doubled to £106Mln.

Commodities

On the commodity markets, US crude oil stockpiles fell unexpectedly last week. EIA data showed crude inventories were down by 450,000 barrels. Analysts in a Reuters poll had expected a one million barrel rise.

Gasoline and diesel stocks rose during the period. Gasoline stocks rose by 2.75 million barrels in the week, distillate stockpiles rose by 5 million. This was due to an increase in the refinery utilisation rate, up 2.7 percentage points in the week to a staggering 95.8%, its highest level since August 2019.

London robusta is at 15-year high, on expected tight supplies from Brazil. Yesterday the US department of Agriculture forecast a 6% increase in coffee production in Brazil, but the detail showed that the country is likely to increase its arabica production by 12%, while the yield of robusta beans is seen down by about 5%.

 

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Charting the Markets: 08 June

Brent crude oil, silver and copper capped by resistance in low volatile trading. EUR/USD range bound while USD/CAD and AUD/CAD remain bearish post BoC rate hike. And levels to watch.

Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Thursday 08 June 2023

 

 

 

 

 

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Early Morning Call: CNH down as China CPI loses ground

It is becoming more and more unlikely that China will meet its government target of average consumer prices at about 3% in 2023.

 Jeremy Naylor | Analyst, London | Publication date: Friday 09 June 2023 09:06

Indices overview

US equity markets ended the session higher, with the S&P 500 entering bull market. APAC indices mostly rose overnight.

It is becoming more and more unlikely that China will meet its government target of average consumer prices at about 3% in 2023. On the contrary, the risk of deflation is a growing concern. China's consumer price index (CPI) rose 0.2% year-on-year (YoY), accelerating from a 0.1% rise in April, but missing the estimate of a 0.3% increase. Food price inflation, a key driver of CPI, slowed to 1.0% year-on-year from 2.4% in the previous month. On a month-on-month (MoM) basis, food prices fell 0.7%.

China's factory gate prices fell at the fastest pace in seven years. May PPI fell for an eighth consecutive month, down 4.6%.

Macroeconomics

The end of the week is very quiet in terms of macroeconomic data. Investors are already focussed on next week, with two big central bank meetings to come.

First is the US rate decision on Wednesday. Markets are pricing in a pause from the Federal Reserve (Fed). Ahead of the Fed decision though, markets will get an update on US inflation. The consumer price index, due on Tuesday, is expected to fall to 4.7% YoY, following a 4.9% rise the previous month. The focus will be on core CPI, forecast to fall to 5.4% YoY, from 5.5% in April.

Since the March headline CPI figure is below core CPI, the market fears the spread between the two indicators could be widening.

On Thursday, the European Central Bank (ECB) is expected to raise its key interest rates by 25 basis points, and again in July before pausing for the rest of the year. This is according to a poll conducted by Reuters which indicated that economists believe inflation across the single currency economies remains sticky.

After 375 basis points (bp) of hikes over the past year, economic activity across the region has slowed, with Europe's biggest economy - Germany - and the eurozone as a whole falling into a winter recession.

EVs

General Motors announced it will adopt Tesla's North American charging plug standard. GM electric vehicle (EV) buyers will now be able to use the Tesla Supercharger network. A similar agreement had earlier been made with Ford which means now that three of the top EV sellers in the North American market have agreed on a standard for charging hardware. It could turn out to be a major win for Tesla, which invested heavily to deploy its fast-charging stations across North America.

This agreement will have significant commercial and public policy implications. The Biden administration wanted to impose a rival "combined charging system". Now the alliance between Tesla, Ford and GM seriously challenges the White House's plans.

 

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Early Morning Call: FX market little changed ahead of busy week for central banks

The European Central Bank (ECB) is expected to raise its key interest rates by 25 basis points, and again in July before pausing for the rest of the year.

 Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Monday 12 June 2023 

Equities overview

Equity markets opened higher on Monday, as volatility index remained near 40-month lows. Indices in Asia-Pacific region also traded higher. In Japan, producer price index fell more than anticipated in May, -0.7% compared to the previous month. Economists were expecting a 0.2% fall.

On an annual basis, the index slowed for a fifth straight month, driven down by falling commodity and energy prices. Three central banks are set to adjust -or not- their policy. Markets are pricing in a pause from the Federal Reserve, after 10 straight meetings in which it has jacked up its key rate by a full 5 percentage points in 14 months. Economists do see this coming meeting as an opportunity to pause to see what degree of a slowdown it's managed with its action so far. Markets are beginning to price in a further possible 25 basis points at the end of July.

European Central Bank

Then on Thursday, the European Central Bank (ECB) is expected to raise its key interest rates by 25 basis points, and again in July before pausing for the rest of the year. This is according to a poll conducted by Reuters which indicated that economists believe inflation across the single currency economies remains sticky. After 375 basis points of hikes over the past year, economic activity across the region has slowed, sending the eurozone into technical recession. As for the Bank of Japan (BoJ) on Friday, it is forecast to maintain its ultra-loose policy in place.

It could also signal the inflation is overshooting its forecast. The so called "core-core CPI", the ex-food and energy reading favoured by the BOJ, jumped to 4.1% year-on-year (YoY) in April, a level not seen since the early eighties.

This would be an appetiser ahead of the banks' economic projections due in July. In Kazuo Ueda's opinion though, inflation overshooting the BOJ's target doesn't necessarily mean rate hike. The BOJ Governor already said he needed to see durable wage growth accompany price rises before considering any move.

Macroeconomic indicators

A few UK macroeconomic indicators could shake the pound in the coming days. Tomorrow, unemployment rate is forecast to rise for as third straight month, to 4%. it would be the highest unemployment rate since December 2021. On Wednesday, GDP is forecast to rise 0.2% in April compared to March, which would be the first increase in three months.

Also on Wednesday, the market awaits Industrial production and trade balance. Oracle , an all-sessions stock on the IG platform, is set to report its 4th quarter (Q4) earnings after market close tonight. Investors are keen to see how Oracle Cloud Infrastructure performed in recent months, as the flexible work model is becoming mainstream. In Q3, Oracle cloud revenue accounted for 51% of its total revenue. In Q4, it is expected to rise to 53%. Another center of interest is Cerner.

The health information tech giant, bought in 2022 for $28.3Bln, contributed $1.5Bln of revenue in the previous quarter. Overall, the street anticipates earnings of $1.58 per share, a 2.6% increase on the same quarter a year ago. Revenue is forecast to rise 16% to $13.74Bln.

Commodities

After a month of heavy declines, the number of Oil and gas rigs in operation remained relatively stable last week, according to Baker Hughes. Total rig count fell by one to 695. This contrasts with the double-digit drops we saw through the whole of May. At the end of April there were 755 producing rigs in the US.

 

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Charting the Markets: 12 June

Indices recover ahead of this week’s key inflation data and central bank meetings. EUR/USD, EUR/JPY and USD/JPY consolidate ahead of central bank meetings. And Gold price edges up, while oil and cotton prices fall.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 12 June 2023 

 

 

 

 

 

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Look Ahead to 13/6/23: Central bank watch; US CPI; Australia data; UK jobless rate; ZEW

Traders await key monetary policy decisions from the Fed, ECB and the BoJ, but there’s plenty of fat to chew on ahead of then: US inflation, UK jobless rate, and German investor morale.

 

Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Monday 12 June 2023 

 

 

 

 

 

 

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Early Morning Call: UK unemployment rate unexpectedly falls in April; wages rise more than expected

UK unemployment rate unexpectedly fell to 3.8% in April. The number of people claiming for unemployment benefits fell by 13,600 in May.

 Jeremy Naylor | Analyst, London | Publication date: Tuesday 13 June 2023 

APAC overview

APAC equity markets rose on Tuesday, following the lead of European and US indices. In Japan, Nikkei 225 rallied to a new 33-year high, helped by SoftBank on the news it may team up on an AI venture with OpenAI. Toyota also rose by nearly 5%.

In Australia, two surveys released overnight reflect the effects of the Reserve Bank of Australia (RBA) tightening policy. Australian consumers are increasingly worried about the consequence high interest rates could have on employment prospects.

Westpac-Melbourne consumer sentiment remained well below 100 in June, at 79.2, suggesting pessimists greatly outnumbered optimists. But what the survey also revealed is the difference in reading before and after the RBA decision last week. Before the 25-basis point hike, confidence survey came in at 89. After the decision it dropped to 72.6. The survey also showed that unemployment expectations rose 6.6%.

The other is National Australia Bank (NAB) business confidence, also showing worries around employment. Australia's business sentiment unexpectedly fell to -4 in May, when the market expected the index to remain at 0. A negative number means that there were more pessimistic opinions that optimistic ones. The survey's measure of sales declined eight points to +14 in May, the employment index fell seven points to +4.

In China, the People's Bank of China (PBoC) lowered a short-term lending rate overnight. The seven-day reverse repo rate was cut by 10 basis points to 1.90%. The cut to the lending rate signals possible easing for longer-term rates. One-year and five-year Loan Prime Rates, used respectively to set consumer loan and mortgage rates, could be lowered by the same margin next Tuesday. They currently point at 3.65% and 4.3%.

UK unemployment

The UK unemployment rate unexpectedly fell to 3.8% in April. The number of people claiming for unemployment benefits fell by 13,600 in May.

At 10am, Germany ZEW economic sentiment is expected to fall to -12.7 in June, from -10.7 in May.

Ahead of the Federal Reserve (Fed) decision, the market is getting ready for the latest US inflation data. The consumer price index (CPI) is expected to fall to 4.1% year-on-year (YoY), following a 4.9% rise the previous month. This would be the weakest CPI growth since March 2021.

But more than headline CPI, the focus will be on core CPI. It is forecast to fall too, but not as much, to 5.3% YoY, from 5.5% in April. Since March, the headline CPI figure points below the core CPI. Energy prices have substantially fallen, but broad-based inflation seems to be stickier than thought.

Equites overview

Oracle shares stormed to a record high last night after the company smashed earnings expectations. Adjusted earnings came in at $1.67 per share. Revenue rose by a whopping 17% to $13.84 billion. The company's top source of revenue, cloud services and license support, jumped 23% to $9.37Bln. Revenue from cloud infrastructure climbed an eye-watering 76% to $1.4Bln.

 

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Charting the Markets: 13 June

Dow, Nasdaq 100 and Nikkei 225 all looking strong. EUR/USD, EUR/GBP and GBP/USD rise amid lower German inflation and UK unemployment. And Brent crude oil and silver stabilise while copper attacks resistance.

Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 13 June 2023

 

 

 

 

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Early Morning Call: global indices rise ahead of Fed decision

Equity markets continued to rise around the globe in Tuesday’s session after slowing US inflation supported the market’s expectations of a Fed pause at 5%–5.25%.

 Jeremy Naylor | Analyst, London | Publication date: Wednesday 14 June 2023 

Equites overview

Equity markets continued to rise around the globe in Tuesday’s session after slowing US inflation supported the market’s expectations of a Federal Reserve Decision (Fed) pause at 5%–5.25%. US consumer price index decelerated more than expected. Headline the consumer price index (CPI) rose by 4% in May year-over-year (YoY), the smallest increase in more than two years. It is undeniable that the effects of the Fed rate hikes are felt more and more, justifying a pause. However, core CPI remains sticky. It came in line with expectations, up 5.3% YoY, 1.3 percentage points higher than headline CPI, which suggests that the tightening cycle is not just over yet.

Currencies overview

There's a Bank of Japan (BoJ) rate decision on Friday, but it's not likely to yield a move up in rates despite a rise in inflation, according to economists who want to see a rise in wages first. The Fed is expected to pause tonight, but the European Central Bank (ECB) is forecast to raise rates on Thursday by 25 basis points, and another hike is forecast at the bank's July meeting. This means that the JPY is likely to set a new 15-year low against the EUR. Against the GBP, the JPY has been falling pretty much constantly this year, and Tuesday's strong UK job report gave more room to the Bank of England (BOE) to keep its tightening cycle going.

The British economy expanded 0.2% month-over-month (MoM) in April, rebounding from a 0.3% drop in March and in line with expectations. The services sector was the main contributor to the growth, led by wholesale and retail trade and the repair of motor vehicles and motorcycles, while manufacturing and construction shrank. Industrial production fell by 1.9% in April YoY, marginally missing expectations. Construction output was up 3.6% YoY.

Shell dividend

Shell announces it will increase its dividend by 15%, starting in the second quarter of the year. Shell CEO Wael Sawan, appointed in January, is working at regaining investor confidence and announces a $5 billion share buyback program to start in the second half of 2023, up from $4 billion in recent quarters. Annual operating costs are also to be reduced by $2–3 billion by the end of 2025.

 

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Charting the Markets: 14 June

Indices stall ahead of US Fed rate announcement. EUR/USD and AUD/USD push higher while USD/JPY consolidates. And WTI, gold bounce off support while natural gas continues to rise.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 14 June 2023 

 

 

 

 

 

 

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Early Morning Call: USD strengthens after Powell hints at another 50bp hike ahead of ECB rates

The Fed Chairman signaled that borrowing costs may still need to rise by as much as half a percentage point by the end of this year.

 Jeremy Naylor | Analyst, London | Publication date: Thursday 15 June 2023 

Fed rate decision

The USD edged higher on Wednesday after the Federal Reserve's (Fed) rate decision. As widely expected, the US Federal Reserve kept its rate target at 5%–5.25%, the first pause after 10 consecutive hikes that took rates 500 basis points higher. But the fight against inflation is not over yet. For Jerome Powell, US growth and the job market are holding up better than expected, giving room for the Fed to continue its campaign to limit price rises.

The Fed Chairman signaled that borrowing costs may still need to rise by as much as half a percentage point by the end of this year. An opinion shared with eight other officials, while three others feel borrowing costs need to go even higher. As for the market, the Chicago Mercantile Exchange (CME) Fed watch tool points to a 72% chance of a 25 basis-point hike next month, but contracts tied to the Fed's policy rate see the central bank delivering only one quarter-percentage-point increase by the end of the year.

The decision was accompanied by economic projections. The Federal Open Market Committee (FOMC) sees the unemployment rate rising by the end of 2023 to 4.1% from the current 3.7%, lower than the 4.6% jobless rate officials projected in March. The 2023 economic growth projection was raised to 1% from 0.4% in March. The Core Personal Consumption Expenditure Price Index (PCE) is seen dropping from the current 4.7% to 3.9% by the end of 2023. That is higher than the 3.6% projected in March.

The European Central Bank

This Thursday, the European Central Bank (ECB) is in the limelight. Christine Lagarde is expected to announce a 25-basis-point rate rise before another one in July. Then the ECB is believed to go into "wait-and-see mode" for the rest of the year. This is according to a poll conducted by Reuters, which indicated that economists believe inflation across the single currency economies remains elevated. After 375 basis points of hikes over the past year, economic activity across the region has slowed, sending the eurozone into a technical recession.

Macroeconomics

A set of macroeconomic indicators released this morning reinforced the case that more stimulus is needed in China, the world's second-largest economy. China's industrial output rose 3.5% in May from a year earlier, missing expectations and slower than the 5.6% expansion recorded in April. Ditto for retail sales, up 12.7%, missing forecasts of 13.6% growth and slowing from April's 18.4%. Investment in the property sector declined, accentuated in the first five months of the year, down 7.2%. Private fixed-asset investment shrank by 0.1% in the period. And if the jobless rate remained at 5.2% in May, youth unemployment would jump to a record 20.8%. Two days after cutting two key short-term policy rates, China's central bank cut the borrowing cost of its medium-term policy loans by 10 basis points to 2.65%.

The Reserve Bank of New Zealand

The New Zealand economy has slipped into a technical recession. Gross domestic product (GDP) matched analysts' expectations of a 0.1% contraction in the March quarter but was well below the Reserve Bank of New Zealand's forecast of 0.3% growth. Furthermore, fourth-quarter GDP was revised to a contraction of 0.7% from a decline of 0.6%. This cuts the risk of more rate hikes but creates a new headwind for the government's re-election hopes.

The Australian dollar overview

The AUD is one of the most enduring bull stories today. In Australia, the job market was stronger than thought in May. The unemployment rate unexpectedly fell to 3.6% when economists anticipated it to remain at 3.7%. Full-time employment rebounded by 61,700 from April, and part-time employment also rose. Last week, the Reserve Bank of Australia (RBA) unexpectedly raised interest rates to 4.1% and signaled that further tightening could still be required to tame inflation. The strength of the job report supports the RBA's case, as a tight labor market will contribute to stronger wage growth.

 

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Charting the Markets: 15 June

Brent crude oil, silver and copper drop on hawkish Fed. EUR/USD, GBP/USD and USD/CAD amid hawkish Fed forecast. And Dow and CAC40 drop back from weekly highs but Nasdaq 100 holds up well.

Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Thursday 15 June 2023

 

 

 

 

 

 

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Early Morning Call: anticipated actions of the BoE after the UK CPI surpasses expectations

UK consumer prices continue to put pressure on the Bank of England.

 Jeremy Naylor | Analyst, London | Publication date: Wednesday 21 June 2023 

UK consumer price index and the BoE

UK consumer prices continue to put pressure on the Bank of England (BoE). The headline consumer price index rose 8.7% in May year-over-year (YoY), higher than the 8.4% expected. This arrests the downward trend in headline UK inflation figures, which had been falling after a peak of 11.1% last year. The Office for National Statistics says that rising prices for "air travel, recreational, and cultural goods" helped keep inflation high. The core consumer price index (CPI) came in at 7.1% YoY, the highest since March 1992. The Bank of England is due to decide on its rates on Thursday.

Central banks

The Bank of Japan (BoJ) must ensure its policy "does not fall behind the curve." This was the comment of one of the nine board members when discussing the BoJ decision last April. BoJ policymakers agreed to keep ultra-low interest rates given ongoing uncertainties over the global economies, but it was noted that wages and inflation were already showing signs of accelerating.

Yesterday, the Swedish krona slumped to a record low against the euro on a combination of global risk aversion and expectations that the nation's central bank is close to wrapping up its year-long interest rate hiking cycle. Bloomberg says the jury is out among analysts on whether further losses are possible, with both RBC Capital Markets and Nomura International seeing the year ending around current levels.

Equities market

On the equity market, Berkeley Group posted a nearly 10% jump in its annual profit. The British high-end homebuilder reported a pre-tax profit of £604 million, compared with £551.5 million reported a year earlier. The homebuilder had forecast a pre-tax profit of about 600 million pounds.

FedEx

FedEx saw shares fall 2.5% in extended trade last night. It was among the businesses that benefited from the Covid lockdown, as consumers had to rely heavily on online shopping. Since then, the picture has been very different for the sector. Consumers have returned to stores, and now shippers are dealing with high costs as the global economic slowdown weighs on demand even further. To protect its margins, FedEx had no other option but to slash costs.

In the last fiscal year, FedEx slashed 29,000 jobs, retired 18 planes, and closed offices. It also reduced its Sunday deliveries. All this will cut $4 billion in permanent costs by the end of the 2025 financial year.

This had a mixed effect on earnings and sales. Earnings came in better than expected at $4.94 per share, but revenue was lower at $21.90 billion. In the new fiscal year, FedEx intends to carry on with cost-cutting and now plans to ground 29 more planes. The group forecasts flat to low-single-digit revenue growth versus the prior year. That would put the range of adjusted earnings, excluding items, at $16.50 to $18.50 per share, compared to analysts' estimates of $18.31.

Tesla

Tesla is joining the growing list of companies that wants to invest in India. Elon Musk met with Indian Prime Minister Narendra Modi Yesterday in New York. "I am confident that Tesla will be in India and will do so as soon as humanly possible," Musk said when asked by reporters about Tesla's plan to invest in India, adding he intended to visit the country next year.

"India has more promise than any large country in the world. He (Prime Minister Narendra Modi) really cares about India because he's pushing us to make significant investments in India, which is something we intend to do. We are just trying to figure out the right timing," Musk said.

 

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Charting the Markets: 21 June

Indices stay under pressure as UK inflation remains sticky. GBP/USD and EUR/GBP bolstered by UK inflation print while USD/JPY rises ahead of Powell testimony.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 21 June 2023

And WTI stalls, gold slips on stronger greenback while wheat prices surge.

 

 

 

 

 

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Early Morning Call: FTSE 100 rebounds after a week of declines; AB Foods and Aston Martin in focus

Europe's equity markets opened higher on Monday after a week of heavy losses.

 Jeremy Naylor | Analyst, London | Publication date: Monday 26 June 2023 09:29

Europe's equity markets

Europe's equity markets opened higher on Monday after a week of heavy losses. The German DAX lost 3%, posting its worst week in three and a half months. This Monday, the Germany index could react to the Information and Forschung (Ifo) business climate survey.

It is expected to fall to 90.7 in June from 91.7 the previous month, a second straight month of declines. Like in May, the current situation and expectation components are forecast to fall. More hurdles are lined up this week: the Gfk consumer confidence on Wednesday, June consumer price index on Thursday, and retail sales on Friday.

AB Foods

Associated British Foods raises its full-year profit outlook. The group reported group sales up 16% to £4.73 billion in the third quarter. Primark sales rose 13% to just under £2 billion, with like-for-like sales growth of 7%, supported by higher average selling prices. Associated British (AB) Foods now expects adjusted operating profit, its key profit measure, to be "moderately ahead" of the £1.43 billion made in 2021/22.

Goldman Sachs

Goldman Sachs announced after the close on Friday that it's just started cutting managing directors around the world as it cuts headcount amid a slump in Mergers and acquisitions (M&A) and from companies wanting to raise money.

Bloomberg reported that Goldman Sachs will shed 125 managing director roles. Of the near 40,000 employees, Goldman doesn't report how many managing directors it has, although in 2021 it promoted 643 to MD roles; these roles also carry a partnership qualification.

Goldman Sachs shares fell to a three-month low on Friday after CNBC reported the bank is likely to take a large writedown for its acquisition of fintech lender GreenSky Inc. Goldman Sachs has been running a sale process for GreenSky, acquired in 2021 for $2.2 billion, and may take a writedown on the $500 million of goodwill.

Banking sector overview

Goldman Sachs is not the only bank to cut jobs. JPMorgan Chase & Co. announced that it will end around 40 investment banking positions as part of its effort to cope with the global slowdown. Recently, Citigroup started cutting hundreds of jobs across the company this year and is planning to shed 30 investment banking jobs and 20 more at its corporate bank in London.

The banking sector will be the centre of attention over the next few weeks. On Wednesday, the Federal Reserve (Fed) is due to release the results of its annual bank health checks after market close. The results dictate how much capital banks need to be healthy and how much they can return to shareholders via share buybacks and dividends.

Banks aren't allowed to announce their plans for dividends and buybacks until typically a few days after the stress test results, but we can expect them at the latest when they publish their quarterly earnings in mid-July.

US oil

On the commodity market, Friday's Baker Hughes rig count saw six oil rigs taken offline as more oil field owners judged the market just wasn't priced high enough to pump. US oil rigs reached 546 this week, their lowest since April 2022. The number of gas rigs on production rose by six, keeping the total rig count steady at 687.

 

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Charting the Markets: 26 June

FTSE 100, DAX and S&P 500 try to find support. : EUR/USD mixed, GBP/USD recovers while USD/JPY trades near 7-month high. And Gold edges higher but oil and coffee prices remain under pressure.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 26 June 2023

 

 

 

 

 

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Early Morning Call: Supermarket price inflation slows in June, food inflation still up YoY

Britain is facing stubbornly high inflation that will take longer to fall.

 Jeremy Naylor | Analyst, London | Publication date: Tuesday 27 June 2023 

US equity markets

US equity markets fell on Monday, led by technology stocks. Amazon, Nvidia, and Meta fell in excess of 3%. Tesla was among the worst performers after Goldman Sachs downgraded the stock to neutral.

Global consulting firm AlixPartners released its 2023 Global automotive outlook. The auto industry must "radically" change if it wants to compete with Chinese players, according to the report, Chinese brands are "poised to become the shaping force of the global automotive industry in the coming years."

UK inflation

Last week, the Bank of England (BOE) surprised investors by raising interest rates by 50 basis points, taking its main rate to 5%. The argument was simple: Britain is facing stubbornly high inflation that will take longer to fall. Since then, Reuters has run a poll and the verdict is that a majority of economists now think the Bank of England will deliver a further 50 basis points during the next quarter, in the form of two hikes of 25 basis points each at its August and September meetings. In a previous poll made only two weeks ago, policymakers were expected to draw a halt at 5.00% next quarter.

Canadian consumer price index

In Canada, the consumer price index (CPI) is expected to rise 3.4% in May year-over-year (YoY) after a 4.4% increase in April. Core CPI is also forecast to decelerate to 3.9%, which is higher than the headline figure, signalling that broader inflation is taking more time to cool down. Which is a point that really preoccupies the Bank of Canada.

At its last meeting, Tiff Macklem's team unexpectedly raised the target for its overnight rate by 25 basis points to 4.75%. Policymakers were then concerned that inflation could get stuck materially above the 2% target and said they would continue to assess the dynamics of core inflation.

Cruise Line

Will Cruise Line carnival's shares recover on the London stock exchange on Tuesday? Cruise Line operators suffered a loss of value on Monday after Carnival forecast third-quarter profit largely below estimates. These disappointing expectations are not due to a drop in demand but to stickier-than-expected inflation. Port expenses, freight, crew travel, and elevated labour costs have all pushed the company to raise its cost outlook. Norwegian Cruise Line's stock fell as much as 6.4%. Carnival's US stock ended well off the lows, and Royal Caribbean Cruises also recovered.

Walgreens Boots Alliance

Walgreens Boots Alliance is due to report its quarterly earnings before the market opens. The Street expects earnings of $1.07 per share on revenue of $34.2 billion. Investors are waiting for an update on the future of Boots. It all started three months ago, when it was reported that investors and board members were pushing for a breakup of the global pharmacy business to refocus on the group's domestic market. Boots have had a number of owners through the years.

It was established in 1849 and has been part of Walgreens since 2012. This would be the second time Walgreens has tried to sell the UK chain. It tried 18 months ago, with a price tag of $7 billion, but the sale was called off in June last year after failing to find a suitable buyer.

 

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Early Morning Call: AUD falls are inflation slows; RBA unlikely to hike

The Australian dollar has dropped nearly 4% against the US dollar.

 Jeremy Naylor | Analyst, London | Publication date: Wednesday 28 June 2023 

The Australian dollar

Since hitting a four-month high a couple of weeks ago, the AUD has dropped nearly 4% against the USD. Australia's monthly consumer price index (CPI) indicator, another measure of inflation in the country, slowed to a 13-month low. It came in at 5.6% for the first five months of the year compared to the same period a year ago, lower than forecast and down from 6.8% in April.

AUD/USD

AUD/USD dropped to a three-week low as the odds of a Reserve Bank of Australia (RBA) rate hike have scaled back slightly after the data release. Markets now see a 30% probability of a 25 basis-point hike in July and estimate that rates are more likely to peak at 4.35% rather than 4.6%.

China overview

In China, profits earned by industrial firms dropped by 18.8% in the first five months of 2023 compared to a year earlier. Profits shrank at both state-owned firms by 17.7% and in the private sector by 21.3%.

Credit Suisse

Bloomberg reported yesterday, after the European market closed, that UBS is looking to cut more than half of Credit Suisse's workforce next month. Eventually, the Swiss bank intends to reduce the total combined headcount by about 30%, or 35,000 people. Credit Suisse currently has about 45,000 employees. This report follows comments from UBS CEO Sergio Ermotti last month. He warned of painful decisions about job cuts without giving details about the number of potential layoffs.

Micron Technology

Micron Technology is set to report on Wednesday after the bell. Wall Street expects the Chipmaker to lose $1.59 per share on revenue of $3.67 billion. This compares to the year-ago quarter, when earnings came to $2.59 per share on revenue of $8.64 billion. Since the beginning of the year, Micron shares have been rising, following a difficult 2022 where the stock lost half of its value. Micron benefited from an improved outlook for the chip sector.

Oil overview

Oil prices fell more than 2% on Tuesday. Investors are concerned that central banks may not be done with interest rate hikes. Yesterday, European Central Bank (ECB) president Christine Lagarde confirmed that "unless there is a substantial change in the inflation outlook," the central bank will "continue to raise rates in July" and thereafter "as far as needed."

In the US, consumer confidence rose to an 18-month high this month, suggesting the Federal Reserve will likely have to continue raising interest rates to slow demand. Last week, Jerome Powell said the market should expect two more rate hikes by year's end. Today, The Fed chairman is due to talk at the ECB forum in Sintra. The application programming interface (API) inventory data had no impact whatsoever on oil prices. Crude stocks fell by about 2.4 million barrels. Gasoline inventories fell by about 2.85 million barrels. Distillate stocks rose by about 800,000 barrels.

Sugar overview

For the past couple of weeks, sugar prices have dropped by about 10%, reacting to favourable weather in Brazil, which paves the way for a quicker and larger harvest this season. Brazil's sugar output was up 18% in the first half of June, while sugarcane yields rose 26%, signalling a possibly larger crop.

A relief for the market that saw sugar prices rally to an 11-year high in April. At that point, traders were concerned about tighter global supplies. At the end of April, India signalled a drop in production, and India's Food Secretary warned that sugar exports would be restricted.

 

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Charting the Markets: 28 June

IGTV’s Jeremy Naylor is joined by Serge Berger from TheSteadyTrader.com who shows us how things have worked against us in the first half and how we should be positioned going into the end of period.

Jeremy Naylor | Analyst, London | Publication date: Wednesday 28 June 2023 

Then, as he points out, look for a potential uptick in volatility when the expiration of futures and options fall shortly afterwards. We look at the S&P 500 and Brent, and ask the question how long can we stay long USD/JPY?

 

 

 

 

 

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Nationwide house price index falls 3.5% in June, the most since 2009

Compared with June last year, the average house price was down 3.5% after a 3.4% annual fall in May, the most since 2009.

 Jeremy Naylor | Analyst, London | Publication date: Friday 30 June 2023 

Indices overview

The S&P 500 and Nasdaq are about to record a fourth consecutive month of gains. In June alone the S&P 500 has rose over 5%.

Meanwhile it was a mixed session overnight in Asia. The Nikkei underperformed the region, but posts monthly of 7%, as it hit 33-year high on June 16.

The Japanese currency is about to post a third straight week of losses against the dollar and briefly passed the ¥145 mark on Friday. It was at that level that, in September 2022, the Japanese government intervened to support its currency. It intervened again a month later when USD/JPY rose to ¥151.

China's factory activity declined for a third straight month in June. The official NBS manufacturing PMI rose to 49, from 48.8 in May, crucially staying below the 50-point mark that separates expansion from contraction. Services sector activity for June recorded its weakest reading since China abandoned its strict Covid curbs late last year but remained well above 50. The readings pushed the yuan to a new eight-month low.

UK GDP

As expected, UK gross domestic product (GDP) final reading for the first quarter (Q1) shows a 0.1% rise quarter-on-quarter (QoQ).

British house prices rose by 0.1% in June from May, according to Nationwide. Compared with June last year, the average house price was down 3.5% after a 3.4% annual fall in May, the most since 2009. The drop was expected as the Bank of England (BoE) puts all its efforts to curb inflation rate among the world's big rich economies.

Much of the impact of higher borrowing costs on mortgage-holders has yet to hit the housing market. Industry body UK Finance estimates 800,000 fixed-rate mortgages will need to be refinanced in the second half of this year, and a further 1.6 million in 2024. There is a total of around nine million residential mortgages in the UK.

Macroeconomics

Among the macroeconomic indicators expected today, the market will be particularly focussed on one. Core PCE price index is expected to rise by 0.4% in May compared to April. Year-on-year (YoY), the index is forecast at 4.7% unchanged on last month. Core PCE is the Fed's favoured indicators when it comes to look at price evolution.

Equities

Nike shares dropped 4% in extended hours after it forecast first quarter revenue below Wall Street estimates. Investors were worried that sales in China would disappoint given the country's lacklustre economic recovery. This wasn't the case at all. Greater China was in fact a bright spot in Nike's quarterly report. Sales jumped 16% after three consecutive quarters of declines.

It was North America's performance that weighed on earnings and sales, where still-high inflation has led to consumers buying essential goods and reducing discretionary spending. Sales rose 5% in the region in the fourth quarter, the slowest in four quarters.

Overall, it was a tepid report. Nike's fourth quarter revenue rose to $12.8Bln, marginally beating estimates of $12.58Bln. Earnings came in at 66 cents per share, missing estimates by two cents.

There was nothing exciting it terms of forecasts either. As Nike's CEO said, "the environment is going to continue to be promotional", as the group is still struggling to get rid of excess inventories.

Nike's gross margin fell 140 basis points to 43.6% in Q4. Nike expects revenue to be between flat to up low-single digit in Q1, compared with analysts' average expectation of 5.8% rise.

 

 

 

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Charting the Markets: 30 June

FTSE 100, DAX 40 and S&P 500 try to end month and quarter on a high. EUR/USD slips while GBP/USD recovers and USD/JPY rises despite risk of BoJ intervention. And gold and corn prices decline, but WTI recovers to $70.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 30 June 2023

 

 

 

 

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Early Morning Call: Equity markets start H2 in positive territory

Apple closed Friday's session with a $3 trillion market capitalization for the first time. But can it remain at this level in today's session?

 Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Monday 03 July 2023 09:31

Japan overview

In Japan, business sentiment improved in the second quarter. The Bank of Japan (BOJ) Tankan large manufacturers index rose 5 in June, bouncing back from the two-year low of 1 recorded three months ago. This latest data confirms economists' opinion that the world's third-largest economy is on track for a moderate recovery.

China overview

In China, factory activity in the private sector managed to keep its head above water in June. The Caixin Manufacturing purchasing managers' index (PMI) fell to 50.5 in June 2023 from 50.9 in the prior month but was above the market consensus of 50.2. Crucially, the index remains above 50. A print below 50, like the official NBS PMI last week, suggests the sector is in contraction territory.

US markets

Over in the US, the market awaits the institute for supply management (ISM) manufacturing's purchasing managers' index (PMI) for June. The index is forecast to be 47, up from 46.9 in May. This would be the eighth month of contraction for the manufacturing sector in the country.

Tesla

Tesla reported on Sunday a record number of vehicles delivered in the second quarter. Tesla delivered 466,140 vehicles in the April–June period, up 10% on the previous quarter and 83% higher than a year earlier. Since the start of 2023, Tesla has taken the risk of cutting its prices to make its cars more competitive, especially on the Chinese market, its second-largest market after North America.

Apple

Another stock to keep an eye on at 9 a.m. at the opening of the IG all-session market is Apple. The stock closed Friday's session with a $3 trillion market capitalization for the first time. But can it remain at this level in today's session? The Financial Times reports that Apple has been forced to make major cuts to production forecasts for its Vision Pro headset. According to the newspaper, the complexity of the design of the mixed-reality device makes its production more difficult than anticipated.

US banks

After the release of the Federal Reserve (Fed) stress test results a few days ago, US banks have announced their dividend and share buyback plans. Goldman Sachs raises its quarterly dividend to $2.75 from $2.50. JPMorgan, Citigroup, Wells Fargo & Co and Morgan Stanley also raise their dividends; the latter also renews its $20 billion share buyback programme.

 

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Charting the Markets: 03 July

FTSE 100, DAX 40 and S&P 500 begin new quarter on positive footing. EUR/USD, GBP/USD slip while USD/JPY rises despite risk of BoJ intervention. Gold and oil under pressure, while sugar prices look to rebound.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 03 July 2023

 

 

 

 

 

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Look Ahead 4/7/23: RBA; German trade balance; Sainsbury’s trading

Australia’s central bank is likely to raise rates to 4.35%, but it may not be a done deal. German trade balance figures come as economists say Brexit has been an ‘economic disaster’ for trade ties between the UK and Germany.

Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Monday 03 July 2023

 

 

 

 

 

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Early Morning Call: APAC indices fall as China's service activity slows

The Hang Seng was by far the worst performer in APAC on Wednesday as traders digested the latest service activity data in China.

 Jeremy Naylor | Analyst, London | Publication date: Wednesday 05 July 2023 

The Hang Seng

The Hang Seng was by far the worst performer in the Asia Pacific (APAC) region on Wednesday as traders digested the latest service activity data in China. The Caixin services purchasing managers' index (PMI) fell to 53.9 in June from 57.1 in May, the lowest reading since January. The data broadly tracked the government's official PMI released last week.

On Monday, the Caixin manufacturing PMI managed to keep its head above the water in June, falling to 50.5. This means that the composite PMI, which compiles manufacturing and services activity, is down to 52.5, making it a sixth straight month of expansion.

Macroeconomic indicators

The market awaits a few macroeconomic indicators today at 10AM, the producer price index in the eurozone is expected to be down -13% in May year-on-year (YoY), and later in the afternoon, US factory orders are forecast to rise 0.8% in May month-over-month (MoM). The Federal Reserve (Fed) will release the minutes of its last meeting, at which it left the Federal Funds Rate on hold.

The pause in rates followed a run of consecutive rate hikes at every meeting since March 2022. The updated economic projections suggest rates may reach 5.6% by year's end, thus suggesting two more increases.

The Federal Reserve

Fed Chair Jerome Powell recently reinforced the view that the board is leaning towards two rate hikes and hasn't ruled out consecutive-meeting rate increases. The latest economic projections from the Fed indicate that the fed funds rate is expected to gradually fall to 4.6% in 2024. Furthermore, the minutes may reveal the board's intention to keep interest rates higher for an extended period, with a rate hike possibly delayed until the end of the first quarter or second quarter of 2024 if inflation falls towards the desired trajectory.

AO World

AO World said profit recovered in its 2022–23 year as it benefited from a plan to reduce costs and improve margins. The British online electricals group's financial year earnings before interest, taxes, depreciation, and amortization (FY EBITDA) reached 45 million pounds, in line with guidance and up from 23 million pounds in 2021–22. Revenue fell 17% to 1.14 billion pounds.

Oil overview

Oil prices remained range-bound after two of the world's largest oil producers said earlier this week, they would cut supplies further to support prices. Saudi Arabia's voluntary oil output cut of one million barrels per day will be extended for another month to include August, and Russia will cut oil exports by 500,000 barrels per day in August.

Soft commodities

On the soft commodities market, soybeans rose over 5% last Friday, while corn prices have been falling. At the end of last week, the US Department of Agriculture announced that farmers in Illinois, Minnesota, and North Dakota had shifted from soybeans to corn. Analysts are now concerned that soybean supplies will be tight and expect the soybean and soybean oil markets to remain bullish.

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    • Saga is positioning itself as a "layer-1 to launch layer-1s" - a mainnet platform that is explicitly designed to empower developers and enable the next 1,000 chains in gaming and entertainment. The core idea is to make it easier for developers to build infinitely scalable decentralized applications (dApps) through Saga's "chainlet" functionality. Essentially, they are customizable Layer 1 blockchains that can be deployed and operated within the Saga network. These chainlets share the same validators and security model as the Saga mainnet, providing developers with a robust and interoperable infrastructure to build on. The ability to rapidly deploy customized, scalable chains is a game-changer for blockchain gaming, and I can see Saga attracting a lot of attention from leading studios and indie developers alike. With the Bitget listing, SAGA tokens are now tradable on a major global exchange. This presents a fantastic opportunity for the project to increase its visibility and accessibility to a wider audience of investors and enthusiasts. Bitget's deep liquidity and advanced trading features should make it easier for both institutional and retail players to gain exposure to Saga.
    • I have not been a fan of either of exchanges and wallets native tokens but would wanna explore it now. I took interest from the current hype around BNB, OKB and BGB. These tokens particularly BNB and BGB has shown strength which is obviously due to increase in demand to take part in the most of the launchpool. BNB rose almost 80% in the past 1 year, BGB was on the spotlight with about 190% in a year. OKB may not be left out due to it's potential but has made any significant movement recently. Wallet tokens on the hand have also been doing well but may not be compared to Centralized exchanges imho; I have also monitored few wallet particularly trust wallet and C98 wallet. My best guess is we could be seeing the wallet tokens making impressive price action as we approach post halving due to increase in transactions and I wonder if any one here is considering the prospect BWB token for Bitget wallet. Launching pretty soon and airdrop participation in play. I would appreciate your speculative opinion on it potentials.
    • In the realm of cryptocurrency exchanges, playing by the rules isn’t just a suggestion—it’s a must for staying in the game. Most major centralized exchanges (CEXs) strive to adhere to these regulations, implementing measures to prevent money laundering and illicit activities. However, a recent controversy has emerged with BingX, a top CEX, defying US sanctions by allowing Iranian users full access to its platform. BingX facilitates Iranian Rial trading, directly violating US sanctions. They allow Iranian users to trade cryptocurrencies without KYC verification. This, along with offering peer-to-peer (P2P) transactions using Iranian fiat currency, further raises red flags. This incident is reminiscent of the past troubles faced by giants like Binance, who were caught facilitating transactions for sanctioned individuals, resulting in a $4.5 billion plea deal with US authorities in 2023. The question remains: will this defiance by BingX lead to its downfall? Regulatory bodies in the US, like the SEC or DOJ, might take action.However, the severity of the situation raises questions about the long-term viability of the exchange and whether it may face the prospect of closure or severe penalties for its actions. As governments grapple with the complexities of digital assets, CEXs that prioritize expansion over compliance will likely face increasing scrutiny and potential consequences.  
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