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With the Federal Reserve Funds rate at its highest since 2007, a 'hawkish pause' is widely anticipated this week. Yet, several key developments suggest the market may be underpricing the risk of a June hike. Source: Bloomberg Federal Reserve Federal Open Market Committee Federal Reserve Board of Governors Federal funds rate Monetary policy Inflation Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 13 June 2023 In its last meeting in May, the FOMC raised the Fed Funds rate by 25bps to a range of 5-5.25% - its highest level since September 2007. While a tightening bias was retained, the Committee noted readiness to adjust the monetary policy if necessary. The minutes from the meeting confirmed the door was open for a pause, highlighting that members were divided about whether additional rate hikes would be necessary. As stated, “Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary.” Federal funds effective rate chart Source: Board of Governors of the Federal Reserve System (US) What can we expect this Thursday? On Thursday, the Fed is widely expected to deliver a hawkish pause before another 25bp rate hike in July. This is based on comments from six of the eleven FOMC voters who have spoken in favour of pause, including the key leadership duo of Fed Chair Powell and Vice Chair Jefferson. Target rate probabilities for the 14 June 2023 meeting Source: CME Group The median dot is expected to show one additional hike to a peak of 5.25%-5.50%. Source: CME Group Why wait? Since the May meeting, several notable developments have occurred, which beg the question, why wait? The debt ceiling was raised before the X-date avoiding costly disruptions The impact of the banking crisis has been less meaningful than feared Core PCE increased by 4.4% YoY from 4.2% previously Non-farm payrolls increased by a robust 339k in May Two early pausers, the RBA and the BoC, hiked rates last week Financial Conditions continue to ease. As such, we think the market is under-pricing the risk of a hike in June and then a pause in July. More so given the possibility of a hotter-than-expected inflation print this evening.

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. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

Brent crude oil and silver stabilise while copper attacks resistance Outlook on Brent crude oil, silver and copper as investors mull over economic and monetary backdrop. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 13 June 2023 Brent crude oil drops towards May lows The price of Brent crude oil fell by over 7.5% from its 5 June high over potential US recession concerns, lacklustre Chinese demand and rising Russian supply which outweighs Saudi Arabia’s planned output cuts. The March-to-June support line at $71.78 has been retested but has so far held with even a minor recovery rally being seen on Tuesday. Below Monday’s $71.58 low lie the early and late May lows at $71.51 to $71.40, a fall through which would target the March low at $70.09. Resistance can now be found between the mid-May low and last Thursday’s low at $73.37 to $73.56. Source: ProRealTime Silver range trades in low volatility The silver price remains below its two-month downtrend line and 55-day simple moving average (SMA) at $24.40 to $24.42 ahead of today’s key US inflation data release. These levels lie marginally below the $24.50 to $24.52 resistance area which consists of the late April low and current June high. Minor support can be spotted at the early June high at $24.02 and also at Monday’s $23.88 low. Source: ProRealTime Copper drives into technical resistance For the past week or so, the price of copper has been capped by the 200-day simple moving average (SMA) at $8,385 per ton as investors grapple with the global economic outlook in an environment of ongoing monetary tightening. On Tuesday the 200-day SMA is being retested, though, above which last week’s high can be seen at $8,450. If exceeded, the 55-day simple moving average (SMA) at $8,557 could be back in the picture. While last Thursday’s low at $8,247 underpins, further upside remains in store. Source: ProRealTime

Dow, Nasdaq 100 and Nikkei 225 all looking strong Indices have remained in strong form ahead of this week’s key events, with notable strength in the Nikkei as it pushes to its highest level since 1990. Source: Bloomberg Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 13 June 2023 Dow clears 34,000 again While this index is still lagging the S&P 500 and Nasdaq 100 in terms of overall performance, it is nonetheless showing fresh signs of strength. It has rallied above 34,000 and now sits at its highest level in six weeks. The April and May highs around 34,150 are the next area to watch while the May peak at 34,260 also aligns with the highs reached in February. From there the 34,360 highs from January come into view. Buyers have had it all their own way over the past week, and it would need a reversal back below 33,500 at least to suggest that the rally has been stopped in its tracks. Source: ProRealTime Nasdaq 100 hits new one-year high Against all expectations the rally in the Nasdaq 100 continues. After some brief consolidation earlier in the month a fresh push higher has resulted in a new high for the year and the highest level since April 2022. The next big level to watch is the March 2022 high at 15,260, which also marked the highs in February and was brief support back in December 2021. For the moment there is no sign of any slowdown or reversal developing in the index - for this to happen we would need to see a drop back below 14,300, which marked an area of support towards the end of May. Source: ProRealTime Nikkei 225 at fresh multi-decade highs So much attention has been paid to tech stocks that the Nikkei’s surge to 30-year highs has gone relatively unnoticed. But this rally shows no sign of stopping either, and now the July 1990 highs at 33,170 are coming into view. Beyond this the next big level would be the 1989 highs above 38,000. Shor-term trendline support from early May continues to underpin the index, so a move below 31,500 would be needed to suggest some short-term weakness is in play. Source: ProRealTime

Investors are braced for a big week packed with central bank meetings by the Fed, ECB, and Bank of Japan. IGTV’s Angeline Ong takes a look at why inflation and the labour market are the keys to what these central banks do next. Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Monday 12 June 2023 (Video Transcript) Central banks on rates Now it's a huge week for interest rates, especially since we've seen a repositioning of interest rate hike bets. Three central banks are set to adjust or not adjust their policy. The Federal Reserve (Fed) rate decision is on Wednesday and markets are pricing in a pause for the Fed after 10 straight meetings in which it has jacked up its key rate by a full five percentage points in 14 months. Economists do see this coming meeting as an opportunity to pause so that the Fed can see the degree of a slowdown it's managed with its rate action so far. Markets are beginning to price in a further potential 25 basis point hike at the end of July. ECB Then the action doesn't stop there. On Thursday, the European Central Bank (ECB) is expected to raise its key interest rate by 25 basis points, and again in July before pausing for the rest of the year. Now this is according to a poll conducted by Reuters, which indicated that economists believe inflation across the single currency economies remains sticky. Now after 375 basis points of hikes over the past year, economic activity across the region has slowed sending the eurozone into a technical recession. BoJ As for the Bank of Japan (BoJ) on Friday, it is forecast to maintain its ultra loose policy, but it could also signal that inflation is overshooting its forecast. The so-called Core CPI reading, excluding food and energy, which is favoured by the BoJ, has jumped to 4.1% year-on-year in April. This is a level not seen since the early eighties and would be an appetiser ahead of the bank's economic projections due in July. In BoJ governor Kazuo Ueda's opinion though, inflation overshooting the Bank of Japan's target doesn't mean a rate hike necessarily. The governor already said he needed to see durable wage growth accompany price rises before considering any move.

Unlike the Fed and ECB, there’s no Bank of England decision this week. However, IGTV’s Angeline Ong says there are still a few UK macroeconomic indicators could shake the pound in the coming days. Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Monday 12 June 2023 (Video Transcript) GBP/USD Besides the Fed and the ECB, a few UK macroeconomic indicators could shake the GBP in the coming days. Let's just have a look at the GBP/USD for you. Now, the GBP has been trading in a rather interesting space recently because we have seen sterling, this cross rather, grind gradually higher. Inflation has been sticky. It's a similar situation to Australia. Really loads of rate hikes recently haven't been able to bring this inflation down, and especially food prices are still uncomfortably high in the United Kingdom and the rate of growth is also really hot. We get the unemployment figures which are forecast to rise for a third straight month to 4%, it would be the highest unemployment rate since December 2021. Then on Wednesday, UK GDP is forecast rise 0.2% in April compared to March. This would be the first rise in three months. Also, on Wednesday industrial production and trade balance figures could give this cross further volatility. EUR/GBP Let's take a look at the EUR/GBP as well, because this one could potentially give investors in and out points as well. If you want to trade sterling last week this cross broke the December 1st 2022 horizontal support sending the pair to levels not seen since around August last year.

Since the volatility VIX index is trading at pre-pandemic lows ahead of key US inflation and central bank data, we would like to buy the VIX index at 16.80 with a stop-loss at 14.60 and a target at 19.80. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 12 June 2023

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

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 This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

Gold price edges up, while oil and cotton prices fall Gold is still struggling to make headway, while oil and cotton have pushed lower in early trading. Source: Bloomberg Chris Beauchamp | Chief Market Analyst, London | Publication date: Monday 12 June 2023 Gold still building a base While the price continues to hold above $1940 and the 100-day SMA, it has not shown the strength needed to break higher. Recent gains have faltered around $1980, so a move above this level and above the 50-day SMA would be needed to provide further bullish emphasis. Beyond this lies the $2060 highs from early May. Bears will need to see a drop back below $1940 to provide an indication that a fresh move to the downside is underway. Source: ProRealTime WTI on the back foot again A run of weaker Chinese data and a downgrade to price forecasts has hit oil prices, which have begun the week on a downbeat note. Having given back all the post-OPEC bounce (one that was less impressive and even shorter-lived than the one before), the price now looks to target the late May low around $67.50, and then down towards $64. The bearish move is firmly in place, and it would need a move back above $74 to suggest that the buyers have reasserted control. Source: ProRealTime Cotton struggles to hold 50-day MA Cotton prices have seen their rebound from the late May low come to a halt. The price has now slipped back below the 100-day SMA, and now it is battling to hold the 50-day SMA. Further declines test trendline support from October, a line that has acted as support several times since late March. A recovery above $83.50 would suggest another attempt to test trendline resistance from the November high. Source: ProRealTime

Indices recover ahead of this week’s key inflation data and central bank meetings Outlook on FTSE 100, DAX 40 and S&P 500 ahead of this week’s US inflation data and several central bank meetings. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 12 June 2023 FTSE 100 recovers from last week’s lows The FTSE 100 recovers from last week’s lows but so far remains below its May-to-June downtrend line at 7,610 ahead of Tuesday’s UK unemployment and Wednesday’s GDP and industrial production data. While Friday’s low at 7,546 underpins, the late May and current June highs at 7,655 to 7,660 may still be reached, though. Minor support above this level can be spotted at last Tuesday’s 7,555 low. Resistance above May to June downtrend line at 7,610 lies at Friday’s high at 7,619. Source: ProRealTime DAX 40 once more tries to head higher The DAX 40 is trying to reach last Wednesday’s high at 16,048 before the publication of Germany’s ZEW economic sentiment data for June on Tuesday. Above this level beckons the late May high at 16,080. An advance and daily chart close above the 16,080 high would eye last week’s 16,115 high, above which lies the May all-time record high at 16,333. As long as Thursday’s low at 15,886 underpins, further upside is likely to unfold. Source: ProRealTime S&P 500 is on track to reach Monday’s nine-month high On Friday, the S&P 500 rallied to a nine-month high at 4,322, close to its August 2022 peak at 4,325, as traders await this week’s US inflation data and the Federal Reserve’s (Fed) June rate decision. With the majority of traders believing that the Fed is to leave its rates unchanged at its June meeting, risk-on sentiment remains in play. The August peak at 4,325 zone will remain in sight as long as no slip through Thursday’s low at 4,257 occurs. Potential support comes in along the wedge support line at 4,290, a fall through which may have potentially bearish implications, however. Below it and last week’s 4,257 low, significant support can be spotted between the mid- to late May highs at 4,234 to 4,214. Source: ProRealTime

The Week Ahead Read about upcoming market-moving events and plan your trading week Week commencing 12 June Chris Beauchamp's insight After a quiet week for markets on the events front (save for surprise hikes from the Bank of Canada and the Reserve Bank of Australia), this week sees the trio of the Federal Reseve (Fed), European Central Bank (ECB) and Bank of Japan (BoJ) make rate decisions. Expectations are for a hold from the Fed, a rise from the ECB and a hold at the BoJ. We also have US consumer price index (CPI) on the calendar, with expectations of a decline in price growth currently dominating. Equity news is quieter, but full-year numbers from Ashtead and a trading update from Tesco will provide interest. Economic reports Weekly view Monday None Tuesday 1.30am – Australia Westpac consumer confidence (June): index to rise to 81.5. Markets to watch: AUD crosses 7am – UK unemployment data: May claimant count to fall to 22K, unemployment rate to hold at 3.9% in April. Average earnings to rise 4.7% for April. Markets to watch: GBP crosses 10am – German ZEW index (June): index to fall to -14. Markets to watch: EUR crosses 1.30pm – US CPI (May): inflation to fall to 4.7% YoY from 4.9% and 0.3% from 0.4% MoM. Core CPI to drop to 5.4% from 5.5% YoY and 0.3% from 0.4% MoM. Markets to watch: US indices, USD crosses Wednesday 7am – UK GDP (April): growth to be 0.2% in April MoM. Markets to watch: GBP crosses 1.30pm – US PPI (May): factory-gate inflation to slow to 2.1% from 2.3% YoY and 0.1% from 0.2% MoM. Markets to watch: USD crosses 3.30pm – US EIA crude oil inventories (w/e 9 June): previous week saw stockpiles fall by 450,000 barrels. Markets to watch: Brent, WTI 7pm – Fed rate decision: rates expected to be held at 5.25%. The 7.30pm press conference may provide further clues on the course of future policy. Markets to watch: global indices, USD crosses Thursday 2.30am – Australia employment data (May): unemployment rate to hold at 3.7%. Markets to watch: AUD crosses 3am – China industrial production (May): production to rise 5.6% YoY. Markets to watch: CNH crosses 1.15pm – ECB rate decision (1.45pm press conference): rates to rise to 3.5%, further commentary in the press conference may drive volatility. Markets to watch: eurozone indices, EUR crosses 1.30pm – US retail sales (May), initial jobless claims (w/e 10 June), Philadelphia Fed index (June): May retail sales to rise 0.5%, and claims to rise to 275K. Markets to watch: US indices, USD crosses Friday 4am – BoJ rate decision: rates expected to remain at -0.1%. Markets to watch: JPY crosses 3pm – US Michigan consumer sentiment (June, preliminary): index to rise to 60.8. Markets to watch: USD crosses Company announcements Monday 12 June Tuesday 13 June Wednesday 14 June Thursday 15 June Friday 16 June Full-year earnings Ashtead Severfield Halfords, Fuller Smith & Turner Half/ Quarterly earnings Oracle Adobe Trading update* Bellway Boohoo, N Brown, Bunzl Tesco Dividends FTSE 100: Land Securities, RS Group FTSE 250: Computacenter, 3i Infrastructure, Pets at Home, Intermediate Capital, AVI Global Trust, Warehouse REIT, Digital 9, LXI REIT Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days. Index adjustments Monday 12 June Tuesday 13 June Wednesday 14 June Thursday 15 June Friday 16 June Monday 19 June FTSE 100 0.60 Australia 200 0.1 0.7 0.2 Wall Street 4.8 15.4 US 500 0.18 1.02 0.78 0.08 0.03 Nasdaq 0.50 1.28 Netherlands 25 EU Stocks 50 China H-Shares 1.1 9.2 1.1 5.1 Singapore Blue Chip Hong Kong HS50 3.2 16.7 4.9 1.9 9.3 South Africa 40 Italy 40 62.9 Japan 225

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. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

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. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

A relatively quiet week is heading towards its end, after a positive session in Asia that followed the lead set by Europe and the US. A rise in jobless claims bolstered the view that the Fed would leave policy on pause at its next meeting. However, rate hikes this week in Australia and Canada have unnerved investors, and so caution could well prevail over the first half of next week. Given that the coming week also includes ECB and BoJ decisions, plus US inflation figures, it promises to be full of potential volatility flashpoints.

H2 2023 outlook on the S&P 500 amid probable monetary tightening, lower liquidity and recessionary fears. Source: Bloomberg Shares Commodities S&P 500 Stock Stock market Volatility Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Thursday 08 June 2023 S&P 500 hits a near ten-month high as shorts once again get squeezed The US 500 has managed to rise close to its August 2022 peak at 4,325.28 as the US government has - for the 79th time since 1960 - agreed to raise its debt ceiling. In doing so, several shorts have once more been squeezed, pushing the index to its current June high at 4,299.28. Has this year’s rally got wings? With, according to the Chicago Mercantile Exchange (CME), the probability of no Federal Reserve (Fed) rate hike at the June meeting rising to 75%, further short-term upside may perhaps be on the cards from a fundamental point of view. Since a July rate hike, for now at least, is still priced in and as the fundamental picture may worsen in the months to come, the odds for a prolonged rally seem to diminish, however. At a time when the contrarian CNN Fear & Greed Index has entered “extreme greed” in the, for western stock markets, historically unfavourable period of the year between May and October, investors seem blasé about this year’s 11% advance in the S&P 500 with volatility dropping to extremely low levels. CNN Fear & Greed Index chart Source: CNN This could mean that there is a bumpy and less rosy road ahead for the S&P 500 until the end of the year. Fundamental reasons for the S&P 500 to decline before the end of the year Five fundamental reasons why we are unlikely to see a repeat of the positive first half performance in the S&P 500 in the second half of the year are: 1) When volatility drops to extremes, investors tend to overlook risks and stock markets may top out; 2) An inverse yield curve, once it reverts, tends to lead to a recession, pushing equity markets down; 3) The raising of the US debt ceiling is going to drain liquidity; 4) The S&P 500 rally year-to-date is not supported by market breadth; 5) Can over 300 institutional investors in the US be wrong? Let’s elaborate: 1) the Chicago Board of Options Exchange (CBOE) VIX volatility index is trading in multi-month lows, and it’s a similar story for the Russell 2000 (RVX), German VDAX and Emerging Markets (VXEEM) volatility indices, showing general complacency. But this extreme low volatility can also be seen outside of the stock market sphere on the Crude Oil (OVX), Gold (GVZ) and Euro Currency Volatility indices. Since periods of low volatility are usually followed by periods of high volatility, which often, but not always, accompany market tops, one should at least be aware of this risk. 2) The US yield curve is likely to re-invert later this year, meaning that at some stage the short-term yields will be trading back below the long-term yields. The problem is that each time the yield curve has re-inverted since the 1980’s, it provoked a recession. This in turn led to equity bear markets rearing their head or at least significant corrections taking place. Inverted US yield curve and recession chart Source: IG 3) Now that the US government has agreed to raise its debt ceiling, the Treasury General Account (TGA) needs to be replenished which will drain lots of liquidity out of the market. This usually leads to a fall in stock prices. TGA overlaid on S&P 500 line chart Source: David Pieper, Tradingview 4) The S&P 500’s advance this year has been driven by fewer stocks than in the 2000 dotcom bubble and fewer than during the 2008 financial crisis, actually by fewer stocks than at any time in the last 30 years. The seven largest companies in the S&P 500 index now have a market cap greater than the Energy, Materials, Industrials, and Financials sectors combined! It is thus fair to say that at a time when the differential between credit card debt versus savings in the US is at an all-time record extreme, this year’s stock market rally is driven by only seven mega caps. According to Goldman Sachs Global Investment Research, the share prices of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla have collectively risen by over 50% year-to-date, the S&P 500 by 11% with the remaining 493 stocks flatlining. US Mega-cap technology, S&P 500 and remaining 493 companies performance chart Source: FactSet, Goldman Sachs Global Investment Research 5) In the latest S&P Global survey, return expectations regarding the US equity market have deteriorated to their lowest level ever. Unless over 300 institutional investors are all wrong, which is unlikely to be the case for a prolonged period of time, stock markets are likely to take a hit at some stage over the summer or later this year. This is especially the case since the probabilities regarding a US recession seem to be increasing and are reaching levels last seen during the pandemic. US recession probability versus credit spreads chart Source: Steno Research, Bloomberg and Macrobond Possible fundamental reasons for the S&P 500 to continue its 2023 ascent? Five fundamental reasons why stock markets could rally further. 1) Core inflation is finally falling; 2) Better-than-expected corporate earnings lead to more share buying; 3) China’s lacklustre growth suddenly picks up, perhaps because of another stimulus plan; 4) Two consecutive positive quarters usually lead to further upside; 5) Historically the S&P 500 has averaged a 6.7% gain in the six months following mega cap outperformance streaks. With regards to the first point, while headline inflation has been falling, core inflation in the US remains stubbornly high at 5.5%. If it were to rapidly fall, the economic picture could improve, confidence return and stock markets push higher still. 2) Q2 and Q3 corporate earnings could once again surprise to the upside, like they have done for many of the larger US stocks in Q1, pushing equity indices such as the S&P 500 higher still. 3) China, where a number of banks this week said that they would cut deposit rates, providing some support for profit margins and the broader economy, may announce another wide-ranging stimulus plan. This could accelerate growth in the world’s second largest economy and boost share prices globally. 4) Going back to the 1950’s, when the S&P 500 has had two consecutive positive quarters after a bear market, it usually continues to rise over the following quarters. 5) Another fact is that historically the S&P 500 has averaged a 6.7% gain in the six months following mega cap outperformance streaks, such as the one we are witnessing at the moment. S&P 500 performance after over five consecutive months of mega cap outperformance chart Source: FactSet, BMO Investment Strategy Group What does technical analysis say? With volatility falling by the wayside as the S&P 500 is approaching its August 2022 peak, investors seem to be getting complacent with regards to a possible top forming. S&P 500 Weekly Chart Source: Tradingview The fact that a minor rising wedge formation can be spotted on the daily chart may point to at least a short-term top soon being formed. For this to be the case, a slip through and daily chart close below the one-month tentative support line at 4232.00 would need to be seen. Confirmation of a more significant correction lower taking place would be a fall through the 24 May low at 4,103.98. In this case the 200-day simple moving average (SMA) at 3,975.14 would be back on the radar over the northern hemisphere summer months. S&P 500 Daily Chart Source: Tradingview Unless the above mentioned technical support levels get taken out, the March-to-June uptrend remains intact, however. A rise and weekly close above the August 2022 peak at 4,325.28 would open the way for the August 2021, January and March 2022 highs at 4,545.85 to 4,637.30 to be reached. Given the current complacency and fear of missing out in the bull market by retail investors, low volatility, growing tail risks and potential technical reversal signals, a bullish scenario for the second half of the year looks less likely than a bumpy one. After all, stock markets rarely go up in a straight line.

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 This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

A description of blue chip stocks, a rundown of the best examples and how to identify and distinguish them from other companies with large market capitalisations. Read on for comprehensive coverage. Source: Bloomberg Charles Archer | Financial Writer, London What are blue chip stocks? Blue chip stocks are the shares of businesses that are highly reputable, financially stable and long-established in their sector. Over time, the companies considered to be blue chip tend to change – only 28 of the original FTSE 100 stocks listed in 1984 were still on the UK's premier index by 2017. In simple terms, a company is considered to be blue chip if it's near the top of its sector, features on a recognised and high-volume index and has a well-known brand. What does it take to be blue chip? The exact requirements to be termed a blue chip are – unusually for the financial sector – vague. Opinions vary from investor to investor, but broadly speaking, the company needs to: Be at or near the top of its sector Feature on a recognised index (e.g. FTSE 100, S&P 500, ASX 200) Be or own a recognised brand Have a history of reliable growth and often consistent dividend payments The term itself was allegedly coined by Dow Jones employee Oliver Gingold. After observing that certain stocks reliably traded above $200 per share, Gingold denoted them 'blue chips' after the most valuable chip colour in poker.¹ It's important to note that some blue chip companies can still be quite small in relative terms if they operate in a niche sector – with the distinction occasionally blurred between a blue chip and a medium cap. The opposite end of the investing spectrum is a 'penny stock'. In the UK, these are typically regarded as companies trading for less than £1 per share and with a market capitalisation of under £100 million. Both of these conditions need to be met to be classified as a penny stock. While there can be some leeway if a company is slightly over the limit, this is a well-understood definition. By contrast, 'blue chip' is not a standardised term. Whether you might classify a company as such requires an element of subjectivity. Advantages and disadvantages of blue chip stocks Investing in blue chip stocks is a popular long-term strategy, but these shares are not risk-free. Advantages of blue chip stocks Blue chip stocks are usually viewed as low-risk because they tend to post stable earnings, often pay out dividends and have investible credit ratings² Dividends combined with reliable capital returns make blue chip shares among the most reliable portfolio investments They are also well-trusted by investors because they have large market capitalisation – the very opposite of penny stocks, which offer larger rewards but without dividend income, stability or low risk There is little volatility to worry about, and therefore investing in blue chips requires less investor effort Disadvantages of blue chip stocks Blue chips are not immune to falls, crashes or even bankruptcy. When negative events happen, such as the 2008 global financial crisis or the 2020 pandemic crash, it can cause substantial damage as a large investor base sells off These types of stocks don't experience the short-term price movements needed to generate short-term trading income Blue chips are unlikely to generate the higher returns that can be made on riskier investments, such as start-up companies, as they have less room to grow They are often in high demand, and therefore investors pay a premium for the lower risk and heritage name Smaller rivals can eat up market share without careful management Examples of blue chip stocks The following does not constitute a formal or exhaustive list of blue chip stocks, but it is true that the largest companies within well-known indices – such as the FTSE 100, CAC 40 or DAX – are widely considered to hold prestige. Again, whether a company remains a blue chip is subject to change over time. But some common names are: Apple American Express AstraZeneca BP Coca-Cola Diageo Disney General Electric IBM Johnson & Johnson McDonald's Microsoft Nike Pfizer Unilever Verizon Wal-Mart As you can see, most of these companies either are well-known brands or owners of some (for example, Unilever owns dozens of premium food brands). To some extent, whether a company holds blue chip status depends on the subjective viewpoint of the everyday layman, including its brand perception. How to identify a blue chip stock Classifying most blue chip stocks is typically not complex given their size, prestige and market-leading specifics, at least from a general perspective. These companies are at the pinnacle of the market and often have wide economic moats – it would be very difficult to supplant Apple or Coca-Cola, for instance. They are businesses that trade on exceptional brand loyalty.³ Identifying factors of blue chip stocks include: Lower volatility than shares in companies without blue chip status due to their institutional profile and strong financial vigour Very high liquidity, as they are frequently traded by both institutional and retail investors. This creates a self-fulfilling prophecy, as all can be confident there will be buyers for their shares Usually little debt, high market capitalisation, a stable debt-to-equity ratio, a high return on equity and a high return on assets employed Strong balance sheet fundamentals that lend blue chips investment-grade credit ratings Usually long and stable history of dividend payments Being on a blue chip index Being a bellwether of the wider industry's performance However, companies considered to be blue chip can change over time. For example, in the FTSE, only 11 of the original 30 prestigious Dow Jones stocks in 1987 remained on the index by 2017. Companies including Kodak, Sears and General Motors have exited the index – businesses that at one point would have been considered exceptionally safe investments. In addition, while losing blue chip status can be difficult, it's equally hard if not more so to attain it. Apple, the world's most valuable company since 2011, was not featured on the Dow until 2015. Many confuse blue chip status with simply being very large, but the two things are not the same. A blue chip is almost always large, but large companies are not always blue chip. Consider the AMC Entertainment short squeeze, which catapulted the market cap of the company to many billions – few would have classified the business as low-risk at the time. Whether blue chips can be considered a good investment is subjective. However, many investors consider allocating a significant portion of their portfolio to these types of large, well-capitalised companies. Often, investors may choose to buy shares in an index tracker which includes many of the most popular blue chips, such as the SDPR Dow Jones Industrial Average ETF Trust. While blue chips are often viewed as safer than lower-level growth stocks or other risky investments, there is no such thing as 'safe' when it comes to investing. General Motors was forced to declare bankruptcy in 2009 after extensive commercial damage caused by the global financial crisis – this was once one of America's titans of industry. Blue chip stocks summed up Blue chip stocks are shares of businesses that are highly reputable, financially stable and long-established in their sector Companies considered to be blue chip can change over time; for example, only 11 of the original 30 prestigious Dow Jones stocks in 1987 remained on the index by 2017 Blue chip stocks are usually viewed as low risk because they tend to post stable earnings, often pay out dividends and have investible credit ratings These types of stocks don't experience the short-term price movements needed to generate short-term trading income Long-term investors may choose to buy shares in an index tracker that includes many of the most popular blue chips, such as the SDPR Dow Jones Industrial Average ETF Trust

Your comprehensive guide to what an IPO is, what happens on the day of an IPO, and the difference between the primary and secondary markets. Learn how to get started. Source: Bloomberg Indices Shares IPO Stock Investor Secondary market Charles Archer | Financial Writer, London What's on this page? What is an IPO? What happens on the day of an IPO? What is an IPO price? What time do IPOs start trading? How to trade or invest in IPOs with us Frequently asked questions about IPOs What is an IPO? An Initial Public Offering (IPO) is when a private company sells its shares to the public for the first time. This allows the company to gain access to investor capital, which would be markedly harder if it had remained private. While an IPO is often the first time shares have ever been made available, it's also common for larger companies already listed in the country to dual-list, or de-list and re-list, by launching an IPO in another state. Alternatively, it's also normal for small caps listed on the AQSE to launch an IPO on the AIM market after they have reached regulatory milestones. The shift from private to public is often an important time for private investors as it usually comes with a share price premium and increased liquidity to offload shares. However, pre-IPO investors are often contractually sealed into a 'lock-up' period, whereby they cannot sell any shares for a length of time after the public launch.¹ Companies in the UK seeking to launch an IPO must meet the regulatory requirements imposed by bodies such as the Financial Conduct Authority. These can vary; for example, AIM listings have less strict conditions than on the main market. As part of the pre-launch process, businesses almost always hire an investment bank to do some of the heavy lifting, such as marketing and gauging demand to help set the initial price and date of launch. What happens on the day of an IPO? An IPO day occurs over two defined stages. 1. The primary market – Here, investors who have subscribed to an IPO or registered their interest in the listing receive their allotment of shares before the market opens. The process takes place between the company and these investors through an underwriter – typically a bank. Once the lock-up period has passed, these investors are usually free to sell their new holdings, just like any other share. In the past, primary markets were only open to institutional investors. Nowadays, companies like ours offer primary market access so you can buy stock pre-IPO at the listing price. 2. The secondary market – Excepting the US, after the primary market concludes – and usually on the same day – shares start trading on the open market. At this point, shares can be bought and sold freely by members of the public through their stockbroker. UK and most international shares are available with us to trade immediately. As always with the stock market, there is a special case to consider. From the first day of the IPO, some companies' shares enter a phase that typically lasts three days. This is known as 'conditional trading'. During this stage, all share purchases have deferred settlement, meaning there is no guarantee that your placed trade will be honoured. There are good but complex risk-based reasons why this happens. But once unconditional trading starts, shares can then be traded freely. Remember: those who invest in the IPO through the primary market are often subject to a 'lock-up' period. While primary market prices can sometimes be had at a slight discount, investors must weigh this advantage against the common restriction. What is an IPO price? Put simply, the IPO price is the value that the company and its underwriter set for the stock to begin trading on the open market. A common misconception is that this figure must match the target price given in the IPO prospectus, but this is not the case. Investors should take care to check for any discrepancies before placing a trade. If the starting price is set higher than the previously given target price, it may be that interest in the shares has surged and the company thinks it can make more money. This is common when smaller companies conduct an IPO, as it sometimes takes the publicity of a listing for analysts to release their opinions. Factors including demand, industry comparables, growth prospects, finances or even a unique selling point all influence the final IPO price. A good example of a strong launch is Alibaba's 2014 IPO. In-demand diversified technology, an announcement to tap into European and US markets in addition to China, and the surprising choice to debut on NYSE instead of NASDAQ made this IPO shatter all previous records. However, just like pricing any other asset, setting too high a price can be a disaster. Deliveroo's London IPO was meant to be the largest in over a decade but was a corporate mess – falling from an opening price of 390p to just 284p at the close. Accordingly, many companies choose to slightly under-price their initial shares, as this can tempt investors with a healthy risk appetite to the primary market. What time do IPOs start trading? IPOs will start trading at varying times, depending on the stock exchange in which the listing is taking place. As a general rule, UK stocks should become available to retail investors at 8am and US stocks at 2.30pm (Western European Time). However, ubiquitous red tape means that US stocks are often delayed, so this should be expected. Stocks listing on the London Stock Exchange usually reveal their IPO price at 7am. Timings vary by country – India IPO securities typically begin trading at 10am. Anecdotally, they tend to be more timely, so this may become standard practice.² Investors can only access the IPO price in the primary market. We offer this for the vast majority of UK listings in which the company offers the IPO price to retail investors. Again, you must subscribe to the IPO before the launch to receive your stock allocation. We offer immediate access to the secondary market for most IPOs across the UK, Europe and Asia. Access to US IPO secondary markets can take several hours, though this is by system design for UK brokers like us. Key market IPO launch times (UK time) London Stock Exchange (UK) 8am New York Stock Exchange (US) 2.30pm, but may take some hours to be tradeable NASDAQ (US) 2.30pm, but may take some hours to be tradeable Germany 9am France 8am How to trade or invest in IPOs with us Research the company to make sure that it fits with your strategy and goals Create your account with us Decide whether you're taking your position on the IPO primary or secondary market If you want to invest in the primary market, choose share dealing To take a position on the secondary market, choose share dealing to buy the stock or trade using spread betting or CFDs Place your trade Remember, trading with spread betting or CFDs comes with added risk attached to leverage. Your position will be opened at a fraction of the value of the total position size – meaning you can gain or lose money much faster than you might expect. When share dealing, you buy and own the shares, so you aren't exposed to this risk. Frequently asked questions about IPOs Advantages of an IPO include: Access to more capital through the wider investing public Increased exposure, public image and prestige Increased transparency from quarterly reporting Often better borrowing terms from creditors Ability to raise additional funds through secondary offerings Disadvantages of an IPO include: IPOs are costly Maintaining a public company comes with additional expenses Share price fluctuations can distract management from making the best long-term decisions Risk-taking managers can feel stifled, especially given the increased paperwork Share prices sometimes do not reflect the true value of the company Listed companies must disclose business information that may help competitors Loss of agency occurs as new shareholders gain rights A short history of IPOs The very first 'modern' IPO was launched by the Dutch when shares of the Dutch East India Company were offered to the public in 1602. Over the years, IPOs have faded in and out of popularity, with periods of intense activity usually coinciding with technological innovation or loose monetary policy.³ For example, the dot-com boom of the early 2000s saw high levels of IPO activity as tech start-ups rushed to get liquidity – while the 2008 financial crisis saw listings drop to a record low and remained rare for some years. Activity started to roar back with the ultraloose monetary and fiscal policies of the pandemic years, with investors focused on 'unicorns' – companies with a private valuation of more than $1 billion. As policy has now tightened compared to recent norms, IPO activity may be dampened for some years. However, this also means that companies which do list will receive elevated interest. IPOs summed up An Initial Public Offering (IPO)is a stock market process by which a private company begins offering shares to the public on a listed exchange in a new issuance for the first time Investors can buy shares on the primary or secondary markets, with some marked differences UK stocks usually become available to retail investors at 8am and US stocks at 2.30pm (Western European Time) The IPO price is the value that the company and its underwriter set for the stock to begin trading on the open market Companies benefit from access to more capital at better terms and public exposure, though must weigh these benefits against increased costs and some loss of agency We offer access to most IPOs. Learn more here ¹ Initial Public Offerings (IPOs)? | Barclays Smart Investor ² What is an IPO and how does it work? - NerdWallet UK ³ The IPO Journey - PwC UK

Orange Juice, Copper, and Gold could continue to constitute the best commodities to consider trading in next quarter. Source: Bloomberg Forex Shares Commodities Gold Copper United States Charles Archer | Financial Writer, London Commodities trading has seen an explosion in popularity over the past few years. The pandemic mini crash followed by the ensuing bull run saw most commodities experience seriously volatile price swings. Russia’s invasion of Ukraine in March 2022 compounded this volatility — with two-way sanctions and wartime logistical problems seeing oil, gas, wheat, gold, palladium, nickel, and steel hit record or near-record highs. In just one example, oil went negative for the first time ever in April 2020, and then rose to multi-year highs in 2022. Brent Crude is still trading for $74 per barrel — elevated by historical norms. When considering the best commodities to trade in Q3, the two most popular candidates are oil and gas. However, the trajectory of these two commodities is currently difficult to predict. OPEC cuts to reduce supply, combined with recessionary fears and uncertain Chinese output weakening demand, means that in the short-term both hard commodities could go either way. Three commodities — orange juice, copper, and gold — could be better trades. All three may be experiencing rising demand, and demand could be set to continue increasing. Best commodities for Q3 Orange Juice Orange Juice rose from circa $90/lbs at the start of 2020 to over $285/lbs last month. While the traditional breakfast drink has now fallen back to $255/lbs, further moves upwards could be imminent. This is becoming a problem for many governments which rely on cheap OJ to get Vitamin C into the general population. This rise has been driven by several factors, but the key issue is falling production in the US state of Florida. The US agriculture department predicts that the state will see production fall by 61% in this season to just 16 million 90lb boxes of oranges. Brazil — the world’s largest orange juice exporter – has stepped up to fill the export gap, this has come with price increases. University of Florida research shows that the citrus industry brings in about $6.6 billion per year but was dealt significant damage by Hurricane Ian last September, with this one weather event dealing $247 million in damages alone. Despite government grants, poor weather — including past hurricanes Nicole and Irma — continue to plague Floridian production. In addition, the state continues to suffer from the citrus greening ‘Huanglongbing’ pandemic, where insects infect orange trees with bacteria that causes them to produce unsellable fruit, and eventually die. This is a huge, growing problem — especially when considering that while Brazil and Mexico make up most of the market, Florida accounts for most of the premium not-from-concentrate market, and therefore its production disproportionately weighs on orange juice’s price. Florida’s orange supply has reportedly halved in a decade — and as Florida Citrus Mutual trade association CEO Matt Joyner notes, ‘it’s a five-year process to get trees back up and productive.’ California has stepped up, with USDA data showing that the state should surpass Floridian production in the 2022-23 season. However, the insects which originally caused greening disease in Florida have traversed the continent and are now infecting California. Orange juice price rises may just be getting started. Copper 21 million metric tons of Copper are mined every single year. But this is not going to be enough to meet the growing demand. The ductile material is essentially irreplaceable in electrical products, including within EVs, phones, wind turbines, and solar panels. Over the next two decades, the International Energy Agency expects copper to become a dominant mineral alongside graphite and nickel, with demand expected to triple by 2040. Codelco, the world’s largest copper producer, concurs, arguing that there could be an eight-million tonne shortage by 2032. Similar figures are cited by S&P Global which sees a deficit of 10 million tons by 2035, and Bloomberg Intelligence, which sees the shortage gap growing to 14 million tons by 2040. For context, 2021’s shortage gap came to just 2% of global production but saw copper prices rise by 25%. This copper supply gap is being highlighted by BHP’s recent takeover of Oz and Glencore’s pursuit of Teck. There’s then the recently agreed Newmont-Newcrest tie-up; while most analysts have focused on the gold opportunities, Newmont will now benefit from a sizeable copper portfolio. Kostas Bintas, co-head of the world’s largest copper trader Trafigura, thinks copper could reach a record $12,000/tonne over the next 12 months. He has already highlighted the metal ‘as the most critical metal globally given the shortage in the market,’ noting that the world ‘only had 3.5 days of copper stock equivalent at the end of last year.’ Goldman Sachs commodities head Jeff Currie has warned that ‘the forward outlook is extraordinarily positive. We’ll be at the lowest observable inventories that have ever been recorded at 125,000 tonnes. We have peak supply occurring in 2024…near term we put (the copper price) at $10,500 and longer term our price target is $15,000 a tonne.’ Meanwhile, Rio Tinto’s copper chief, Bold Baatar, argues that even the very short-term outlook for the critical mineral is looking ‘pretty healthy’ as ‘physical stocks of inventories of copper are at multi-year lows’ even as South American supply reduces. Gold Gold has historically served as a reliable ‘safe haven’ asset and inflationary hedge during times of severe economic stress, and this trend has continued reliably in 2023. Central banks have recognized this, as evidenced by their substantial purchase of 1,136 tonnes of gold worth $70 billion in 2022, the highest amount since records began in 1950. This has marked a notable departure from the trend of selling gold in previous decades. The appeal of gold lies in its characteristic as an asset that is not tied to any specific issuer or government, providing diversification for central banks away from other traditionally safe assets such as the US Dollar or US treasuries. While gold does not provide a direct return, its independence from any one government or issuer contributes to its attractiveness as a store of value — and this is especially pertinent as the US debt ceiling crisis rumbles on. The relationship between gold prices and the US Dollar is closely intertwined. The expectation of further interest rate hikes typically depresses gold prices, as the US Dollar becomes a safer haven compared to the precious metal. However, as Chair Jerome Powell has indicated a possible slowdown or pause in tightening monetary policy, gold prices could potentially reach new record highs. During the 2008 financial crisis, gold demonstrated its resilience as an asset, with a 24% increase while the S&P 500, considered a benchmark for the US economy, dropped by 37%. Notably, this occurred as the Federal Reserve expanded its balance sheet through quantitative easing, leading to an increased supply of US Dollars and driving up the relative value of gold. But with monetary policy far from certain, and gold near record highs, a gold trade is perhaps not low risk.

Brent crude oil, silver and copper capped by resistance in low volatile trading Outlook on Brent crude oil, silver and copper as investors mull over economic and monetary backdrop. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Thursday 08 June 2023 Brent crude oil capped by downtrend line Brent crude oil continues to trade in low volatility whilst remaining capped by its April-to-June downtrend line at $77.48 per barrel as traders mull over the outlook for energy demand amid top importer China’s lacklustre growth. While the next higher $77.51 to $78.52 resistance area, the early May to early June highs, caps, a return towards the middle of the recent sideways trading range looks probable. Minor support below Wednesday’s low at $75.47 sits at Tuesday’s $74.68 trough, a fall through which would push the $73.37 mid-May low back to the fore. Source: ProRealTime Silver continues to range trade in low volatility The silver price remains below its two-month downtrend line at $23.96, having yesterday revisited but failed to overcome last week’s high at $24.02 on a daily chart closing basis as the US dollar briefly depreciated. While the $24.02 to $24.05 resistance zone caps, a retest of Monday’s low at $23.25 may still ensue, a fall through which would target the March-to-June uptrend line at $23.14. If it were to be slipped through, the May low at $22.68 and the 200-day simple moving average (SMA) at $22.23 would be back in sight. A rise and daily chart close above $24.05 would put the late April low at $24.50 on the map. Source: ProRealTime Copper price remains capped by technical resistance For the past four days, the price of copper has been capped by the 200-day simple moving average (SMA) at $8,381 per ton as investors grapple with the global economic outlook in an environment of ongoing monetary tightening. While no rise and daily chart close above Wednesday’s high at $8,417 is made on a daily chart closing basis, a slip back towards Monday’s low at $8,169 may unfold. Below it lies more significant support at the $8,089 mid-May low. Source: ProRealTime

Thanks for sharing @Agarwal All the best - MongiIG

In last week's update, we noted that the European economy's expansion had slowed after a patch of soft data in May. Source: Bloomberg Forex Indices DAX European Central Bank Inflation China Tony Sycamore | Market Analyst, Australia | Publication date: Wednesday 07 June 2023 The run of soft data across industrial production, purchasing managers index's (PMIs) and the German Ifo survey was made more acute by a slowdown in Chinese economic data. China is the Euro Areas' (EA) largest trading partner. Adding a new dimension to the slowdown, the release of softer-than-expected EA inflation for May last Thursday evening. Headline inflation fell to 6.1% Year-on-Year (YoY) from 7%, driven by a decline in energy, food, alcohol, and tobacco prices. Core inflation which excludes energy, food, alcohol, and tobacco, fell to 5.3% YoY from 5.6%. Heading into next week's European Central Bank (ECB) meeting, the interest rate market is priced for two more 25 basis point (bp) rate hikes in June and July, taking the deposit rate to 3.75%. The ECB is expected to start cutting rates in early 2024 in response to slower growth. In the UK, while growth has been stronger than expected, so too has inflation. The UK rates market is pricing four more 25 bp rate hikes from the Bank of England (BoE) for a terminal rate of 5.50% by year end. The contrast between ECB closing in on its terminal rate and the BoE still with much work to do helps explain why the DAX is back near all-time highs, and the Financial Times Stock Exchange (FTSE) is still 5% below its all-time highs. DAX Technical Analysis After a brief look below the 15,700-support level (coming from the highs in February and March and uptrend support from the October 11,829 low), the DAX rebounded at the end of last week as US Congress passed the Debt Ceiling Agreement. The rally was also supported by expectations of imminent stimulus in China and strong US non farm payrolls print. The pullback from the mid-May 16,375 high to last-week's 15,649 low appears corrective. As such, providing the DAX holds above the 15,649 low, we look for a retest and break of short-term resistance at 16,150 with scope to the 16,375 high. Aware that should the DAX see a sustained break of support at 15,650ish, a deeper decline is expected towards year-to-date (YTD) lows and the 200-day moving average (MA) of 14,600/500 area. Source: TradingView.com FTSE Technical Analysis The release of stubbornly high inflation data in mid-May and expectations of another 100 bp of BoE rate hikes has weighed on the FTSE. As has a lack of tech stocks. After briefly looking below the 200-day MA at 7527 last week, the FTSE held and bounced from uptrend support near 7450 (coming from the October 6707 low). While the FTSE remains above support at 7450, a rebound towards resistance at 7800 is likely. Aware that should the FTSE see a sustained break of uptrend support at 7450, a deeper decline is expected towards support at 7300/7200, coming from year-to-date lows is likely. Source: TradingView.com

Levels to watch After its huge run higher, the Nasdaq 100 has faltered, but the Dow and CAC40 are showing signs of strength. Source: Bloomberg Chris Beauchamp | Chief Market Analyst, London | Publication date: Thursday 08 June 2023 Dow makes headway in early trading The price has managed to rise over the past two days, moving back above the 50-day SMA, bolstered in part by a recovery in oil stocks. Gains faltered in early May around the 37,740 mark, so a move above here and then above 33,900 continues to build a bullish move, supported by the rising 50-day SMA and a bullish MACD. A reversal back below 33,310 would negate this view and risk a return to the 200-day SMA and the lows of late May around 32,700. Source: ProRealTime Nasdaq 100 drops back from one-year high The move higher over the preceding four sessions was broadly negated by Wednesday’s losses. This might point towards a reversal towards the 50-day SMA, though short-term trendline support from late April might also come into play around 14,000. A reversal above 14,500 points the way to some fresh short-term upside. Source: ProRealTime CAC40 edges back above 7200 The index struggled on Wednesday as poor Chinese and German data, plus a rate hike by the Canadian central bank, prompted a risk-off mood to prevail in European markets. However, it avoided a move below Tuesday’s lows, and this could provide the foundation for a move higher, with a move above 7300 likely to bolster the bullish outlook. The broader uptrend is still intact, so a higher low for the index would be a bullish development. This view would be negated with a daily close below 7100. Source: ProRealTime

Crude oil appears rudderless going into the Thursday session; the OPEC+ lollipop has been devoured by markets as it settles in the range and the underlying structure of the market seems to reaffirm a range trade for now. Source: Bloomberg Commodities Petroleum Price of oil Volatility WTI OPEC Daniel McCarthy | Strategist, | Publication date: Thursday 08 June 2023 The crude oil price has stabilised after a tumultuous start to the week that saw a 5-week peak before running back into the range. This kind of price action has been a hallmark of many asset classes whereby a range is established, it breaks on either side, and then retreats back inside the range. From a macro perspective, this might reflect the juxtaposition of central banks and the dilemma they face between reining in inflation while keeping their respective economies afloat. Up until recently, the tightening cycle was deemed necessary, and in some aspects essential for the long-term well-being of the financial stability and prosperity of society. The problem now is the uncertainty around monetary policy and markets seem to be reflecting this unknown rate path. Looking at volatility across markets and it is apparent that this directionless pattern has become entrenched. The widely watched VIX index, a measure of market-priced volatility on the S&P 500, dipped to its lowest level since February 2020 this week. Similar measures of volatility across bonds, currencies, oil and gold have crumbled in the last few days. See the chart below. A lower level of volatility might lend itself to more range trading scenarios. Cross market volatility chart – bonds (move), S&P 500 (VIX), oil (OVX), gold (GVZ) and fx (EVZ) Source: TradingView For crude oil, the lack of follow-through from the OPEC+ production cut announced over the weekend may reveal the underlying weakness in global demand. On the flip side, the US has made it clear that they will seek to replenish the Strategic Petroleum Reserve (SPR) should oil stay under US$70 bbl. Potentially lending some support to black gold is the RBOB crack spread that has ticked up again this week. The RBOB crack spread is the gauge of gasoline prices relative to crude oil prices and reflects the profit margin of refiners. RBOB stands for reformulated blendstock for oxygenate blending. It is a tradable grade of gasoline. If profitability increases for refiners, it may lead to more demand for the crude product. At the same time, the difference in price between the front two WTI futures contracts is relatively benign and might be suggestive that the range scenario is intact for now. WTI crude oil, crack spread, backwardation/contango, volatility (OVX) Source: TradingView This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.