Economic Indicators & Central Banks:
- The bulls are back in town for now. Wall Street climbed, led by tech and especially the Magnificent 7 — all cohorts rallied, even Tesla which broke a 7-session losing streak even as its earnings news was awaited.
- US: The weaker than expected PMI data from S&P Global was the excuse needed to underpin a short covering rally in Treasuries after the big selloff in April.
- Record US Auction boosted demand! A well bid 2-year sale also added to the gains in Treasuries, while signs of future price pressures saw the long end underperform. Demand petered out into the finish, however, especially with the surge on Wall Street, and yields edged off their lows.
- Australia: The hot inflation print pointed to sticky local price pressures and reinforced the case for the RBA to hold rates at a 12-year high. The CPI rose to 3.6% y/y VS 3.5% estimate, while core CPI rose 4%, also higher than forecast and well above the RBA’s 2-3% target.
- Japan: Strong warning for intervention by officials. The BoJ is widely expected on Friday to leave policy settings & bond purchase amounts unchanged.
- NEW YORK (AP) — The Biden administration has finalized a new rule set to make millions more salaried workers eligible for overtime pay in the US.
Financial Markets Performance:
- The USDIndex slumped, falling to 105.39 largely on profit taking and as haven demand faded.
- USDJPY flirts with 155 after FM Suzuki issued the strongest warning to date on the chance of intervention, saying last week’s meeting with US and South Korean counterparts had laid the groundwork for Tokyo to act against excessive Yen moves.
- AUDUSD up for a 3rd day in a row, to 0.6528 amid a broadly weaker USD but also a strong Aussie post a hot inflation print.
- USOIL steady at $83 ahead of sanctions against Iran and shrinking US Inventories.
- Gold closed slightly lower at $2332, but off yesterday’s $2289 nadir.
Market Trends:
- The NASDAQ increased 1.59%, with the S&P500 up 1.20%, while the Dow rallied 0.69%. Dissipating geopolitical risks also supported.
- EU stock futures are posting gains, after a largely stronger close across Asia. Nikkei and Hang Seng gained more than 2% amid a strengthening tech rally. Australian shares underperformed.
- Tesla Inc. (+13.33% after hours) spiked after its statement for the launch of more affordable vehicles despite a sales miss. The stock halted a 7-day plunge, climbing alongside other members of the group.
- Microsoft Corp., Meta Platforms Inc. and Alphabet Inc. are also due to report earnings this week. Profits for the “Magnificent Seven” group — which also includes Apple Inc., Amazon.com Inc. and Nvidia Corp. — are forecast to rise about 40% in the Q1 a year ago, according to Bloomberg Intelligence data. The group of tech megacaps is crucial to the S&P 500 since the companies carry the heaviest weightings in the benchmark.
- Visa revenue advanced by 17% as Consumer Card spending increased.
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Andria Pichidi
Market Analyst
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