Global equity prices are stabilizing after rising sharply yesterday in response to the US CPI report, which supports Fed rate cuts later this year. We see Wall Street slightly higher in pre-market US trading and close to record highs.
Yesterday's US CPI data, which showed that consumer prices cooled for the first time in six months, boosted market confidence that economic data may be starting to move into areas that the Fed sees as necessary to ease monetary policy. Inflation concerns and actual stubborn inflation have significantly reduced rate cut expectations and the Fed's own prediction of rate cuts for 2024 and the coming years.
Today's initial jobless claims in the US were lower than in the previous week, but still give the impression that the currently very tight US labor market is easing somewhat. US housing starts rebounded less than forecast in April, suggesting only a gradual improvement in housing starts and the US real estate sector.
We continue to see optimism in the market – although we remain somewhat cautious. Recent economic data has supported hopes of interest rate cuts, but at the same time shows that the US economy is cooling. A gradual slowdown is still seen as a positive as it supports the case for the Fed to ease monetary conditions.
Investors will be listening closely to what Fed officials have to say after recent voices have not been dovish.
I do not expect broad and strong additional gains today – the general state of the global economy is too uncertain. Moreover, there is not yet enough evidence that disinflation in the US is progressing fast enough for the Fed to cut rates this year. We expect the current risk appetite to persist for a while yet. Falling yields and a weaker USD continue to support Wall Street and commodity prices.
The oil price has recovered strongly – also supported by further declining US crude oil inventories, which point to a tightening oil market. Precious metal prices received a strong boost yesterday after US inflation data came in somewhat weaker than expected – I expect gold to remain on the upswing. The improved risk sentiment is also reflected in the weaker USD and the rise in risk-sensitive assets such as growth stocks and cryptocurrencies.
👁 ROB'S MARKET OVERVIEW:
May 16, 2024
🌐/🇺🇸 Global Markets ↕️
Cyclical / Luxury Stocks ↕️
Tech/Growth Stocks ➡️/↗️
Financial Stocks ↘️/➡️
Defensive Stocks ➡️/↗️
Energy Stocks ➡️/↗️ (remains oversold; can benefit from the rebound in oil prices)
Materials Stocks ↗️/➡️
💱 Forex
USD ↗️/➡️ (recovering from sharp decline yesterday, but remaining under pressure)
JPY ↗️/↘️
EUR, GBP, CAD ➡️/↗️
CHF ↘️/➡️
AUD ↘️/↗️
⚒ Commodity Markets ↗️/↕️
Oil prices ↗️/↕️
Natural Gas prices ↗️/↕️
Metal prices ↕️
Gold ↘️/↕️/↗️ (some profit taking after yesterday's strong gains; remains bullish)
⚡️Cryptos ↗️/↕️ (Jumped higher to a range $64K – $67K – now resistance in that range)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
