Wall Street is showing signs of pausing after the recent strong rally, which was fueled by optimism that the US Federal Reserve will start cutting interest rates before the end of the year. We see all major US equity futures little changed after the S&P 500 closed significantly higher again yesterday and above the 50-day moving average.
Markets in Europe and Asia were mostly higher, with Japan's Nikkei and Hang Seng in particular extending their recent strong gains.
Strong gains from the banking sector helped the European markets to make further gains. However, there are increasing signs of weakness in the European automotive sector: German chip manufacturer Infineon Technologies lowered its sales forecast, signaling that demand from the automotive industry remains weak. Walt Disney reported a profit for the second quarter that exceeded estimates, thanks to significantly lower losses in the streaming TV business and higher admission prices at its theme parks. Nevertheless, total revenues fell short of forecasts, causing shares to fall in pre-market trading.
We also see that demand for bonds continues unabated and yields continue to fall, giving risk assets/stocks a tailwind. In a quiet week for economic data, the focus will be on further speeches from Fed officials. Minneapolis Fed President Neel Kashkari will speak today. Federal Reserve Bank of Richmond President Thomas Barkin said yesterday that he expects high interest rates to cool inflation to the central bank's 2% target. I don't expect much restraint from Fed officials, but the latest NFP labor market report points to an easing labor market, while PMI data shows a slowdown in the US economy.
We will see markets with low volatility and thin trading activity, mostly in sideways moves.
Investors will also react to news on the current situation in Gaza. Israeli forces took control of the Rafah border crossing in Gaza on Tuesday morning in preparation for a possible attack on the city. It is the first time that the Israeli army has entered this part of the Gaza Strip since the war with Hamas began in October. Israel called on residents in parts of eastern Rafah to leave the city immediately and launched further airstrikes in some areas of the city. Fears of a worsening situation in the Middle East could again increase the risk premium for oil and gold, which are also currently trading little changed.
👁 ROB'S MARKET OVERVIEW:
May 07, 2024
🌐/🇺🇸 Global Markets ➡️
Cyclical / Luxury Stocks ➡️
Tech/Growth Stocks ↕️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ➡️
Materials Stocks ↗️/➡️
💱 Forex
USD, EUR ↗️/➡️
AUD, GBP, CAD ➡️
CHF ↘️/➡️
JPY ↘️
⚒ Commodity Markets ↘️/➡️
Oil prices ↘️/➡️
Natural Gas prices ↘️/↕️
Metal prices ↕️
Gold ↘️/➡️ (fundamentally benefiting from lower yields; slightly pressured from stronger temp. stronger USD)
⚡️Cryptos ➡️/↕️ (back in sideways – for now range $62.5K – $65K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
