Wall Street opens unchanged as investors await key results from Nvidia to see if the massive AI rally that has been the main reason for Wall Street's strength over the past 15+ months can continue. Nvidia shares are trading little changed near record highs in pre-market trading.
Markets also became more nervous over the prospect of stubbornly high inflation, which could prevent central banks from easing monetary policy as early as expected. Hawkish comments from Fed officials lowered expectations of a Fed rate cut. Only the swap markets see a chance of just over 60% for a rate cut in September. The latest data from the UK shows that inflation is continuing to fall – albeit more slowly than expected.
With global equity prices near record highs, we need economic data that is close to ideal: It must not point to a dramatic slowdown in growth and consumer demand, while showing that disinflation is continuing or that the economy and labor market are moderately easing. It is absolutely not easy to be achieved. Much will depend on Nvidia, which will publish its results after today's US session. Strong forecasts from Nvidia would help global equities (especially tech stocks) to reach new all-time highs.
Stocks in Asia were mostly mixed today, while European stocks were down around 0.3% as hotter-than-expected inflation data from the UK had a stronger impact on sentiment in Europe (including the Eurozone).
The Reserve Bank of New Zealand (RZBA) also left interest rates unchanged today, signaling that policy will remain tight for longer, while Fed Governor Christopher Waller said yesterday that he wants to see more good inflation data before Fed starts cutting rates. The minutes of the latest Fed meeting will be released later today (18:00 UTC+0).
Target lost almost 7% after its earnings forecast fell short of estimates and Lululemon Athletica sank as much as 4% after announcing organizational changes. Tesla slipped 2% after news that sales in Europe fell to a 15-month low in April.
Trading volumes remain very low – exceptionally low for May.
Increased caution also led to a further rise in the USD, which also weighed on commodity prices. Gold retested recent lows at $2,406 (as we expected yesterday) but continues to be supported by increased safe-haven demand. Yesterday's API report showing that inventories in the US rose last week also pushed oil prices lower.
👁 ROB'S MARKET OVERVIEW:
May 22, 2024
🌐/🇺🇸 Global Markets ➡️/↕️ (sideways movement with rising volatility after Fed meeting minutes and before NYSE closing / ahead of Nvidia's earnings report)
Cyclical / Luxury Stocks ➡️/↕️
Tech/Growth Stocks ➡️/↕️
Financial Stocks ↘️/➡️/↕️
Defensive Stocks ➡️
Energy Stocks ↘️/➡️ (slight further headwinds due to weaker energy prices)
Materials Stocks ↘️
💱 Forex (low volatility)
USD ↗️/↕️ (gains towards Fed meeting minutes)
GBP ↗️/➡️ (limited upside potential after initial gains post UK inflation report)
EUR ➡️
CAD, AUD ↘️/➡️ (headwinds from weaker oil prices, lower than expected inflation in Canada)
CAD, AUD ↘️ (remains weak as rate cut hopes decline slightly in US, UK, Eurozone, NZ)
⚒ Commodity Markets ↘️
Oil prices ↘️
Natural Gas prices ↘️/↕️
Metal prices ↘️/↕️
Gold /↘️/↕️/↗️ (headwinds from stronger USD, higher yields, benefits from cautious mood)
⚡️Cryptos ↘️/↕️ (volatile with potentially more profit taking ahead – for now hovering near $70K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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