Mai hui MHmarkets: June 29, 2023 - Fundamental Reminder

☆ At 14:30, Fed Chairman Powell and Bank of Spain Governor Hernandez de Cos participate in a meeting on financial sustainability, investors should be wary of Powell eagle again.

☆ At 20:30, USD Initial Jobless Claims(JUN/24) & USD GDP Growth Rate QoQ Final (Q1) & USD Consumer Spending QoQ Final (Q1) & USD Core PCE Prices QoQ Final (Q1)

Market Overview

Review of Global Market Trend 

Spot gold fell sharply on Wednesday as Powell reiterated his hawkish stance, falling below the 1,910 mark and hitting a near four-month low before settling down 0.32 percent at $1,907.46 an ounce. Spot silver settled down 0.7% at $22.69 an ounce.

The dollar index rose as high as 103.16 before failing to hold above 103 and closing 0.45 per cent higher at 102.97. Treasury yields slipped, with the 2-year yield easing to 4.712%; The yield on the 10-year Treasury note fell back near the 3.7% mark to close at 3.714%.

WTI crude oil rose sharply in the US session and returned to near $69, reaching an intraday high of $69.80 before closing up 1.69% at $69.11 a barrel as USD Crude Oil Stock Change fell for the second week in a row and international crude oil rebounded. Brent crude settled up 1.43 percent at $73.76 a barrel. The premium of Brent crude oil to Dubai prices was wiped out for the first time since November 2020, with losses in the oil hedge fund of star trader Andurain, known as the god of crude trading, widening to 51% at one point.

Major U.S. stock indexes swung slightly throughout the day, with the Dow Jones Industrial Average closing down 0.22%, the S&P 500 down 0.04% and the Nasdaq up 0.27%. Tesla closed up 2.4%, Apple gained 0.6%, further narrowing its $3 trillion market cap to less than $30 billion, and Nvidia closed down nearly 2%. The Nasdaq China Golden Dragon Index closed down 0.93%.

European stocks closed in the red, with Germany's DAX30 index up 0.64 percent. Britain's FTSE 100 closed up 0.52%; The Stoxx Europe 50 index closed up 0.92%. 

Market Focus

1. Panel meeting of four central banks in Europe, the United States and Japan: Powell said he didn't pay attention to what market expectations were, reiterating the need for two more interest rate hikes this year. A recession is possible but not the most likely scenario.

2. Apple is less than $30 billion away from a $3 trillion market cap.

3. Some ECB officials are said to be considering a faster pace of debt reduction.

4. Opec again shut out three major news organizations, including the Wall Street Journal.

5. The premium of Brent crude oil over Dubai's quoted price was erased for the first time since November 2020.

6. Sensing the existential crisis posed by AI, big American news organizations have rarely sought to band together.

7. The Biden administration is considering imposing a new wave of AI-chip export controls on China, the Wall Street Journal reported, citing people familiar with the matter.

8. Us Congressional Budget Office: US public debt is expected to reach 181% of GDP in 2053, compared with 98% this year.

9. White House: Biden in recent weeks began using a CPAP respirator to improve sleep quality, which is common for people with a history of sleep apnea.

10. U.S. banks passed the Federal Reserve's stress tests amid a recession, high unemployment and a housing crash, clearing the way for a potential multibillion-dollar buyback program for the sector.  

Geopolitical Situation

Conflict Situation

1. Financial Times: The Ukrainian side says the main part of the counter-offensive is still behind us and that Ukraine's main army reserves have not yet been used in the operation.

2. The governor of Ukraine's Kharkiv region said that three civilians were killed in Russian shelling in Ukraine's Kharkiv region.

3. The Russian Defense Ministry issued a battle report on 28th that Russian air and space forces used precision-guided weapons to strike Ukrainian oil refining and fuel storage facilities.

4. The General Staff of the Ukrainian Armed Forces issued a news release on the same day saying that the Ukrainian forces continued their offensive in the direction of Melitopol, Berdyansk and Bakhmut and made progress in the area near Bakhmut. 

Assistance Situation

1. Lithuanian President: Lithuania signed an agreement to buy 2 sets of NASAMS air defense missile systems to be shipped to Ukraine.

2. Market news: Ukraine accepted EU power supply on Tuesday due to local power shortage.

3. German Chancellor Scholz: (When asked about the upcoming EU summit and Ukraine's request to buy more weapons) the summit will not agree on substantial new matters.

Institutional Perspective 

01

Goldman Sachs

【Goldman Sachs: Brazil's Credit Growth Likely to Continue to Slow】

On June 28, Brazil's high interest rates, high levels of household debt and the prospect of slowing economic activity could mean credit growth in the South American country will continue to slow, Goldman Sachs economist Alberto Ramos said in a research note. Brazil's central bank said the country's total credit rose 0.2 percent in May from April and 9.9 percent from a year earlier. Ramos said credit quality deteriorated this month, with non-performing loan rates rising for both individuals and businesses. A strong labor market and government assistance to low-income households should partially mitigate factors holding back credit growth, he said.

02

SOCIETE GENERALE

Societe Generale chairman: European banks have been resilient during the rate hike. Inflation problems put the credibility of central banks at risk.

03

MUFG

【Mitsubishi UFJ: Stronger-than-expected U.S. economic data expected to push the Fed to continue raising interest rates】

June 28, the U.S. dollar index DXY rose slightly, extending yesterday's gains, following the release of stronger-than-expected U.S. economic data, including durable goods orders, new home sales and the U.S. CB consumer confidence. Lee Hardman, senior Forex analyst at Mitsubishi UFJ Financial Group, said the data showed resilience under the negative impact of rising interest rates and a tightening credit environment in the near term, which should allow the Fed to continue to raise interest rates. He said, “The unexpected strength of these data is the largest since early April, which has allowed the Fed to implement at least one of two additional rate hikes in July.”