Nasdaq extends winning streak

Nasdaq extended its winning streak to eight weeks, a rare event, with history suggesting that bullish trends continue (until, of course, they don’t). Echoing its warning that rates could rise again, a couple of Federal Reserve members spoke this morning of the need for more rate hikes. Positive consumer sentiment data reinforced this message. Global stocks were impacted by continuing signs that China’s economic recovery is faltering.

Bottom line – risk-hold.

 

Nasdaq 100

Source: TradingView, StoneX.

 

TODAY’S MAJOR NEWS

Consumer still confident despite rate rises

• The University of Michigan Consumer Sentiment Index, mentioned in yesterday’s report (Bulls Back in Charge NASDAQ Rallies) showed increasingly confident consumers
• June’s preliminary index was 63.9, ahead of the expected 60.5
• This is hardly what the Fed would like to see, and could tilt a "hawkish" Fed closer to a July rate hike

Chinese power usage growth slows, economy struggling?

• Chinese power consumption rose 7.4% year-on-year in May, after 8.5% in April, both coming off a low base last year when much of the country was in a lockdown due to Covid
• Power use in the industry and manufacturing sector rose 4.1% year-on-year in May, after 7.6% in April
• Power use in the service sector jumped 20.9% year-on-year in May, up from 17.9% in April
• There was an unexpected jump of 8.2% in residential power use year-on-year in May, up from 0.9% growth in April (perhaps a product of more unemployed people who are now staying at home)

 

TODAY’S MAJOR MARKETS

Equity markets

• The S&P 500 and Nasdaq 100 indexes were pretty much unchanged, with the broadly based Russell 2000 off 0.8%, as traders continued to digest the Fed’s ‘aggressive interest rate pause”
• NASDAQ is nonetheless closing on an eight week winning streak
• The Nikkei 225 led global markets, up 0.7%, with the FTSE 100 and DAX indexes up 0.2% and 0.3%, respectively
• The VIX, Wall Street’s fear index, fell sharply to 13.7, back to 3 year lows

Currencies, Bonds and Crypto

• The dollar index was unchanged against a basket of currencies, with the Euro x-rate unchanged versus the dollar but Sterling up 0.4%
• Bonds fell after the Fed’ no-hike meeting, with yields on 2- and 10-year Treasuries lower at 4.74% and 3.77%
• Bitcoin got a boost to $26,183, up 4.5%, on  the news that BlackRock had filed for a daily-priced Bitcoin ETF, something which as long eluded the crypto industry

Commodities rally

• Gold prices were unchanged at $1,970 per ounce
• Crude oil prices rose another 1.4% to $71.4 per barrel, continuing its recent rally
• Grain and oilseed markets benefited from a continuing ‘weather rally’ ahead of a critical three-day holiday weekend that could see a lot of volatility around today's close and again on Monday night's opening trade

 

Analysis by Arlan Suderman, Chief Commodities Economist. [email protected]

Markets outlook by Paul Walton, Financial Writer. [email protected]