Gonet: Market news from June 2nd

Dow -0.54%, S&P 500 -0.75%, Nasdaq -0.72%, Russell 2000 -0.49%, SOX -1.60%, Eurostoxx -0.78%, SMI -1.01% .

Two financiers meet in downtown Manhattan. The first: “How’s our economy, darling?”. The second: “I am very afraid that his condition improved in May. I would have liked to have good news for you, my friend, forgive me.” Such has been life on Wall Street for some time, “good news is bad news” and vice versa. The stock market, that big spoiled child, fears that the Fed’s liquidity tap is turning off like the plague, and yesterday’s economic stats are doing nothing to ease those fears. The ISM index of US manufacturing activity surprises us with a rebound in May, while its paid price component rises more-than-expected. New orders and production growth have accelerated over the past month, suggesting that underlying demand remains strong. That’s all it takes to reignite fears of a more aggressive Fed in the rate-hike process. And those who are quicker to say higher interest rates are saying the US economy is more at risk of a hard landing. It’s a bit like the money snake biting its own tail. Still, the market is reviewing its ranges and now expects 3 more 50bps hikes in each session before slowing to 25bps in November. The bad news squad takes center stage on Raphael Bostic. The Atlanta Fed chief recently mentioned the possibility of a pause in the rate hike process, he returns to the subject, specifying that his words should in no way be interpreted as a “Fed put”, that is: Mr. Bostic has been wreathed by his boss Jerome Powell and forced to state publicly that the Fed is not there to bail out the markets.

It’s been two days since the stock indices have been dormant slightly down, maybe they’re hungover after last weekend’s MSCI rebalancing. Anyway, despite this slight blip in early June, the performance of the last few sessions remains very good, also the volatility has been falling for the past two days, albeit slightly, but it is falling, which is unusual when stocks are also investors, so do not panic in any way fallen while staying protected, the current level of the VIX (25.69) is a good example of this. The various forces present are not changing, on the one hand the bears who are convinced that the American economy is slowing (well, yesterday’s ISM statistics tend to contradict that, as does the Fed’s Beige Book released last night, this shows in particular employment growth in all districts). The bears also have arguments such as inflation, the supply chain disrupted by the war in Ukraine, and the management of Covid in China. After all, central banks are regularly singled out by this declining population, there has to be a culprit. On the enlightened side of the force, remembering that the recent drop in indices has brought valuations to much more reasonable levels, we prefer a scenario of a resilient economy that will land softly (soft landing), we don’t forget the piles of cash ready to enter the market and retail investor sentiment which has recently deteriorated to its Covid level is a great contrarian indicator.

Let’s go back to yesterday’s session. The financial sector is being tackled by JP Morgan chief Jamie Dimon, who is in excellent shape and says investors should be prepared for an economic “hurricane”. “We don’t know if it’s a minor hurricane or Storm Sandy,” adds Jamie Dimon. “You better be prepared. The best defense against an economic downturn is a conservative balance sheet.” I like JP Morgan, they allow you to express yourself without necessarily following the boss’s line, a sign of intellectual integrity. Marko Kolanovic, global head of quantitative macro research and derivatives at JP Morgan, is more optimistic than his boss. He expects the S&P 500 to end the year flat as investors have “already absorbed and priced in” the Fed’s policy changes. Unlike financials, which ended the session at the bottom of the field, energy was the only sector of the S&P500 Index (SPX) to end the session in the green and fairly well (+1.76%). The technology sector limits losses, stabilized by some giants such as Apple (AAPL -0.01%) or Microsoft (MSFT +0.2%) and driven by HP (HPQ +3.9%) and Salesforce (CRM +9.9%) ). Salesforce’s first-quarter results are better than expected after disappointing fourth-quarter results in early March weighed on the price. The company says demand is incredibly healthy and macroeconomically unaffected; While FY23 revenue forecasts have been revised downwards, foreign exchange transactions are the main contributor and analysts are particularly fond of the upward revision to operating margin targets.

Oil retreats to $113 a barrel in WTI Light Crude, the United States is pressuring (no pun intended) to bring crude prices back to more affordable prices for the consumer rumbling a little louder everywhere, it’s starting to spine to hurt a lot. the FinancialTimes (FT) reports that Saudi Arabia would be willing to increase its production to replace Russia’s if necessary. The bond market reacts to the economic statistics of the day and sends slightly higher yields. US 10-year Treasuries are back at 2.91% this morning while the dollar is benefiting from the situation and returning to 1.0676 against the euro, technical levels are in play, the greenback is resistance at least for now.

As is well known, Europe was always built up in times of crisis. Croatia is about to join the euro zone. The European Commission has decided the country is healthy enough to adopt the single currency next year, marking its 20th yeare Member. Other EU governments are expected to make a final decision in the first half of July. Eurozone membership should lower interest rates, improve credit ratings and make Croatia more attractive to investors.

Big US “macro” day with Challenger study on layoffs (1.30pm), then ADP study on employment (2.15pm) and weekly unemployment claims (2.30pm), industrial orders (5pm) and weekly oil stocks .

Straumann: Julius Baer sticks with a reduced target from 160 to 140 Swiss francs. Hewlett Packard Enterprise cut its 2022 earnings guidance, the stock falls 7% off the session. Sheryl Sandberg is stepping down as COO of Meta Platforms after 14 years in the business. General Motors will fully electrify its Buick vehicle line by 2030. Elon Musk gives his Tesla executives an ultimatum to personally return to work. Moody’s has upgraded Holcim’s long-term credit rating from “Baa2” to “Baa1”. Novartis resumes operations in Ukraine. Temenos signs a deal with Vietnamese bank MSB. Roche signs license agreement with Repair Therapeutics.

Last night and this morning indices were trading lower in Asia except for Shanghai which was up 0.41%. Tokyo lost 0.16% at the bell, Hong Kong fell 1.28% and Seoul lost 1%. SPX futures are trading around breakeven and Europe opens slightly higher by 0.2%. Gold returns to $1852 an ounce. London is on holiday today and tomorrow for the Queen’s Jubilee, the market is waiting, the all-important US jobs report comes out tomorrow afternoon.

#Gonet #Market #news #June #2nd

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