Market News – European Stocks Follow US Gains, Inflation Pressures Rise in Australia
Economic Indicators & Central Banks:
Australia’s CPI surged to 4% in May, up from 3.6% in April, complicating the central bank’s plans for rate cuts. This increase was mainly driven by higher housing and transport costs.
European stocks followed the upward trend after a volatile Asian session and a rally in US session overnight, with markets awaiting new trading catalysts.
China’s central bank once again loosened its grip on the Yuan as the currency traded near the lower end of its fixed daily trading band. A Bloomberg survey indicated that China’s export outlook is set to improve, supporting growth in the world’s second-largest economy despite slowing consumer spending.
Treasuries lost ground with yields ending a few basis points higher as hawkish comments from the Fed’s Bowman combined with risk-on flows into the NASDAQ and a slightly better than expected confidence report weighed on bonds.
Investors are likely to continue investing in US stocks at any sign of a pullback as the Fed moves closer to reducing interest rates, according to Societe Generale SA, which expects the easing cycle to begin early next year.
Asian & European Open:
Asia stock indices rose, while Australian stocks declined. US stock futures edged higher in Asia, bolstered by a rebound in Nvidia shares.
The bounce in Nvidia after its 3-day rout helped lift tech and in turn the NASDAQ and the S&P500. Nvidia climbed 6.8%,following a $430 billion sell-off. The NASDAQ ended with a 1.26% gain, while the S&P 500 was 0.39% in the green. The Dow dropped -0.76% with a -2.67% plunge in materials leading a broadbased decline.
Rivian Automotive Inc. surged as Volkswagen AG announced a $5 billion investment to form a joint venture with the electric-vehicle maker.
Financial Markets Performance:
The USDIndex firmed but off its 105.78 peak.
USDJPY held just below the critical 160 per Dollar level, raising concerns about possible market intervention.
The AUD strengthened to 0.6688 due to faster-than-expected inflation data.
USOIL held a decline following an industry report indicating a small increase in US crude inventories ahead of official government data.
Copper fell to its lowest level in over 2 months due to sustained pressure from weak Chinese demand. Gold remained largely unchanged.
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Andria Pichidi
Market Analyst
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