Senior Relationship Manager
Good Morning,
Risk off sentiment is driving markets after a terrible end of the week in which all 3 US indexes fell more than 2%. This morning it looks like the selloff is set to continue withteh GER40 below 14000. The S&P500 at 4230 the Dow at 33500 and the Nasdaq 100 at 13260, all based on the futures. The Euro could initially gain on the news that Emmanuel Macron beat Le Pen with a wide margin but gave up the gains over night.
EURUSD is trading at 1.0770, GBPUSD at 1.2800, the Japanese Yen remains high at 128.50, and the USD Index to 101.35, Gold and Silver fall to 1915 and 23.70 respectively and Bitcoin below 40k at trade at 39000. Oil is down 3%. EU bonds are little changed with the Bund Future trading at 153.50
Driver is a combination of rate hike fears in the US and now even the EU, where the market has now priced in around 85 basis points of hikes for this year, continued lockdowns in China, and overall growth fears.
The EU planning the 6th round of sanctions against Russia and the US are planning more weapons deliveries.
The takeover of Twitter by Elon Musk remains in the headlines, Hyunday reported a first quarter profit increase of almost 20%. Credit Suisse is rumored to pan a next restructuring as it threatens to fall out of the SMI Index.
The week will be driven by earnings data, with key companies reporting. Today Coca Cola is the largest, tomorrow Microsoft, Alphabet, GE, VISA and 3M will come out.
Technicals by Kim Cramer: : Nasdaq and S&P 500 have resumed their bear trend. Like to test March lows in a few days . RSI below 40
S&P 500 strong key support 4,164 likely to be tested coming week. 3,815 likely level to be seen before summer. Possibly 3,500 !
Dow Jones closed well below 34,102 key support. March lows around 32,578 likely to be tested within next 5-8 trading days.
Semiconductors already taken out March lows
Nikkei . Look out for key support test at 26,239.
ASX 200 rejected a few points below all time high. Likely to test support 7,356
DAX Key support 13,989 ! likely to close below Monday . If so March lows are targets.
Today the only significant economic data is the German IFO at 10:00 CET.
Remain cautions today and trade safely.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist