Senior Relationship Manager
Summary: Markets bounce after a week of heavy losses
Good Morning
We are going into an interesting week with key central bank decisions, lots of economic data and the first nonfarm Payroll of the year. The FOMC meeting last week has markets nervous and looking for clues on the course going forward.
After opening weak, US Index closed strong on Friday: Dow up 1.65%, S&P+ 2.43%, Nasdaq +3.13%, the biggest news were Apple, +7% Visa +10.6% , Western Digital and Caterpillar fall 7.3% and 5.2% on disappointing outlooks Chevron Corp missed Wall Street estimates and offered a weak outlook for this year's oil and gas production, shares fall 3.5%.
Main drivers were bargain hunting and weaker than feared US data, as well as a statement by Minneapolis Fed President Kashkari that a rate hike pause after a likely hike in March was possible. That indicted to many that the Fed would remain flexible in it`s approach. The overall expectation remains at close to 5 hikes this year.
10 Year Yields remain at 1.8% after a high of 1.85 on Friday, the US Index falls to 97.11 from 97.40 on Friday. Gold and Silver fell on Friday but especially Gold could hold above the 1782 support, currently 1788 and Silver trades at 22.40.
EURUSD remains near last weeks lows at 1.1165 while GBPUSD at 1.3420. EURGBP is trading at 0.8315 and at a strong support from since 2016, Thursday will be a big day with both central bank meetings.
Oil remains strong supply worries and high geopolitical tensions
As the Turkish Central bank continues to manage the exchange rate against the USD, Turkish President Erdogan dismissed the head of the statistics office on a reported disagreement over inflation.
Reuters reports that Russia is setting up a roadmap on Crypto regulation as Bitcoin remainsarround 37000.
We have launched a basked of Companies with strong female leadership set up by Peter Garnry:
Why women leadership?
Today we are launching our next equity theme basket focusing on women leadership. Why would do we need a women leadership basket? We are currently running an investor theme focus on ESG and the percentage of woman in companies’ executive team is part of the social aspect of companies. Recent research (here and here) also shows that there are mostly positive impact on company performance from having a more gender diversified executive team. This research from S&P Global also show that publicly listed companies with more women in the leadership team performs better.
Ecomnomic Data:
Monday: Germany GDP Turkey Trade Balance, Italy GDP, EU GDP, Germany CPI, US CPI,
Tuedsday: UK Houseprices, Germany Retail Sales Switzerland Retail Sales, France PMI, Germany PMI and Unemployment, EZ PMI, Canada GDP, US PMI, ISM Manufacturing PMI
Wednesday: EZ HICP, ADP Employment
Thursday: International PMIs, EU PPI , UK rate decision, EU Rate decision, US Employment data and factory orders
Friday: Germany Industrial Orders, EU retail sales, US Nonfarm Payroll
Earnings:
Tuesday: Keyence Corp, United Parcel Service, Exxon Mobil Corp US PayPal Advanced Micro, Starbucks Gilead Chubb
Wednesday :Alibaba Novo Nordisk Alphabet Sony Mitsubishi T-Mobile Meta QUALCOMM AbbVie Thermo Fisher Novartis AG
Thursday: Roche Ford Amazon.com Eli Lilly Shell ConocoPhillips , Estee Lauder Cos Inc
Friday:: Bristol-Myers Squibb, Sano FP
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