Senior Relationship Manager
Summary: Confidence wanes
Good Morning,
A disappointing US Consumer confidence caused equities to slip yesterday, the expectation was 100.4 and 98.7 was released.
Indexes fell and overall risk sentiment declined. The US Dollar gained across the board even if yields remained calm and traded lower. The USD Index traded at 103.80 yesterday morning and rose to 104.55.
EURUSD fell to below 1.05 at 1.0493, GBPUSD to 1.2195 and Gold and Silver dropped to 1820 and 20.85. The Yen can rise against the USD on higher than expected retail sales.
The Dow fell 1.5%, the S&P500 fell 2% and the Nasdaq nearly 3. According to Reuters, the S&P is likely to suffer the largest first half decline since 1970, it is currently down 19.82%.
Turkey agreed to let Sweden and Finland join NATO
The EU agreed on laws to combat climate change by ending combustion engine cars from 2035 , and a multibillion-euro fund
The ECB is looking if it should quantify the upcoming bond-buying scheme, as the impact so far is not convincing.
Peter wrote a great comment on Nike , “Nike’s cautious outlook shows the consumer is hit by inflation” and the implication of the bleak outlook, it is worth a read, the stock had lost 7%.
Toyota announced it is missed the global production target for May, making it the third month in a row where supply chain issues and lockdowns in China disrupt the plans.
Today we are looking at the Spanish inflation data at 9, EU Sentiment at 11:00, German Inflation at 14:00, the US GDP at 14:30 , tomorrow, UK GDP, Swiss KOF, German and EU Unemployment, German Price data, as well as US Consumption data Friday
H1 and Q2 adjustments are likely and as we saw yesterday with Nike, news drive the markets. Overall we remain in a bearish environment and need a strong move to pull us higher.
Remain diversified and manage risk actively.
Expiries
Physically Settled Futures:
CNM2 will expire 29th June at 8:35 GMT
RRN2, SILN2, SIN2, STFN2, XCN2, XKN2, XWN2, ZCN2, ZLN2, ZMN2, ZSN2 will expire 29th June at 15:00 GMT
RBN2, SBN2 will 30th June at 15:00 GMT
BZQ2 will expire 30th June at 18:30 GMT
Expiring CFDs:
CHINA50JUN22, HK50JUN22,SINGAPOREJUN22, TAIWAN95JUN22 will expire 29th June at 2:00 GMT
INDIA50JUN22 will expire 30th June at 2:00 GMT
OILUKAUG22 will expire 30th June at 15:00 GMT
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