Chief Investment Officer
Summary: The US S&P 500 Index has moved above a key technical level overnight and to new highs since the beginning of the Covid19 crisis. Today is the first cash equity session in the US since Friday after the holiday yesterday, so it looks pivotal for either confirming or rejecting this important technical sign that a full technical market recovery is unfolding.
What is our trading focus?
What is going on?
China assures that Hong Kong judiciary will remain independent. This is likely the headline helping Hong Kong stocks to extend their bounce from yesterday’s lows – few details are on offer as to what this means after massive demonstrations yesterday.
Germany bails out Lufthansa. In a EUR 9 billion deal, the German government will take a 20% equity stake in the struggling airline.
What we are watching next?
Market mood this week as we have crossed the line in major US S&P500 index. Markets appear to either be at a total loss as to what to do (major US dollar crosses and the US treasury market, both of which have been locked into tight ranges for weeks) or to be fully pivoting into risk-on mode, with implied volatilities continuing to collapse in many markets and EM currencies charging higher while the S&P 500 has now having a look above a key resistance level noted above.
Economic Calendar Highlights (times GMT)
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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
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