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World News Roundup

🇰🇷 South Korea Consumer Sentiment Drop to 6-Month Low in May

The Composite Consumer Sentiment Index (CCSI) fell to 98.4 points in May 2024, after remaining at its highest level since August 2023 for two consecutive months. Consumer sentiment regarding current living standards was one point lower than in April, at 88, and that concerning the future outlook was two points lower than in the previous month, at 92. Consumer sentiment related to future household income was two points lower than in April, at 97, and that concerning future household spending was one point lower than in the previous month, at 109. Consumer sentiment concerning current domestic economic conditions was one point lower than in April, at 67, and that concerning future domestic economic conditions was two points lower than in the previous month, at 79. The expected inflation rate for the upcoming year was 3.2%.

🇯🇲 Jamaica Keeps Key Rate on Hold

The Bank of Jamaica left its benchmark interest rate at 7% for the twelves consecutive time in May 2024, reflecting the fact that, although inflation is moderating, it is still not securely within the target range, and the risks to future inflation are skewed to the upside, meaning inflation could be higher than projected. Annual inflation rate in April was 5.3%, while monthly inflation was within the Bank’s target range and 0.3% lower than the rate recorded at March 2024. The MPC noted that future monetary policy decisions will depend on incoming data related to the risks to inflation stated above. In particular, the evolution of wage increases, inflation expectations and core inflation are important factors that will guide the MPC’s decisions on policy rate adjustments and other monetary policy actions in the future.

FX Updates: New Zealand Dollar Drops by 0.43%

Top currency losers are New Zealand Dollar (-0.43%), South Korean Won (-0.43%) and Japanese Yen (-0.41%). Gains are led by Mexican Peso (0.32%). In addition, there was a slight change on Dollar Index (0.11%), British Pound (0.06%) and Euro (-0.1%).

Energy Commodities Updates: Natural gas Rises by 4.77%

Top commodity gainers are Natural gas (4.77%), Natural Gas UK GBP (3.06%) and Natural Gas EU Dutch TTF (3.03%). Biggest losers are Gasoline (-0.93%) and Methanol (-0.77%). In addition, there was a slight change on Crude Oil WTI (-0.48%) and Brent Crude Oil (-0.34%).

Metals Commodities Updates: Platinum Falls by 3.07%

Top commodity losers are Platinum (-3.07%). Gains are led by Copper (1.29%), Silver (1.01%) and Gold (0.61%).

Agricultural Commodities Updates: Cheese Slumps by 5.70%

Top commodity losers are Cheese (-5.70%), Cocoa (-1.03%) and Lumber (-0.66%). Gains are led by Wheat (5.61%), Sugar (3.11%) and Soybeans (1.68%).

🇳🇿 New Zealand Equities Trade Lower

The stock market in New Zealand lost 46 points or 0.39% to 11,690 on Tuesday morning deals, giving up gains from the prior session amid weaknesses among logistics, consumers, and utilities.

🇺🇸 US Futures Steady After Nasdaq Hits New Record

US stock futures held steady on Tuesday after the tech-heavy Nasdaq Composite notched another record close in the previous session. In extended trading, Palo Alto Networks fell more than 8% as the cybersecurity firm’s forward guidance failed to excite investors. In regular trading on Monday, the Nasdaq Composite gained 0.65%, helped by a 2.5% jump in Nvidia ahead of its earnings report.

🇯🇵 Japanese Shares Track Wall Street Higher

The Nikkei 225 Index rose 0.4% to above 39,200 while the broader Topix Index gained 0.3% to 2,776 on Tuesday, extending gains from the previous session and tracking gains on the tech-heavy Nasdaq Composite which rallied to new record highs. Those moves came as Nvidia jumped more than 2% on multiple bullish analyst calls ahead of its earnings report on Wednesday, with its leadership in the artificial intelligence space serving as a major tailwind. Investors also look forward to a slew of economic reports in Japan this week including trade, inflation and business activity data. Technology stocks led the advance, with gains from Disco Corp (3.9%), Tokyo Electron (1.4%), Advantest (2%), Recruit Holdings (2.4%) and Shift Inc (0.5%). In corporate news, Tokio Marine jumped 6.3% after the insurance giant announced plans to buy back up to 200 billion yen worth of its own shares.

Gold Retreats from Record Highs

Gold fell around $2,420 an ounce on Tuesday, retreating from new record highs, as investors weighed the recent remarks from Fed officials. Despite last week's cooling US consumer inflation data, Fed officials are not yet prepared to say inflation is moving towards the central bank's target, with several advocating for continued policy caution. Fed Vice Chair Michael Barr emphasized the need for more time to evaluate restrictive policy effectiveness. More Fed officials are also scheduled to speak throughout the week. Meanwhile, strong safe-haven demand continued to support the metal, amid fears of potential escalation of geopolitical tensions after the death of Iranian President Ebrahim Raisi. Additionally, robust central bank purchases, particularly by China, aiming to lessen its reliance on the US dollar, alongside their property boost plan, further bolstered the trend.

Oil Holds Decline as Traders Assess Middle East

WTI crude futures held near $79 per barrel on Tuesday after settling lower in the previous session, as investors continued to assess developments in the Middle East following the death of Iran’s president in a helicopter crash and emerging health concerns of Saudi Arabia’s king. Still, markets don’t appear too worried about oil supply from the region as there are no immediate signs of disruptions to oil flows. Investors also cautiously awaited OPEC’s upcoming meeting on June 1 for a potential rollover of production cuts. Meanwhile, recent events such as Ukraine's attacks on Russian refineries and a Houthi missile strike on a China-bound oil tanker in the Red Sea continued to pose risks to global supply. On the demand side, Atlanta Fed President Raphael Bostic said US interest rates are likely to trend higher than what markets anticipate, comparable to those seen in the 1990s.

🇳🇿 NZ Dollar Edges Lower Ahead of RBNZ Rate Decision

The New Zealand dollar weakened slightly to $0.609 as traders braced for the Reserve Bank of New Zealand’s interest rate decision on Wednesday. The central bank is widely expected to leave its official cash rate at 5.5% for the seventh consecutive meeting. Thus, market focus will be on whether it signals that interest rate cuts could begin sooner than the mid-2025 starting point highlighted in February's forecasts. Last week, data showed that the country’s 2-year inflation expectations fell to their lowest level in almost three years during the second quarter, fueling speculation that the RBNZ might consider lowering rates later this year. Externally, the US dollar stabilized as several Fed officials on Monday called for continued policy caution, even after data last week showed consumer price pressures eased in April. Investors awaited the release of FOMC minutes this week, along with comments from other Fed officials, for more cues on the US interest rate path.

🇰🇷 South Korean Shares Fall as Battery Makers Weigh

The benchmark KOSPI fell 0.4% to around 2,731 points on Tuesday, reversing gains from the previous session, with battery makers leading the market lower. At the same time, investors are bracing ahead of the Bank of Korea’s policy meeting decision and the US chipmaker Nvidia’s earnings result due this week. The Bank of Korea is widely expected to keep its policy rate unchanged for an 11th straight meeting on Thursday. Meanwhile, South Korea’s composite consumer sentiment index fell to 98.4 points in May after remaining at its highest level since August 2023 for two consecutive months. Losses from battery stocks were led by LG Energy Solution (-1.9%), Samsung SDI (-2%), and SK Innovation (-1.4%). Battery materials makers were also down, including LG Chem (-1.9%) and Posco Holdings (-1.8%).

🇦🇺 RBA Resumes Rate-Hike Talk: May Minutes

Inflation in Australia has declined more slowly than anticipated, with recent data and other information signaling that the risks around inflation somewhat have risen, minutes of the Reserve Bank's May policy meeting showed. The situation prompted the central bank to resume a discussion of an interest rate hike before finally deciding that the case to stay on hold was stronger as the board aimed to avoid "excessive fine-tuning". Importantly, inflation expectations remained well anchored while uncertainty around the economy stayed highly elevated. Policymakers reiterated that returning inflation to the target range of 2–3% remained its highest priority. It added that the goal could be reached in H2 of 2025 and the midpoint in 2026. Meantime, unemployment was expected to be around the level consistent with the committee's full employment mandate by mid-2025. The process was unlikely to be smooth and it was difficult either to rule in or rule out future changes in the cash rate target.

🇺🇸 Dollar Extend Gains After Bostic Remarks

The dollar index rose toward 104.7 on Tuesday, extending gains from the previous session as Atlanta Fed President Raphael Bostic said that it will take time before the central bank is confident that inflation will return to 2%, reiterating that only one rate cut will be necessary this year. He added that “our new steady state is likely to be higher than what people have known over the last decade, maybe back to where we were in the 1990s and 2000s.” Still, traders held onto bets over the timing and extent of Fed rate cuts this year, seeing rate reductions in September and November. Investors now look ahead to more central bank commentary and the latest FOMC minutes this week to guide the outlook further. The dollar strengthened across the board, with the most pronounced buying activity seen against the Australian and New Zealand dollar and the Japanese yen.