🇰🇷 South Korea Business Mood at 18-Month High in May
The Business Survey Index (BSI) for the manufacturing sector inched higher to 74 in May 2024, from 73 in the previous month. It pointed to the highest level since November 2022 as export oriented demands (81 vs 80 in April) and domestic demands (71 vs 69 in April) increased, along with sales (83 vs 79 in April), profitability (80 vs 78 in April) and raw material purchase prices (123 vs 121 in April). Meanwhile, manufacturers reported that sales prices remained steady at 100.
🇵🇾 Paraguay Maintains 6% Policy Rate
The Central Bank of Paraguay unanimously left its policy rate on hold at 6% in May 2024, the third consecutive pause, amidst mitigated external risks, especially regarding oil prices. Domestically, the monthly economic activity indicator grew by 0.2% year-on-year in March, driven by services and agriculture, while livestock, manufacturing, electricity generation, and construction contracted. Consumer confidence remained optimistic at 52.8 in April (53.5 in March). Additionally, consumer price inflation reached 0.8% in April, primarily due to higher prices of volatile basket items, with core inflation at 0.2% monthly and 3.1% annually. Inflation expectations remain aligned with the 4.0% target. The committee remains committed to price stability, closely monitoring internal and external developments to anticipate their impact on inflation and ensure the 4% target is met within the monetary policy horizon.
FX Updates: Mexican Peso Depreciates by 0.49%
Top currency losers are Mexican Peso (-0.49%), South Korean Won (-0.35%) and Brazilian Real (-0.35%). Gains are led by Norwegian Krone (0.29%). In addition, there was a slight change on Dollar Index (0.02%), British Pound (0.01%), Euro (-0.04%) and Japanese Yen (0.16%).
Energy Commodities Updates: Natural Gas EU Dutch TTF Gains by 3.74%
Top commodity gainers are Natural Gas EU Dutch TTF (3.74%), Natural Gas UK GBP (3.42%) and Urals Crude Oil (0.60%). Biggest losers are Natural gas (-3.26%), Gasoline (-1.58%) and Methanol (-1.43%). In addition, there was a slight change on Crude Oil WTI (-1.43%) and Brent Crude Oil (-1.42%).
Metals Commodities Updates: Silver Gains by 0.89%
Top commodity gainers are Silver (0.89%) and Steel Rebar (0.82%). In addition, there was a slight change on Gold (-0.18%).
Agricultural Commodities Updates: Cheese Slumps by 7.64%
Top commodity losers are Cheese (-7.64%), Butter (-5.47%) and Palm Oil (-1.40%). Gains are led by Coffee (5.43%), Lumber (2.48%) and Orange Juice (1.83%).
🇺🇸 US500 CFD hits All-time High
US500 CFD increased to an all-time high of 5328.00 Index Points. Over the past 4 weeks, United States Stock Market Index (US500) gained 6.31%, and in the last 12 months, it increased 27.05%.
🇳🇿 New Zealand Stocks Muted ahead of RBNZ Rate Decision
Equities in New Zealand were almost flat at around 11,673 in morning trade on Wednesday, as investors awaited an interest rate decision from the RBNZ later today. The central bank is widely expected to keep cash rates on hold for the seventh straight gathering amid elevated inflation.
🇯🇵 Japan Manufacturers’ Mood Unchanged in May
The Reuters Tankan sentiment index for manufacturers in Japan stood at 9 in May 2024, unchanged from April but respondents complained that inflationary pressures driven by the weak yen were squeezing profit margins. The latest figure came a week after data showed that Japan’s economy contracted 2% on an annualized basis in the first quarter as private consumption, capital expenditure and exports all softened. One respondent said: “China's economic slowdown has caused orders we receive to decline. On top of that, the weak yen drove up the prices of raw materials such as plastic resin, while labour costs and electricity bills increased, all of which squeeze our profits." Another manager said: "Domestic orders lacked momentum. Various cost increases through the weak yen and higher labour costs seem to make (our clients) hesitant to boost capital expenditure."
🇺🇸 US Futures Steady Ahead of Nvidia Earnings
US stock futures held steady on Wednesday as investors look ahead to Nvidia’s highly-anticipated earnings report. In extended trading, Urban Outfitters jumped nearly 6% on better-than-expected earnings and revenue for its latest quarter.
Gold Prices Steady at $2,420
Gold prices held near $2,420 an ounce on Wednesday, after easing from record highs, as investors continued to assess the recent remarks from Fed officials. Several Fed policymakers advocated for continued policy caution and noted that the US central bank should wait a few more months to confirm that inflation is truly back on track to its target before reducing rates. Investors will pay attention to the minutes from the Fed's latest policy meeting, scheduled for release later today, along with some speeches from other Fed officials. Meanwhile, the bullion's downside is capped by renewed U.S.-China trade tensions and fears of escalating geopolitical conflict in the Middle East amid the recent death of Iranian President Ebrahim Raisi. Elsewhere, China’s measures to stabilize its crisis-hit property sector is also providing some boost to gold prices.
Oil Declines for Third Session
WTI crude futures fell to around $78 per barrel on Wednesday, sliding for the third straight session as uncertainty over the timing of US Federal Reserve interest rate cuts weighed on the demand outlook. Fed speakers this week have largely called for caution and more confidence that inflation will return to 2% before cutting rates. Industry data also showed that US crude inventories increased by 2.48 million barrels last week, defying expectations for a 3.1 million barrel decline. Moreover, the risk premium stemming from tensions in the Middle East has diminished as oil supplies have not been affected. All eyes are now on the upcoming OPEC meeting scheduled for June 1, where key oil producers are anticipated to prolong output cuts in order to prevent a global oversupply and bolster prices.
🇨🇳 China Stocks Struggle for Direction
The Shanghai Composite rose 0.1% to around 3,160 while the Shenzhen Component fell 0.2% to 9,665 in mixed trade on Wednesday, with mainland stocks struggling for clear direction amid a lack of market-moving cues. The latest measures from Beijing to support China’s ailing property sector also failed to sustain a market rally. Moreover, markets continued to assess the possibility of further policy easing in China after the central bank decided to hold key lending rates steady this month as it aims to support growth while defending its currency. Strong gains were seen from property stocks such as China Vanke (3.8%), 515J Holdings Group (9.9%) and Shenzhen SDG (13.3%). Meanwhile, losses were seen from heavyweight firms including Zhejiang Wanfeng (-1.8%), Citic Offshore (-3.4%) and Zhongji Innolight (-1.9%).
🇺🇸 Dollar Steadies as Fed Minutes Eyed
The dollar index steadied around 104.6 on Wednesday, remaining in a tight range so far this week as investors awaited minutes of the Federal Reserve’s last policy meeting for further insights on the path for interest rates. So far this week, Fed speakers have called for caution before cutting rates, with Fed Governor Christopher Waller saying he would need to see several more months of good inflation data. Atlanta Fed President Raphael Bostic also said on Monday he thinks "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, markets see around a 61% chance of a Fed rate cut in September and a higher 73% odd in November. The dollar held steady across the board, but weakened sharply against the kiwi after the Reserve Bank of New Zealand delivered a hawkish pause.
🇫🇮 Finnish Jobless Rate at Near 3-Year High
Finland’s unemployment rate increased to 9.2% in April 2024 from 7.9% in the corresponding month of the previous year. It was the highest jobless rate since May 2021, as the number of unemployed persons rose by 41 thousand year-on-year to 263 thousand. Meantime, the unemployment rate for people aged 15-24 stood at 24.7%, which was 2.1 percentage points more than a year ago. On the other hand, the employment rate edged down to 76.3% from 77.8% a year earlier, with the number of employed persons decreasing by 18 thousand to 2.588 million. Lastly, the activity rate ticked higher to 68.7% from 68.6%.
🟥Fed Waller: April data is not enough to judge that inflation will continue to slow
US Federal Reserve Bank member Christopher Waller made some statements about inflation and interest rates during his speech at the Peterson Institute for Economic and Monetary Policy Forecasts conference on Tuesday, and the most important of those statements were the following:
- The US Federal Reserve needs to see several more months of good inflation data before it feels comfortable to start easing monetary policy conditions.
- The exception to this, which might prompt the US Federal Reserve to cut rates early, would be significant weakness in the labor market.
- Additional interest rate increases are likely unnecessary.
- April inflation data suggest that progress towards the 2% target is likely to resume, but progress has nonetheless been modest.
- However, data indicate that inflation is not currently accelerating
- The economy appears to be developing closer to what the US Federal Reserve expected.
- Data on spending and the labor market suggest that monetary policy is well placed to put pressure on inflation.
- Wage growth is still slightly higher than desired, but not that significant.
- The US Federal Reserve will closely monitor the development of private domestic final purchase prices in the second quarter.
- Delinquency rates on credit card and auto loans indicate that some consumers are under pressure.