S&P reaches 5,500 points pre-holiday, markets in France and Japan up
Markets in the US calm after Powell’s remarks; S&P 500 hits 5,500. France’s CAC 40 +1.6%, Japan’s Nikkei 225 +1.3%. Oil stable at $82.81
U.S. Markets and Federal Reserve
Federal Reserve Chair Jerome Powell’s recent remarks in Portugal have had a calming effect on U.S. Treasuries and buoyed Wall Street stocks to record highs. The S&P 500 closed above 5,500 points for the first time, and the Nasdaq hit new records. Tesla, a standout performer, surged 10% following a smaller-than-expected 5% decline in Q2 vehicle deliveries, and its shares continued to rise by another 3% pre-market on Wednesday.
U.S. Treasuries saw ten-year yields dip to 4.43% from a recent peak of nearly 4.5%, influenced by increased speculation on a Trump electoral victory. Despite the Federal Reserve maintaining a stance against immediate interest rate cuts, Powell indicated a “disinflationary path,” which helped soothe fears for markets.
Upcoming labor market reports, including ADP’s private sector jobs data for June and weekly jobless claims, are set to provide further economic direction. Wall Street futures remained steady, with minimal movements ahead of a trading holiday.
European Markets
In Europe, market movements were influenced by electoral outcomes and economic data. France’s CAC 40 rose by 1.6%, Germany’s DAX by 1%, and Britain’s FTSE 100 by 0.6%. French government bond yields fell below 70 basis points over German Bunds, reflecting reduced political risk from the French assembly elections.
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Asian Markets
Asian markets presented a contrasting picture, with the U.S. dollar strengthening to a 38-year high against the yen and reaching 2024 highs against the yuan. The Nikkei 225 in Japan rose 1.3%, driven by gains in technology stocks like Kyocera (up 3.1%) and Murata Manufacturing (up 6.4%). The Australian S&P/ASX 200 gained 0.3%, South Korea’s Kospi edged up 0.5%, and Hong Kong’s Hang Seng increased by 1.2%. Conversely, the Shanghai Composite Index dropped by 0.5% due to weak service sector data.
Oil and Commodities
Crude oil prices remained stable, with U.S. benchmark crude at $82.81 per barrel and Brent crude at $86.31 per barrel. Anticipation of strong summer demand and potential disruptions from hurricanes like Hurricane Beryl contributed to this stability. In commodities, spot gold rose 0.9% to $2,350.42 per ounce.
Corporate Highlights
Paramount Global experienced a significant pre-market jump of 13% amid merger talks with Skydance Media. The merger had previously faced obstacles but seemed closer to fruition. Tesla continued to benefit from robust sales figures, rising 2.3% pre-market after substantial gains earlier in the week. In other corporate news, Skydance Media plans to merge with Paramount Global, Dell Technologies was added to Bank of America’s US 1 list, and Southwest Airlines adopted measures to counter activist shareholder pressures.
Currency and Cryptocurrencies
The U.S. dollar experienced mixed performance, slightly easing against the euro and sterling but strengthening against the yen. The euro rose to $1.0768, and the British pound increased to $1.2714. Bitcoin and Ether saw declines, falling by 2.8% and 3.5%, respectively.
Bond Insights
The yield on ten-year U.S. Treasuries declined by two basis points to 4.41%, while Germany’s ten-year yield rose by two basis points to 2.62%. In the UK, the ten-year yield fell by three basis points to 4.22%.
Key Events
Key events for the week include the UK general election, the U.S. jobs report, Eurozone retail sales, and speeches by Fed’s John Williams and ECB officials. The economic data released throughout the week will likely influence future Federal Reserve decisions and trends for markets.
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