Mai hui MHmarkets: June 19, 2023 - Fundamental Reminder

☆ Market closure reminder: U.S. stocks are closed for the day today due to the Juneteenth holiday, and Brent crude oil, U.S. crude oil and gold and silver trading are closed early.

Market Overview

Review of Global Market Trend

Last Friday, perhaps because the market is digesting the Fed will be expected to raise interest rates in July, spot gold oscillating trading, its European session slightly upward, up to $1968, and then give back all the gains of the day, and finally close to a flat close at $1957.98 per ounce; spot silver rose more than 1% during the day, finally closed up 1.26% at $24.19 per ounce.

The U.S. dollar index narrowly defended the 102 mark during the day, climbing in the U.S. session, eventually closing up 0.15% at 102.29. U.S. bond yields rose sharply, with the 10-year U.S. bond yield rising to a high of 3.308% during the day, eventually closing at 3.767%; the two-year U.S. bond yield rose to 4.780%, eventually closing at 4.720%.

Crude oil received a boost from reinvigorated Asian demand, with WTI crude once rising to a daily high of $72.02, eventually closing up 1.53% at $71.60 per barrel and Brent crude closing up 0.91% at $76.26 per barrel.

U.S. stocks opened lower, with the Dow closing down 0.32%, the S&P 500 closing down 0.37% and the Nasdaq closing down 0.68%. The new energy vehicle sector advanced for five consecutive trading days, with Faraday Future closing up about 12% and Tesla closing up about 2%. Virgin Galactic closed up about 16%; the Nasdaq China Golden Dragon Index closed down 1.09%. The S&P 500 rose for the fifth consecutive week, which was the longest streak since November 2021; the Nasdaq rose for the eighth consecutive week, which was the longest streak since March 2019.

European stocks closed up across the board, Germany's DAX index closed up 0.41%; Britain's FTSE 100 index closed up 0.19%; France's CAC 40 index closed up 1.34%; Spain's IBEX 35 index closed up 0.68%; Italy's FTSE MIB index closed up 0.47%.     

Market Focus

1. A 6.4 magnitude earthquake struck the Gulf of California.

2. U.S. stocks are closed on Monday and crude oil futures trading settled early.

3. Biden: The tax system is unfair, and it's time for the super rich to start paying more taxes.

4. South Korean President Yoon Seok-Youl will visit Vietnam: focus on economic and trade cooperation, accompanying economic envoys lineup is the most in the current government.

Geopolitical Situation

Conflict Situation

1. Video from the Russian Defense Ministry shows Russian troops blowing up a Ukrainian stronghold with suicide armored vehicles, causing heavy losses to the enemy.

2. British military intelligence: Russia has restrengthened its deployment of attack helicopter units in the region since Ukraine began its counteroffensive in the south. Amid the constant jousting of aviation measures and countermeasures, Russia may well have gained a temporary advantage in southern Ukraine.

3. Russian Ministry of Defense: The Russian army carried out a cluster strike on a Ukrainian “decision-making center”, and the intended target was hit.

Assistance Situation

1. Ukraine has built a multi-layered air defense system with the help of NATO, and in the next few months the Ukrainian army will be able to obtain the first “Hawk” air defense system and other related equipment, Ukrainian Defense Minister Oleksiy Reznikov said.

2. German Finance Minister: The European Union has overdrawn its long-term budget until 2027 because of military and economic support for Ukraine. Germany can no longer afford to contribute extra money to the EU budget.

3. The United States plans to provide F-16 fighter jets to Ukraine. Russian Foreign Minister: We have sent a diplomatic note to the United States that if we see F-16 fighter jets flying over Ukraine and posing a threat to Russia, then Russia will respond militarily and technically.

Energy Situation

1. Russian Energy Minister: Russia starts supplying oil to Pakistan and Pakistan will pay in friendly currencies.

2. Rosneft: has discovered about 25 billion tons of oil equivalent energy resources in the Arctic region. 

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs: Market expectations of how fast US inflation will fall are too optimistic】

On June 17, Goldman Sachs strategists said that the US inflation rate will not fall as fast as the market currently expects. Strategists such as Praveen Korapaty believe investors may be betting that a sharp slowdown in economic growth will lead to a faster easing of price pressures and may be more bearish on energy prices than reflected in commodity futures. Strategists see limits on the ability of those factors to push inflation down, and markets are ignoring potential delayed inflation in areas such as health care. “While we expect inflation to fall further going forward, the market seems much more optimistic than we are about the rate of cooling,” the strategists said.

02

SOCIETE GENERALE

SOCIETE GENERALE:The ECB needs “ take a strong stand ” tonight to keep supporting the euro.

On June 15, Societe GENERAL says THE European CENTRAL Bank needs “tough talk” tonight to avoid a failure of the euro rally. Notably, markets are now pricing in another 50 basis point rate increase by September, though views on a third increase are divided. Societe General said it would take an improving economic outlook in Europe to push the euro above the 1.15-1.20 range at the end of the year and early next year. Signs of improving economic data in Europe could have a bigger impact on the euro outlook in the coming weeks, while the ECB could also just sound hawkish tonight, the bank said.

03

MUFG

【MUFG: Dollar gains may be limited as Fed rate hikes come to an end】

On June 15, the dollar's rally after the Federal Reserve paused today may not last long unless U.S. economic activity and inflation data released later exceed expectations, Mitsubishi UFJ said. The bank's currency analyst Lee Hardman said the Fed should soon end rate rises as evidence of disinflationary pressures continues to build. While another rate increase is likely in July, “we remain unconvinced” that a second increase is warranted, as weaker data on economic activity and inflation could prompt the Fed to signal that policy tightening has been sufficient.