Global Market Summary: Economic and Geopolitical Impacts Part 2

6

Australian retail sales rose more than expected in May, driven by discount promotions that boosted consumer spending. Sales increased by 0.6% from the previous month, double the economists' forecast. This was the largest increase in four months. Following the data release, the yield on policy-sensitive three-year bonds rose 3 basis points to 4.17%, and traders increased bets on a rate hike this year, while stock gains moderated.

Analysis:

Impact on FX:Stronger retail sales could strengthen the AUD.

FX Pair:AUD/USD, EUR/AUD, GBP/AUD

Impact on Shares:

Australian Market: Positive impact on retail stocks.

Companies:Woolworths Group (WOW.AX), Coles Group (COL.AX)

7

According to Bloomberg's trade tracker, global trade recovery momentum is strong everywhere except Europe. Nine out of ten key indicators of global trade returned to “normal” levels in June. Shipping volumes at Hong Kong ports rebounded, US export orders increased, especially with the rapid expansion of AI, boosting momentum for chip and electronics manufacturers in Singapore, Taiwan, and South Korea.

Analysis:

Impact on FX:Strong global trade could strengthen trade-related currencies.

FX Pair:USD/SGD, USD/TWD, USD/KRW

Impact on Shares:

Global Market: Positive impact on tech and shipping stocks.

Companies:Taiwan Semiconductor Manufacturing Company (TSM), Samsung Electronics (005930.KS)

8

ECB Chief Economist Philip Lane stated that last month's inflation data is insufficient to answer the pending question about underlying price pressures. Lane, in agreement with ECB President Christine Lagarde, indicated that the likelihood of another rate cut in July is low, calling for patience in collecting evidence to confirm the central bank is moving towards its 2% inflation target.

Analysis:

Impact on FX:Continued low rate cut likelihood could weaken the EUR.

FX Pair:EUR/USD, EUR/JPY, EUR/GBP

Impact on Shares:

European Market: Continued uncertainty may impact financial stocks.

Companies:Deutsche Bank (DBK.DE), BNP Paribas (BNP.PA)

9

Following a significant downward revision of first-quarter GDP data, two economists have adjusted their forecasts for the Japanese economy, predicting contraction in 2024. This highlights the dilemma the Bank of Japan faces in considering interest rate hikes.

Analysis:

Impact on FX:Negative economic forecasts could weaken the JPY.

FX Pair:USD/JPY, EUR/JPY, GBP/JPY

Impact on Shares:

Japanese Market: Negative impact on broader market sentiment.

Companies:Sony (6758.T), Mitsubishi UFJ Financial Group (8306.T)

10

The Biden administration has launched a program aimed at cultivating the US semiconductor workforce to address potential labor shortages that could disrupt domestic chip production. The program, called the “Workforce Partnership Alliance,” will utilize part of the $5 billion in federal funds reserved for the National Semiconductor Technology Center (NSTC).

Analysis:

Impact on FX:Positive developments in the semiconductor sector could strengthen the USD.

FX Pair:EUR/USD, USD/JPY, GBP/USD

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Positive impact on semiconductor stocks.

Companies:Intel (INTC), NVIDIA (NVDA), Advanced Micro Devices (AMD)

11

Indonesia has made progress in reducing economic inequality due to increased social welfare support. According to government data, the spending gap between high-income and low-income households, measured by the Gini coefficient, fell from 0.388 last year to 0.379, the lowest level since the pandemic. A lower Gini coefficient indicates higher equality.

Analysis:

Impact on FX:Improved economic equality could strengthen the IDR.

FX Pair:USD/IDR, EUR/IDR, GBP/IDR

Impact on Shares:

Indonesian Market: Positive impact on consumer and financial stocks.

Companies:Bank Central Asia (BBCA.JK), Unilever Indonesia (UNVR.JK)

12

ECB President Christine Lagarde reiterated that the ECB is “monitoring” the bond market while refusing to comment on the situation regarding the French elections.

Analysis:

Impact on FX:Continued monitoring without specific action could weaken the EUR.

FX Pair:EUR/USD, EUR/JPY, EUR/GBP

Impact on Shares:

European Market: Uncertainty in bond market impacts financial stocks.

Companies:BNP Paribas (BNP.PA), Société Générale (GLE.PA)

13

HSBC Holdings is slowing down hiring and asking investment bankers to control travel and entertainment expenses as part of cost-cutting measures by outgoing CEO Noel Quinn.

Analysis:

Impact on FX:Cost-cutting measures could stabilize the GBP.

FX Pair:GBP/USD, EUR/GBP, GBP/JPY

Impact on Shares:

UK Market: Potential stabilization in banking sector stocks.

Companies:HSBC Holdings (HSBA.L), Barclays (BARC.L)