Weekly News 2023/07/03-2023/07/07

 U.S. stocks closed down on Friday. The Dow fell 187.38 points, or 0.55%, to 33734.88; the Nasdaq fell 18.33 points, or 0.13%, to 13660.72; the S&P 500 fell 12.64 points, or 0.29%, to 4398.95 point. All three major stock indexes posted losses for the week. The Dow fell 1.95%, the S&P 500 fell 1.15%, and the Nasdaq fell 0.92%. Investors in U.S. stocks on Friday ushered in the closely watched U.S. non-farm payrolls data for June, which showed U.S. job growth slowed in June, taking some momentum out of an already exceptionally strong labor market.

The U.S. Department of Labor reported on Friday that U.S. non-farm payrolls increased by 209,000 in June, compared with an estimated increase of 230,000 and an unrevised increase of 339,000. The report showed unexpectedly strong wage growth, reinforcing expectations that the Federal Reserve will continue to raise interest rates this month. The report showed that the unemployment rate fell to 3.6% from 3.7% in May; average hourly earnings rose 0.4% and were up 4.4% year-over-year. Data showed annual wage growth remained too high for the Fed's 2 percent inflation target. After pausing rate hikes in June, the Fed is almost certain to resume rate hikes later this month, based on Powell's previous statements.

Market participants pointed out that the number of non-farm payrolls exceeded 200,000, which is still very strong. Unemployment fell, the labor force participation rate held steady, and wage growth rose. This suggests that more policy tightening is needed to cool the economy. Analysts said that while the Fed raised interest rates at its July meeting was almost expected, the June non-farm payrolls data undoubtedly strengthened the case for a rate hike and will trigger debate about whether another rate hike is expected at the next meeting.

 Mercedes-Benz (ETR: MBG) announced that it has joined Tesla's (NASDAQ: TSLA) North American Supercharger network. Starting in 2024, Mercedes-Benz owners will have access to Tesla's North American Supercharger stations. In addition, the company also announced that it will build its own high-power charging network at the same time, and will be equipped with more than 2,500 high-power chargers in North America.

Meta Platforms (NASDAQ: META) CEO Mark Zuckerberg said Friday that Threads has 70 million registered users. Meta recently officially launched Threads, a new social media app developed as an alternative to Twitter.

At the World Artificial Intelligence Conference, Lisa Su, chairman and CEO of AMD (NASDAQ: AMD), said that there will be a large-scale computing super cycle in the next ten years. Therefore, the current It's a great time to be a technology provider and also a good time to work with some customers who are going to use these technologies to develop different applications.

Intel (NASDAQ: INTC) previously planned that the next-generation Arrow Lake CPU would be the first CPU built with Intel 20A, but the current plan has changed. The CPU may abandon the Intel 20A process and switch to TSMC (NYSE: TSM) 3nm process.

Adobe (NASDAQ: ADBE) announced that when users use the AI image generation tool Firefly for Enterprise provided by it, if a copyright dispute arises due to the use of AI-generated images, Adobe will provide full compensation for related legal costs. Shutterstock, a commercial photo gallery website, also announced that they will be held responsible for AI-generated images on the platform.

 For the week, bitcoin fell 2.42 percent to $30,107. The world's largest cryptocurrency by market capitalization fell as low as $29,908 on Friday before recovering above the psychological level of $30,000. Ethereum fell 1.78% this week to $1,859.

Wall Street heavyweights continued to show institutional interest in the cryptocurrency this week after BlackRock, the world's largest asset manager, resubmitted its application for a spot bitcoin ETF on Monday.

The Wall Street Journal reported that BlackRock's move was in response to comments made by the U.S. Securities and Exchange Commission (SEC) on Friday, which said that BlackRock's investment in BlackRock, WisdomTree and Fidelity Companies such as Bitcoin ETF applications are not interested.

“This strategic move demonstrates that BlackRock is actively working to bridge the gap between its proposal and regulatory expectations. However, it is worth noting that increased chances of acceptance do not guarantee immediate approval.” Chief Investment Officer, Yield App, a digital asset platform Lucas Kiely said.

According to the data, in the second quarter ended in June, cryptocurrency trading volume hit the lowest level since the fourth quarter of 2019. A report by research firm CCData pointed out that the volume of cryptocurrency transactions in June increased by 16.4% to $575 billion, the first increase in nearly three months. However, the research report pointed out that overall, Q2 cryptocurrency trading volume fell 40% month-on-month to $1.7 trillion, down 62% year-on-year. In the second quarter, the cryptocurrency was affected by the regulatory authorities. Binance, the world's largest crypto exchange, was accused by the US SEC of violating US securities laws, which caused panic in the market.

 Gold prices rose on Friday, posting their first weekly gain in four, as the dollar and bond yields fell as doubts renewed about the trajectory of interest rate hikes beyond July following weak U.S. nonfarm payrolls data.

Data from the Labor Department showed nonfarm payrolls rose much less than expected last month, but the unemployment rate eased from a seven-month high amid fairly strong wage growth. Benchmark 10-year U.S. Treasury yields retreated from a peak in more than four months, while the dollar slipped 0.9% to a more than two-week low after the data, making gold attractive to holders of other currencies. Traders are sticking to bets that the Fed will raise rates this month, but are increasingly skeptical about the likelihood of further increases.

Tai Wong, an independent metals trader said, “Gold buying remained solid and was trading higher even before the data. Friday report gave the bulls some comfort, at least in the short term, and gold should be able to hold above $1,910, but the real test is the $1950-$60 level, where the 100 and 200-day moving averages converge. The report was not soft enough to warrant a rally to that level.”

Although the U.S. non-agricultural data for June released on Friday remained generally strong, the unemployment rate fell as expected and the annual rate of hourly wages unexpectedly rose. However, there is evidence that the lagged impact of monetary policy may start to show up in the economy, and the Fed is likely to end its rate hike cycle in July 2023, with a limited downside for gold in the market outlook. Gold is sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.

 Oil prices climbed about 3 percent on Friday to hit a nine-week high, as supply worries and technical buying outweighed fears that further rate hikes could slow economic growth and reduce oil demand.

Brent crude hit its highest close since May 1, while U.S. crude hit its highest close since May 24. Both benchmark contracts were up about 5% for the week.

“We're knocking on the door of a big breakout to the upside, I think we've seen some short covering at these levels today because a lot of people have been shorting. ”said Phil Flynn, an analyst at Price Futures Group.

After two months of consolidation between around $73-$77, Brent crude has entered technical overbought territory for the first time since mid-April.

Top oil exporters Saudi Arabia and Russia announced new output cuts this week, bringing the total cuts by the Organization of the Petroleum Exporting Countries and its allies, the OPEC+ alliance to about 5 million bpd, or about 5% of global oil demand. OPEC is likely to maintain an optimistic view of oil demand growth next year. A government source told Reuters on Friday that Russia would be able to meet its latest pledge to lower oil exports without a production cut of a similar magnitude, as more fuel is needed to meet domestic demand.

The U.S. dollar fell to its lowest level in two weeks, which also supported crude oil prices. Earlier data showed U.S. job growth was weaker than expected but still strong enough to push the Federal Reserve back to raising interest rates later this month, as it previously signalled.

 The dollar tumbled on Friday as signs of weakening resilience in the U.S. labor market reduced the prospect of the Federal Reserve keeping interest rates high for an extended period, while the yen jumped on concerns that 10-year U.S. Treasury yields would rise above 4 percent. 

Marc Chandler, chief market strategist at Bannockburn Global Forex, said markets are focusing on next week's consumer price index (CPI), which could show inflation slowing to 3.1%. That would reduce the chances of the Fed raising rates again after raising rates in late July.

The yen rose 1.37% against the dollar, hitting a two-week high of 142.13. “Risk aversion has been the main theme this week, and with USD/JPY hovering around these highs, there's concern that Japan might re-engage and intervene to support the yen. We're still pretty close to 145, which is What appears to be a key level, with U.S. Treasury yields, especially the 10-year, holding above 4% is proof that any downside in USD/JPY is likely to be very limited.”  Japanese government data on Friday showed recurring wages rose by the most in 28 years in May, reinforcing the view that the Bank of Japan will have to adjust its ultra-loose monetary policy sooner rather than later.

The yen's rally was fueled by some liquidation by speculators, who had built up sizable bearish positions, Hardman said. Weekly data from U.S. regulators showed speculators held a $9.793 billion short position in the yen, the largest since May 2022 and nearly doubling in size in the past three months alone. The yen has held just below 145 against the dollar for almost two weeks, and Japanese authorities have made it clear that they are concerned about the yen's weakness.

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