Wednesday's Markets Update (May 29, 2024)

30 May 2024 by rate3

On Wednesday stocks are down after a surge in bond yields spooked investors. On world markets, aluminum hit a 2-year high as the IMF raised China's growth outlook for 2024 to 5% from 4.6%. BTC and ETH declined by about 2%, still staying inside their weekly side-ranges. Most of the crypto market is marginally down, with Uniswap dropping 11%.

Details

10-years Treasury note yields jumped to 4.63% due to strong economic data and inflation worries. Rising interest rate expectations led to a global bond sell-off. The Fed signaled continued hikes, and markets now predict a single rate cut this year. 1Y trend: "Up"
Manufacturing activity in the Fifth (Richmond) District rose in May, reaching its highest level in seven months. Shipments and new orders improved, but employment declined. Prices that manufacturers paid increased slightly, while prices they charged for their products went down. Overall, businesses remained cautiously optimistic about the future. 1Y trend: "Side" (side)
Texas service sector businesses reported a significant decline in May, with the Dallas Fed index hitting a one-year low. Both business activity and company outlook worsened. Despite rising wages and continued revenue growth, uncertainty remains high. 1Y trend: "Down"

Crypto

BlackRock's new BTC ETF, with $20B in assets, is now the biggest BTC fund globally. This dethrones Grayscale's long-standing trust. (source)

World Markets

Business loans in the Eurozone inched up 0.3% in April 2024 to €5.13 trillion, following a slightly larger increase in March. Overall, lending has fluctuated around €4.38 trillion since 2003. 1Y trend: "Side" (source)
Germany's inflation rose slightly to 2.4% in May, exceeding expectations and ending a five-month decline. Service and food prices rose, while goods eased. Energy prices continued to fall despite policy changes. Core inflation remained at 3%. The EU-harmonised rate also climbed to 2.8%, the highest in four months. 1Y trend: "Down" (De)
Spain's retail sales growth slowed down in April to just 0.3% compared to a year ago. This is the weakest growth since November 2022. Both food and non-food spending increased at a slower pace than the previous month. Monthly sales however, rose 0.8% in April. 1Y trend: "Side" (Ine)
Chinese stocks rebounded on Wednesday after the IMF raised China's growth outlook for 2024 to 5% from 4.6%, thanks to a strong start to the year and government support. The Shanghai Composite edged up slightly, while the Shenzhen Component saw a more moderate gain. 1Y trend: "Side"
Italian manufacturing confidence edged up in May, exceeding forecasts. While still below pre-pandemic levels, the decline in orders eased and production expectations improved. Backlogs grew at a slower pace, but production downturn accelerated. Businesses are cautiously optimistic about new orders and the economic outlook, despite rising inflation concerns. (Istat)
UK car production dipped 7% in April, continuing a two-month decline. This drop is linked to factories shifting towards electric vehicles (EVs). Automakers are investing heavily in EVs to meet the country's 2050 net zero goal. Exports, a major factor in the decline, fell 12.7%. Despite the slump, production of electric and hybrid vehicles rose to 40.5% of the total. (Smmt)

Currencies

The euro hovered around $1.086, as markets awaited the ECB's decision on interest rates the next week. German inflation rose slightly, but not enough to prevent a possible rate cut by the ECB.
The British pound dipped below 1.275 after a brief rise. The US dollar strengthened as investors bet on slower interest rate cuts by the Fed. Despite UK inflation easing, it was still higher than expected, delaying a BoE rate cut. The surprise announcement of a UK election in July further reduced chances of a June cut.

Commodities

Aluminum prices soared in May, hitting a two-year high (2793) due to supply disruptions. Gas shortages forced Rio Tinto to limit shipments, adding to concerns after weather issues in China threatened production. Stockpiles in Malaysia also dropped, reflecting trading activity after sanctions on Russian aluminum. This could limit supplies for some buyers.