Wednesday's Markets Update (June 12, 2024)

13 Jun 2024 by rate3

On Wednesday, stocks hit new ATHs as inflation eased and the Fed held the rate at 5.25%, hinting at future cuts. Apple and Tesla led the gains. On global markets, EU stocks rebounded on the Fed's decision and easing concerns about political instability in France. BTC and ETH, after a 3-day plunge, attempted to recover on an unexpected inflation dip.

Details

The Fed held interest rates steady at a high level (5.25%-5.50%) in June, waiting for inflation to slow down more. They now expect just one rate cut this year, with inflation forecasts slightly higher than before. The economy is still projected to grow steadily, but unemployment is expected to tick up a bit. 1Y trend: "Up" (Fed)
Annual inflation unexpectedly dipped to a 3-month low of 3.3% in May, driven by easing prices for most goods. Compared to April, overall inflation remained flat due to lower gasoline prices countered by rising housing costs. Core inflation slowed to a three-year low of 3.4% in May, easing from the prior month and below expectations. Shelter costs, a major driver of inflation, also moderated slightly. 1Y trend: "Down" (BLS)

World Markets

European stocks surged on hopes of a Fed rate cut. French political stability also eased concerns. Tech and industrial sectors led the rally, while automakers lagged due to emission lawsuits. SAP and Schneider Electric - up, but Mercedes and BMW - down. 1Y trend: "Up"
China's inflation remained low at 0.3% in May, below expectations. This is the fourth month of rising prices, suggesting a pick-up in domestic demand. While non-food items edged up slightly, food prices continued to fall, although at a slower pace. Overall inflation is still muted, even with some price fluctuations in specific categories. 1Y trend: "Side" (CnStat)

Currencies

The Brazilian real fell to a new low in June due to worries about government spending and rising inflation. President Lula's plans to increase spending cast doubt on the country's ability to control its deficit. This comes as inflation rose above expectations in May. 1Y trend: "Up"
The Mexican peso is at a 15-month low (18.79) due to political uncertainty. Investors are worried about proposed reforms by the incoming president, fearing they could hurt the economy or violate trade deals. This follows concerns about similar reforms from the current president before he leaves office. 1Y trend: "Down"

Commodities

Lithium carbonate remains near multi-year low of CNY 100K per tonne in June due to a global electric vehicle battery raw material surplus. Producer expansion and government subsidies are fueling oversupply fears, while trade tensions add pressure with tariffs on Chinese EVs. 1Y trend: "Down"