Thursday's Markets Update (June 20, 2024)

20 Jun 2024 by rate3

On Thursday, Nasdaq and S&P retreated after reaching record highs. Tech giants like Nvidia are down as investors cashed in. The Dow, less reliant on tech, managed a small gain. Data showed the economy cooling down with building permits dropping, jobless claims rising, and business activity falling. Internationally, the Swiss National Bank cut its rate, indicating a divergence from the Fed's austerity policies, as the Bank of England kept its rate at 5.25% with some members advocating for a decrease. BTC and ETH are holding their levels at 65K and 3.5K, with the rest of major coins climbing a bit, with max gains of ~3%.

Details

Building permits dropped in May, below expectations. Permits for apartments and single-family homes fell compared to prior months. The decline was widespread except for Midwest and West regions which saw increases. 1Y trend: "Down" (CB)
Jobless claims in fell slightly but remained high, suggesting a cooling labor market. New claims totaled 238,000, exceeding expectations, and ongoing claims hit a multi-month high. This could push the Federal Reserve to cut interest rates to boost the economy. 1Y trend: "Up" (DOL)
The Philly Fed manufacturing index dipped in June, signaling a slowdown for the second month in a row. New orders and shipments declined, and employment remained low. Despite this, price pressures persisted, and future growth expectations stayed positive. 1Y trend: "Up" (PhFed)

Crypto

South Korean crypto trading dropped sharply, falling from $35 billion to $6 billion weekly between Q1 and Q2. This decline is linked to investor risk aversion and US inflation. (source)

World Markets

The Bank of England held interest rates steady at 5.25% despite falling inflation and some support for a cut. While growth is strong, concerns about future inflation kept policy restrictive. The Bank will watch data closely and adjust rates as needed. 1Y trend: "Up" (BOE)
The Swiss central bank cut interest rates again by 25 bps to 1.25% in June. This follows similar moves in March. Inflation is expected to stay low, around 1% in coming years. The bank predicts moderate economic growth with some job losses. The franc rose recently due to European instability. 1Y trend: "Up"
Indonesia's central bank kept interest rates at a record high of 6.25% to tame inflation and support the Rupiah currency. Inflation is within target, but capital outflows due to US policy changes are pressuring the Rupiah. The bank also maintained overnight deposit and lending facility rates. 1Y trend: "Up" (BI)
Turkey's consumer confidence dropped to a 6-month low in June (78.3). People felt less optimistic about the economy, finances, and spending on big purchases. However, they were slightly less worried about job security, while inflation concerns grew. 1Y trend: "Up" (Tuik)

Currencies

The dollar is nearing a six-week high as economic data mixed with expectations of future Fed rate cuts. While some indicators were weak, bets on the Fed cutting rates later this year remain high. This, along with central banks in Britain and Switzerland keeping rates steady or cutting them, boosted the dollar. 1Y trend: "Up"
The Chinese yuan weakened significantly, falling below 7.28 per dollar for the first time in months. This follows the central bank's decision to allow a weaker exchange rate and keep interest rates low, suggesting concerns about China's economic recovery. 1Y trend: "Up"
South Korean won hit a new low (past 1,385) in June, pressured by a weaker Chinese yuan and global dollar strength. Despite strong exports, the central bank is taking steps to slow the decline using foreign exchange reserves. 1Y trend: "Up"

Commodities

Silver surged to a two-week high above $30, mirroring gold gains. Weak economic data fueled bets of interest rate cuts by the Fed, joining other central banks easing policy. However, concerns about slowing industrial demand, particularly in China's solar panel industry, limited investor enthusiasm. 1Y trend: "Up"