Global Economic Daily - 04/06/2024
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Closing Commentary
Quote of the Day: Success is getting what you want. Happiness is wanting what you get. – Dale Carnegie
Equities: Stocks were mixed to start the week. The Dow Jones Industrial Average began June’s trading with a decline after weak U.S. manufacturing data raised concerns about the strength of the economy. Banks, industrials and other shares dependent on economic growth led the pullback. The 30-stock Dow slipped 115.29 points to close at 38,571.03. The S&P 500 inched higher by 5.89 points to finish the session at 5,283.40, while the Nasdaq 100 added 64.32 points to 18,600.97. Cyclical stocks whose fortunes are closely tied to economic growth slid, with the energy, industrials and materials sectors closing in the red. Earlier, the U.S. manufacturing sector showed signs of slowing, with the ISM manufacturing index measuring 48.7 in May, sending Treasury yields and the dollar lower. A reading below 50 is an indication of a contraction. However, the rally seemed to lose steam near the end of the month. The three averages all closed May more than 1% below their record highs, even with the Dow adding more than 500 points on Friday. The Nasdaq fell 1.1% last week as chip stocks stumbled. The first week of June is brimming with further economic updates. Investors await private payroll data on Wednesday from ADP followed by the May jobs report on Friday. Investors appear to want some economic slowing that would give the Federal Reserve the greenlight to cut interest rates, but not too much of a slowdown that would raise fears of a recession. A technical issue at the New York Stock Exchange affected price quotes for several stocks earlier Monday, but trading returned to normal around midday. TECHNICAL OUTLOOK - The Dow and S&P are above the 14, 21 day moving average.
Crude Oil: Oil prices tumbled by $3 a barrel on Monday to their lowest in nearly four months, as investors worried that a complicated OPEC output decision could lead to higher supplies later in the year even though demand growth has been slow. OPEC on Sunday agreed to extend most of its oil output cuts into 2025 but left room for voluntary cuts from eight members to be gradually unwound from October onward. Analysts at Goldman Sachs said the outcome was negative for oil prices as the phasing out of voluntary cuts shows a strong desire by several OPEC members to bring back output despite recent increases in global oil stocks. Other analysts also called the group's decision incrementally bearish for oil prices in light of high interest rates and rising output from non-OPEC producers like the United States. An aide to the Israeli prime minister confirmed on Sunday that Israel had accepted a framework deal for winding down the Gaza war, although the Israeli side called it a flawed deal. The U.S. government will release estimates of oil stocks and demand on Wednesday, which will show how much gasoline was consumed around the Memorial Day weekend, the start to the U.S. driving season. U.S. efforts to replenish the country's Strategic Petroleum Reserve could provide some support for oil prices. The United States is buying another 3 million barrels for the SPR at an average price of $77.69 a barrel, the U.S. Department of Energy said on Monday. TECHNICAL OUTLOOK – The Crude is way below the 14, 21 day moving average.
Metals: Gold prices are moderately higher near midday Monday. Silver prices are slightly up. Amid a lack of fresh, markets-moving news to start the trading week, the precious metals market traders are looking at the key “outside markets” that are leaning friendly for metals prices. The U.S. dollar index is lower today and U.S. Treasury yields have down-ticked. Technically, August gold bulls have the overall near-term technical advantage but have faded. A bearish double-top reversal pattern has formed on the daily bar chart to suggest a near-term market top is in place. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,477.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the May low of $2,308.70. July silver futures bulls have the solid overall near-term technical advantage. However, a four-week-old uptrend on the daily bar chart has stalled out. Silver bulls' next upside price objective is closing prices above solid technical resistance at the May high of $32.75. The next downside price objective for the bears is closing prices below solid support at $29.00. TECHNICAL OUTLOOK – The metals are above the 14, 21 day moving average.
DISCLAIMER: The Information and data contained herein was obtained from sources deemed reliable. The accuracy and completeness are not guaranteed
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