Source: Wall Street News Author: Fang Jiayao, Du Yu
The US added significantly fewer non-farm jobs in June than expected, with previous figures significantly revised downward and an unexpected rise in unemployment rate. This highlights a cooling labor market, increasing market bets on rate cuts in September and December to over 70%. Only small-cap stocks in the US performed poorly, dropping 1% for the week, while other indices saw weekly gains. The Nasdaq and chip stock indices led the way with weekly gains of over 3.4%. Meta, Netflix, Google, Amazon, Apple, Microsoft, Arm, and Taiwan Semiconductor all hit new highs, while Nvidia fell nearly 2% but still saw weekly gains. The China-concept stock index fell 2% but still saw a weekly gain of almost 3%. NIO and XPENG Motors saw their Friday losses of about 10% cut in half. After the election, the UK stock, bond, and forex markets saw simultaneous gains as employment data boosted rate cut expectations. The two-year US bond yield fell by 10 basis points to a three-month low, with both the yield spread and bond yields falling more than 10 basis points for the week. The US dollar fell below 105 for the first time in four weeks, the yen rose above 161, offshore renminbi rose above 7.28 briefly, and Bitcoin lost nearly 10% for the week, hitting a one-year low. Strong demand prospects boosted oil prices for the fourth consecutive week, with a high on Friday followed by a downturn but several days spent hovering around a two-month high. Gold futures rose above $2,400 and silver saw weekly gains of over 7%, while London copper rose 3.6% for the week and peaked at $0.01 million USD intraday.
The US non-farm payroll report strengthened expectations of a rate cut in September. According to the US non-farm payroll report, 206,000 jobs were added in June, higher than the expected 190,000, but the substantial downward revisions in April and May non-farm employment offset the positive impact in June. In addition, the unexpected increase in the unemployment rate to its highest level in two and a half years and the decrease in wage growth to its lowest level in three years provided evidence of a cooling US labor market.
Commentators have suggested that another round of data support is needed to solidify expectations of a rate cut in September. More importantly, next week's inflation data and data next month are crucial. Some analysts have noted contradictory points in recent data, with the non-farm payroll data raising expectations of a rate cut and boosting US stocks, but several data sets showing similar trends also raise concerns about signs of a slowdown in the US economy.
Investors are optimistic about the prospect of a rate cut by the US Federal Reserve, with the Chicago Mercantile Exchange's FedWatch Tool showing a 71.1% chance of a 25-basis-point cut in September, up from 66.5% previously. The likelihood of a first rate cut in November has also increased, while the likelihood of a second rate cut in December has risen to 46.5%. Investors completely expect two rate cuts by the Federal Reserve before the end of the year.
After the non-farm payroll data was released, US stocks and bonds rose and the dollar came under pressure. Initially, US Treasuries fell on the announcement that June non-farm payrolls exceeded expectations, but the market rebounded sharply after focusing on a "data detail" of a large downward revision of 110,000 for the two previous months ahead of non-farms. This made the yield curve steeper.
In terms of bulk commodities, the US employment report boosting expectations of a rate cut reduced the opportunity cost of holding non-interest-bearing gold assets, and the dollar came under pressure, supporting higher metal prices. Industrial metals in London rose across the board. International crude oil fell sharply, but a larger-than-expected drop in oil inventories indicated that oil demand would rise, and oil prices continued to rise for the fourth consecutive week.
In international news, the UK Labour Party won a landslide victory in the election, paving the way for a rate cut by the Bank of England following the end of the UK election. While French polls suggest the parliament may be inconclusive, today's Ipsos poll shows that Le Pen is expected to win 175-205 seats in Sunday's French parliamentary elections, well below the 289 required for an absolute majority, narrowing the yield spread between French and German 10-year treasury notes to 65 basis points.
The S&P and Nasdaq indexes both rallied for the fourth straight day, setting new records for Google, Apple, Microsoft, and Meta.
On Friday, July 5th, the Nasdaq and S&P 500 indexes, which are dominated by technology stocks, rose throughout the day and set new historical highs for the close of trading. Although the Dow, which gathers blue-chip stocks, fell several times during the day, it rose at the end of the day and closed at a high point. The Russell small-cap index maintained a downward trend. Among the major indexes, the Nasdaq had the largest gain, rising 1% with the majority of Nasdaq stocks being technology stocks.
At the close of trading, the S&P, Nasdaq, and Nasdaq 100 indexes all set new closing highs, with the S&P 500 and Nasdaq setting new historical highs for the 34th and 23rd times this year, respectively. The Dow approached its all-time high set on June 24th.
The S&P 500 rose 30.17 points, or 0.54%, to close at 5,567.19 points, setting a new closing high for the third consecutive day. The Dow rose 67.87 points, or 0.17%, to close at 39,375.87 points. The Nasdaq rose 164.46 points, or 0.90%, to close at 18,352.76 points, setting a new closing high for the fourth consecutive day.
All three major indexes rose this week. The Nasdaq rose 3.5%; the S&P 500 rose nearly 2%, the fourth week of its five-week rise; and the Dow rose nearly 0.7%. The Russell small-cap index, on the other hand, fell 1% and has slightly declined this year, while the S&P 500 rose 16.7% and the Nasdaq rose 22.3%.
The Nasdaq 100 rose 1.02%, setting a new closing high for the third consecutive day; the Nasdaq technology index (NDXTMC), which measures the performance of technology companies in the Nasdaq 100, rose 1.17% to set a new closing high; the Russell 2000 small-cap stock index fell 0.49%; and the "fear index" VIX rose 1.71% to 12.47.
Of the 11 sectors of the S&P 500 index, the S&P telecommunications services sector rose 2.74%, the optional consumer sector rose 0.85%, the information technology/technology sector rose 0.49%, the financial sector fell 0.28%, the industrial sector fell 0.4%, and the energy sector fell 1.52%.
This week, the telecom sector rose by 3.91%, the technology sector rose by 3.85%, the optional consumer sector rose by 3.75%, the daily consumer goods sector rose by 1.03%, the financial sector rose by 0.93%, the industrial sector fell by 0.56%, the utilities sector rose by 0.56%, the real estate sector fell by 0.23%, the raw materials sector fell by 0.46%, the health care sector fell by 0.96%, and the energy sector fell by 1.27%.
Star technology stocks rose, with Google, Apple, Microsoft, and Meta hitting historic highs. Tesla closed up 2.09%, up for the eighth day in a row, up 27.12% this week, up about 38% in eight days, and close to turning positive for the year. Meta, the "metaverse company," rose 5.87% to a new high, up 7.08% this week. Google A rose 2.57%, setting a new closing high for two consecutive days, up 4.64% this week, and up for five consecutive weeks. Apple rose 2.16%, setting a new closing high for four consecutive days, up 7.46% this week, and up for two consecutive weeks; Microsoft rose 1.47%, also setting a new high for four consecutive days, and its market value was pushed closer to Apple's. Amazon rose 1.22%, equalling its all-time high.
Chip stocks rose and fell. The Philadelphia Semiconductor Index rose 0.9% before turning down, finally up slightly, hovering around the high of 5600 points for two weeks, up 3.4% for the week, and the industry ETF SOXX rose 0.2%. Nvidia fell sharply in the afternoon and closed down 1.91%. With a market value of 3.1 trillion US dollars, it ranks third in the US stock market. It rose nearly 2% this week after ending two weeks of decline. NVIDIA leveraged the ETF fell 3.8%. In addition, Arm Holdings rose 7.7%, setting a new high with TSMC US stocks, which rose 0.8%, AMD rose 4.88%, Intel rose 2.53%, Qualcomm rose 0.95%, and KLA Corp rose 0.22%. Broadcom fell 1.5%, and Micron Technology fell 3.82%.
AI concept stocks performed differently. SoundHound.ai rose 6.62%, Palantir rose 5.34%, and C3.ai rose 4.83%; CrowdStrike rose 0.65%, and Oracle rose 0.31%, both approaching their all-time highs; Snowflake rose 0.11%, while Super Micro Computer fell 0.05%, Dell fell 2.6%, and BigBear.ai fell 3.38%.
Nvidia: Nvidia has been downgraded unusually, with New Street Research analyst Pierre Ferragu lowering Nvidia's rating to neutral, saying that its valuation is worrying. The analyst believes that Nvidia's upside potential in the future is quite limited unless it is in a bull market. The latest stock price target for Nvidia is $135.
On the news front:
Amazon: Victoria Greene, chief investment officer of G Squared Private Wealth, said that Amazon's diversified business units and investment projects are expected to help the company enter the $3 trillion market value club: "Not only the retail business, but also the higher-profit Amazon Web Services (AWS) business unit, which is expected to have a profit margin of 40% in the next five years. Amazon will join the $3 trillion market capitalization club within the next five years."
Chinese concept stocks fell across the board. Among the ETFs, the China Technology Index ETF (CQQQ) fell 2.38% and rose 0.18% this week. The Chinese Internet Index ETF (KWEB) fell 2.16% and rose 2.15% this week, ending a trend of six consecutive weeks of decline. The Nasdaq Golden Dragon China Index (HXC) fell 2.02%, falling below the high of 5900 points, up 2.83% this week. In the popular Chinese concept stocks, new carmakers fell sharply, with Xpeng falling more than 5.1%, Li Auto falling 1.25%, and Ideanomics falling 8.74%. Netease fell more than 4.1%, Alibaba fell 1.39%, Baidu fell 1.21%, PDD Holdings fell 0.84%, JD.com fell 0.41%, and Tencent Holdings (ADR) fell 0.68%. Sohu rose about 2.4%. In addition, ZTO Express fell more than 3.6%, Vipshop fell 3.5%, New Oriental fell more than 3.4%, Gaotu Education fell more than 8.9%, and Kanzhun.com fell more than 6.4%.
Stocks with large fluctuations include: Macy's, the old US department store, rose more than 14% and closed up more than 9% at a one-month high. It was reported that an investor group raised its takeover bid to about $24.80 per share, up from the previous $24 per share, for a total amount of about $6.9 billion.
This week, the telecom sector rose by 3.91%, the technology sector rose by 3.85%, the optional consumer sector rose by 3.75%, the daily consumer goods sector rose by 1.03%, the financial sector rose by 0.93%, the industrial sector fell by 0.56%, the utilities sector rose by 0.56%, the real estate sector fell by 0.23%, the raw materials sector fell by 0.46%, the health care sector fell by 0.96%, and the energy sector fell by 1.27%.
Among stocks with significant volatility:
This week, the overall sales volume of the company was 18,000 kiloliters, up 28.10% year-on-year, showing significant growth. In terms of product structure, 10-30 billion yuan products had operating income of 401/1288/60 million yuan, respectively. Mingxing Technology stocks rose across the board, with Google, Apple, Microsoft, and Meta hitting historic highs. Tesla closed up 2.09%, up for the eighth day in a row, up 27.12% this week, up about 38% in eight days, and close to turning positive for the year. Meta, the "metaverse company," rose 5.87% to a new high, up 7.08% this week. Google A rose 2.57%, setting a new closing high for two consecutive days, up 4.64% this week, and up for five consecutive weeks. Apple rose 2.16%, setting a new closing high for four consecutive days, up 7.46% this week, and up for two consecutive weeks; Microsoft rose 1.47%, also setting a new high for four consecutive days, and its market value was pushed closer to Apple's. Amazon rose 1.22%, equalling its all-time high.
The Philadelphia Stock Exchange KBW Bank Index fell by 1.41%. All 24 component stocks performed poorly, with Morgan Stanley down 1.87% in seventh place, Goldman Sachs down 0.68% in fourth place, Citigroup down 0.67%, Morgan Stanley down 0.61%, and State Street down 0.57% having the 'best performance'. The Dow Jones KBW Regional Bank Index fell 1.33%.
US gold and silver mining stocks rose across the board. For example, Gold Fields rose 3.79%, Harmony Gold Mining rose 3.74%, and Freeport-McMoRan Copper & Gold rose 1.72%. Pan American Silver rose 2.77%. In addition, gold ETF-SPDR closed up 1.35%, and silver ETF-iShares rose 2.30%.
All 22 component stocks in the energy sector suffered a collapse, with Valero Energy down 3.61% leading the way, and Schlumberger down approximately 2.5%.
Most concept stocks related to cryptocurrencies fell, with Stronghold falling 5.5% on Friday, MFH falling more than 5.4%, Marathon Digital falling more than 3.8%, and Canaan ADR falling more than 2.3%.
Individual investors are still enthusiastic about their selected stocks. Koss Corp rose 25.59%, Blackberry rose 0.4%, AMC Entertainment rose 0.4%, while GameStop fell 0.78%.
Investors are waiting for the results of the French election. European stocks ended a two-day rally, mostly falling on Friday. After the election results were announced, the UK mid-cap stock index rose more than 0.8%:
The pan-European Stoxx 600 index fell 0.18%, up 1.01% this week. The Eurozone STOXX 50 index fell 0.16%, up 1.74% this week.
The German DAX 30 index rose 0.14%, up 1.32% this week. The French CAC 40 index fell 0.26%, up 2.62% this week. The Italian FTSE MIB index fell 0.35%, up 2.51% this week. The UK FTSE 100 index fell 0.45%, up 0.49% this week. The Spanish IBEX 35 index fell 0.39%, up 0.73% this week.
Among the 'Eleven Arhats' of European stocks, ASML Holding rose 0.89%, setting a new historical high and approaching the 1,000 euro mark, rising about 3% this week, while Novo Nordisk rose 0.41%. Although Harvard University released an unfavorable study on its weight loss drug, the company's stock price continued to rise for the second consecutive day, down 3.14% this week.
Among the stocks that fluctuated significantly, strong orders and Samsung's earnings drove up European chip stocks broadly. Germany's Isoneo rose by nearly 18%. Danish pharmaceutical company Zealand set a new closing high for the second consecutive day, rising 6.6% this week, up more than 46% in eleven days.
The labor market cooled down and suppressed US bond yields, with short-term bond yields leading the way, both falling by about 10 basis points.
At the end of the session, the two-year US Treasury bond yield, which is sensitive to interest rates, fell 10.44 basis points to 4.6014%, down 15.20 basis points this week; the US 10-year basic bond yield fell 8.42 basis points to 4.2745%, and rebounded and rose to a daily high of 4.3823% before quickly falling below 4.28% on 'non-farm day'. The trend of shock downward was presented throughout the day, down 11.97 basis points this week. In addition, the three-year US Treasury bond yield fell 9.76 basis points, the five-year US Treasury bond yield fell 10.03 basis points, and the seven-year US Treasury bond yield fell 9.42 basis points. The 20-year US Treasury bond yield fell 6.16 basis points, and the 30-year US Treasury bond yield fell 5.75 basis points.
US bond yields fell sharply this week, with short-term bond yields leading the way.
The French 10-year treasury notes yield fell 6.7 basis points, down 8.7 basis points this week; the Italian 10-year treasury notes yield fell 6.3 basis points, down 13.7 basis points this week; the Spanish 10-year treasury notes yield fell 5.4 basis points, down 7.8 basis points this week, and the Greek 10-year treasury notes yield fell 5.9 basis points. The UK 10-year treasury notes yield fell 7.2 basis points to 4.125%. After the results of the UK parliamentary elections and the change of leadership at 10 Downing Street, the two-year UK bond yield 'gap down', falling 6.3 basis points to 4.128% on 'non-farm day', down 9.3 basis points this week.
The US dollar index fell more than 0.2%, and the yen once came close to 162. Cryptocurrencies experienced a flash crash.
The US dollar index fell more than 0.2%, and the yen approached 162 briefly, while cryptocurrencies plummeted.
The basket of US dollar index DXY measuring against six major currencies fell by 0.24% to 104.875 points. It fell to a daily low of 104.825 points when the US non-farm payroll report was released, then briefly rebounded. It fell by 0.94% this week and stopped four weeks of gains. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.
The Bloomberg Dollar Spot Index fell by 0.18% to 1260.27 points, down 0.73% this week.
This week, the euro rose 1.18% against the US dollar, the British pound rose 1.35% against the US dollar, and the US dollar fell 0.34% against the Swiss franc; among commodity currencies, the Australian dollar rose 1.19% against the US dollar and the New Zealand dollar rose 0.88% against the US dollar. The USD/CAD fell by 0.25%.
The offshore yuan rose as much as 150 points or 0.2% before the US stock market opened, reaching 7.28 yuan at one point, and then basically wiped out its gains during regular trading hours and returned to the 7.29 yuan mark. It is still not far from the eight-month low.
The USD/JPY fell by 0.33% to 160.74, breaking through the 161 mark. When the non-farm payroll report was released, it fell to a daily low of 160.35. It fell by 0.09% this week and showed an overall rise and fall trend.
As speculation about the rate hike by the Reserve Bank of Australia continues to rise, Mitsubishi UFJ analysts suggest taking a long position on the AUD/USD. They predict that the AUD/NZD will rise further above 1.10 as the Reserve Bank of New Zealand "will stand pat next week without sending a signal closer to a rate hike."
Most mainstream cryptocurrencies fell. The largest market cap leader, Bitcoin, fell by 5.30% to $56,655.00, down 6.08% this week. The second largest, Ethereum, fell by 4.76% to $2,983.00, down 12.14% this week.
Oil prices fell about 1% on Friday, but strong demand prospects have led to four consecutive weeks of gains, with US oil up about 2% for the week.
WTI August crude oil futures fell by 0.72 US dollars, or nearly 0.86%, to 83.16 US dollars/barrel. Brent September crude oil futures fell by 0.89 US dollars, or nearly 1.02%, to 86.54 US dollars/barrel.
When the stock market opened, US stocks hit a new daily high, rising to about $0.64 or 0.76% to $84.52, the highest since April 15. Brent crude oil, which is more actively traded, rose as much as $0.52 or 0.59% to $87.95; when the US stock market opened, oil prices plummeted, and when the US stock market hit a new low, US oil fell the most by $0.86 or 1% to $83.02, and Brent crude oil fell the lowest by $0.94 or 1% to $86.49.
Both oil prices rose for four consecutive weeks. US oil rose by 2.1%, and Brent oil was slightly higher.
Analysts predict that as summer fuel demand picks up, oil demand will be even tighter in the third quarter. The latest inventory data released by the US EIA further validates this prediction.
UBS predicts that global oil demand will increase by 1.5 million barrels/day this year, higher than the long-term growth rate of 1.2 million barrels/day. As the OPEC+ production cut agreement continues until September, inventory will further decline in the coming weeks, and Brent crude oil prices may reach $90 per barrel in the third quarter.
In addition, JPMorgan also predicts that Brent crude oil prices will reach $90 per barrel in August or September.
US natural gas futures contracts for August fell by about 4.09% to $2.319/MBtu. US gasoline futures closed at $2.5591/gallon.
"Non-farm payroll" data supports a general rise in metals, with gold up for two consecutive weeks to a high not seen since May. Silver rose more than 7.63% and copper rose more than 3.59% this week.
COMEX August gold futures rose 1.3% at the close on Friday, surpassing $2,400/oz. for the first time since June 7. COMEX July silver futures rose by about 2.2% to $31.52/oz.
Pre-market trading of spot gold rose slightly, and after the non-farm payrolls data was released, the price of gold continued to rise. At the end of the US stock market, it once rose 1.5% and approached the integer position of $2340, reaching a new high since May 22. This week's cumulative increase is 2.87%, up for two consecutive weeks, which is the largest weekly increase in nearly 13 weeks.
After the non-farm payrolls announcement, the spot silver continued to rise, and the US stock market rose 3.6% at one point during lunchtime and approached the integer position of $31.5. It rose about 7.63% this week, which is the best weekly performance in nearly seven weeks.
Ole Hansen, head of commodity strategy at ICBC Standard Bank, said that the latest non-farm employment data "leaves the possibility of a Fed rate cut in September." The current expectation of swap traders is that the probability of a rate cut within two months is 75%. Tim Waterer, chief market analyst at KCM Trade, said:" Gold had a good week, benefiting from some soft US macro data."
The decline in the US dollar caused a rise in London industrial metals on Friday. 'Dr. Copper' rose $62 and approached the integer position of $0.01 million, with a cumulative increase of more than 3.59% this week.
In addition, London aluminum rose by $13 to $2536 per ton. London zinc rose by $14 to $3001 per ton, up more than 2.14% this week. London lead rose by $10 to $2237 per ton. London nickel rose by $124 to $17341 per ton. London tin rose by $716, an increase of nearly 2.16%, to $33874 per ton, with a cumulative increase of more than 3.46% this week.
The main driver of the rise in copper prices on Friday was the weaker-than-expected non-farm payroll growth in June in the United States, which strengthened expectations of a Fed rate cut this year. In addition, some traders adopted short covering operations to reduce risk exposure, which also pushed up copper prices as expected shipments of copper to the United States did not arrive. Dan Smith, research director at Amalgamated Metal Trading, said that the inventory that should have been shipped to the United States has obviously not yet arrived.
Editor/Lambor