Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
PODÍL
As US markets emerge from their lengthened Independence Day weekend, traders around the world will have another chance to digest last Thursday’s disappointing non-farm payrolls report. The June figure fell far short of expectations of 110k new jobs, coming in at just 57k instead, while April and May saw downward revisions to the sum of 74k fewer jobs than initially estimated. The apparent cooldown in the US labour market was enough to shift interest rate expectations last week, the overall consensus being that a rate hike is now likely to be pushed further down the line. High inflation numbers in the first half of the year have pressured the Fed into hiking rates on the dollar to control runaway price appreciation, but the latest jobs figures will likely stay the central bank’s hand for the time being. The dollar fell sharply last Thursday following the release of the jobs report, losing around half a percent against other major currencies, although the DXY remains comparatively high around 101 this morning. The one positive element of the report is a minor drop in the unemployment rate, which fell from 4.3% to 4.2%, while the broader U-6 rate also nudged lower to 7.9% from 8.1% the month prior. Last week also saw the publication of the June ISM manufacturing PMI, which at 53.3 continued to show a sector firmly in expansion. The services sector will follow suit later today, with estimates pointing north of 54.
Veering away from an immediate interest rate hike favours non-yield-bearing assets such as gold and silver, which indeed made a sharp U-turn last Thursday. After settling down to $4,000 per ounce the week before, gold buyers stepped in to push the precious metal to highs of $4,200 by the Friday close, while silver was able to regain $60 following the jobs report and push higher still the next day, reaching $62.4 as the week drew to an end. Even Bitcoin showed signs of strength, lifting prices from lows of 57,500 to highs of 63,500 over the weekend. Although the imagined 4th of July deadline for the Clarity Act has come and gone, the likelihood of the bill being enshrined into US law has increased over the last few days, with Polymarket showing odds of over 50% for a successful passage through Congress. Senators are now working on the final public draft of the new text, which is expected to be published for public review in the coming days.
An interesting development is being monitored in US stock markets, whereby capital appears to be rotating out of tech and into other sectors. Last Thursday’s NFP report prompted a very different response in the Dow Jones index compared to the tech-heavy Nasdaq, with the former rising 1.1% to a new all-time high of 52,900 points, while the latter shed 0.8%, remaining 5% below its own record high established back in early June. Zooming out, the effect was even more pronounced on a monthly basis, with the Dow rising 2.5% in June, and the Nasdaq Composite falling 1.5% over the same time frame. Technology valuations are being reassessed with a greater degree of scrutiny, particularly with regard to AI spending and revenue. The prospect of more stable rates on the dollar also benefits the wider stock market instead of a narrow band of hype stocks. Next week’s earnings calendar will force the semiconductor space to defend its position, with a number of heavy-hitting companies stepping up to the stage.
The economic calendar cools down this week, having very little to offer compared to last week’s NFP report. As mentioned above, the ISM services PMI is expected to show continued momentum in the US services sector later today, but the rest of the week is more or less a blank slate. The one exception arrives on Wednesday in the form of the latest FOMC minutes, which will provide detailed insights into Kevin Warsh’s first meeting at the helm of the Fed. Analysts will be keen to find out how much inflation pressure the board attributes to the recent surge in oil prices versus other economic factors. With crude oil back down to pre-crisis levels, the Fed may be more willing to shrug off the recent uptick in inflation.
About the Author
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
Reviewed by RADEX MARKETS
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