Daily Broad Market Recap – June 18, 2024

Weaker than expected retail activity in the US raised concerns about growth and weighed on the US dollar.

So why did US stocks expand their gains?

Here are the headlines you need to know if you missed yesterday's trading!

Titles:

• Reserve Bank of Australia keeps interest rates at 4.35% He highlighted increased inflation risks in June
• Bank of Japan Governor Ueda They told Parliament there was “a chance” they would raise interest rates at their meeting in July
• Final inflation rate in the euro area Confirmed at 2.6% y/y in May; Core CPI remains at 2.9% y/y during the month
• Eurozone ZEW Economic Sentiment Improved from 47.0 to 51.3 in June (vs. 47.8 expected)
• ZEW economic sentiment index in Germany It rose from 47.1 to 47.5 in June (vs. 49.6 expected); Inflation expectations rose after the Consumer Price Index came in higher than expected in May
• Retail sales in the United States Grew by 0.1% m/m (vs. 0.3% expected, -0.2% previous); Core retail sales fell 0.1% m/m in May (vs. +0.2% expected)
• American industrial production rose 0.9% m/m in May (vs. 0.3% expected, 0.0% previous); Capacity utilization rate improved from 78.2% to 78.7%
• Vote Federal Open Market Committee Member Thomas Barkin We believe we are seeing the “back side of inflation” but still want to “learn more (about inflation) over the next few months.”
• Vote Federal Open Market Committee Member Adriana Kugler He supports “monetary easing later this year” if the economy develops as expected
• Australia's leading economic indicator CB It fell another 0.3% m/m in April; LEI signals 'growth headwinds' after GDP decline in Q1 2024
• Global dairy trade auction in New Zealand Dairy product prices fell by 0.5% after rising by 1.7% earlier this month.

Broad market price movement:

Market activity remained subdued due to the lack of new market-moving news, prompting major assets to react mainly to specific headlines.

Crude oil prices continued to rise, with WTI consistently trading above the key $80.00 level. This increase is due to expectations of increased demand during the summer driving season and expectations of reduced supply later in the year.

Gold temporarily lost its luster during the risk-filled European trading session, but rebounded after weak US retail sales data led to lower US Treasury yields and lower demand for the US dollar. Meanwhile, Bitcoin (BTC/USD) fell to new weekly lows near $64,000 before bouncing back above $65,000.

Global stocks also mostly extended their upward march. Asian markets were strengthened by the Reserve Bank of Australia keeping its policies steady despite rising inflation risks, while European stocks received support from optimism about upcoming economic data and easing political concerns.

In the United States, the S&P 500 and Nasdaq reached new highs, with NVIDIA surpassing Microsoft as the world's most valuable public company, with a market capitalization of $3.22 trillion.

Forex market behavior: US dollar against major currencies

Overlay of the US dollar against major currencies Chart by TradingView

The US dollar started the day showing some resilience, except against the Australian dollar, which was supported by a 'tightening' event from the Reserve Bank of Australia.

Demand for the dollar remained stable during the European trading session but faltered after the US retail sales report came in weaker than expected. This decline occurred despite a positive industrial production report and some FOMC members reiterating their hawkish biases!

The dollar traded in tight ranges for the rest of the day, likely due to a lack of fresh catalysts and US traders leaving their desks early ahead of the June bank holiday.

Potential catalysts coming on the economic calendar:

• The UK CPI and PPI will be released at 6:00 AM GMT
• Eurozone Current Account at 8:00 AM GMT
• UK house price index at 8:30am GMT
• NAHB US Housing Market Index at 2:00 PM GMT
• US markets are out on bank holiday
• New Zealand quarterly GDP at 10:45pm GMT

With US markets going on a bank holiday, markets may focus on European data releases. The UK CPI and PPI reports, in particular, may see increased scrutiny ahead of the Bank of England's policy decision this week.

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