Gold dips as dollar steadies, focus turns to US jobs data

Gold fell more than 1% on Tuesday as the dollar steadied ahead of US jobs data, due later this week, which could set the tone for the Federal Reserve’s interest rate strategy.

Spot gold fell 0.9% to USD 2,329.10 per ounce by 1818 GMT.

US gold futures settled 0.9% lower at USD 2,347.4 per ounce.

Gold reversed gains from a bounce late in the previous session following weaker US manufacturing data. The latest fall in the safe-haven asset also came despite a dip in Wall Street.

“There was probably a bit of a reaction to the US dollar,” and an element of profit-taking in gold, said Bart Melek, head of commodity strategies at TD Securities.

The dollar index steadied making gold more expensive for overseas buyers, after falling to its lowest since mid-April overnight. USD/

Investors now await Friday’s US non-farm payrolls data for clarity on rate cuts. Lower rates reduce the opportunity cost of holding non-yielding bullion.

Weaker jobs data might prompt a short-term rally in gold, while a stronger number will pressure gold since it may suggest the Fed is going to have a “more difficult time” cutting rates, said Jim Wyckoff, senior analyst at Kitco Metals.

Overall, “gold is likely to grind sideways, if not sideways to slightly lower here in the coming few weeks, barring an unexpected geopolitical event that would drive safe haven demand.”

Additionally, investors kept an eye on results from elections in India, the world’s second-biggest gold consumer.

“If equities continue to crash, there will be some funds going into gold as well,” said ANZ commodity strategist Soni Kumari.

Overall declines in commodities, led by oil, may also be contributing to the bearish sentiment in precious metals, analysts said.

Silver fell 3.8% to USD 29.59 per ounce, platinum shed 1.6% at USD 995.50 per ounce and palladium lost 0.1% to USD 916.50 per ounce.

(Reporting by Rahul Paswan in Bengaluru; Editing by Shreya Biswas and Maju Samuel)

Oil drops as OPEC+ boosts supply even though demand is shaky

HOUSTON – Oil prices fell more than USD 1 a barrel on Tuesday on skepticism about an OPEC+ decision to boost supply later this year into a global market where demand has already shown signs of weakness.

Extending losses from a four-month low reached on Monday, Brent crude futures settled down 84 cents, or 1.07%, at USD 77.52 a barrel. Brent’s closing price on Monday was below USD 80 for the first time since Feb. 7 after falling more than 3%.

At its lowest on Tuesday, Brent traded at USD 76.76, less than USD 2 shy of this year’s nadir of USD 74.79 at the beginning of January.

US West Texas Intermediate crude futures finished down 97 cents, or 1.31%, at USD 73.25. WTI had fallen by 3.6% on Monday to settle near a four-month low.

The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, agreed on Sunday to extend most of their oil output cuts into 2025 but left room for voluntary cuts from eight members to be unwound gradually, beginning in October.

“My base case is that the market is overreacting to the OPEC announcement,” said Phil Flynn with Price Futures Group.

The planned October unwinding adds jitters about oversupply in an environment where traders are already spooked about high interest rates hampering global economic activity. A steady flow of dim signals from major economies such as the US, China, and Europe suggest that their appetite for oil may not be as healthy as hoped through the rest of the year.

“If we do see a significant drop in oil prices, then you will have to question the soundness of the global economy,” Flynn said. “Then it will look like the Federal Reserve has done too much.”

On top of this, supply is rising from non-OPEC producers such as the US

Meanwhile, on the demand side in the world’s top oil consumer, weekly US oil data will show how much gasoline was consumed around last week’s Memorial Day weekend, the start to the US summer driving season.

The American Petroleum Institute will release inventory data on Tuesday afternoon. The US government will release inventory and product-supplied data on Wednesday.

(Reporting by Erwin Seba in Houston; additional reporting by Paul Carsten in London, Arathy Somasekhar in Houston, and Trixie Yap in Singapore; Editing by Marguerita Choy, Jason Neely, David Goodman, and Lisa Shumaker)

Wall Street stocks end slightly higher as weak jobs data supports rate cut

NEW YORK – US stocks ended a shade higher on Tuesday following softer-than-expected labor market data that reaffirmed expectations of an interest rate cut by the Federal Reserve.

Data on Tuesday showed that US job openings fell to their lowest level in more than three years in April, signaling an easing in labor market tightness that supported a Fed rate cut this year. The US Treasury yields slipped following the report.

Wall Street’s main indexes gained ground after paring earlier losses. Equities in real estate and consumer staples sectors advanced ahead of others, while materials and energy stocks were the biggest losers.

The labor market data was the latest in a string of recent reports that pointed to cooling US economic growth. Data on Monday showed that US manufacturing activity had slowed for the second straight month in May.

“What we’ve seen in the data so far this week is that it’s been relatively weak, starting with manufacturing PMI and job openings today,” said James St. Aubin, chief investment officer at Sierra Mutual Funds in Santa Monica, California.

“That has had a total effect of helping the rally in the bond market; but for the stock market, it’s a double-edged sword because they’re looking for a rate cut announcement, which has a rising probability with weaker data,” St. Aubin added.

Market expectations for a September rate reduction now stand around 65%, versus below 50% last week, according to the CME’s FedWatch tool. The closely watched non-farm payrolls data for May is due on Friday.

The Dow Jones Industrial Average rose 140.26 points, or 0.36%, to 38,711.29, the S&P 500 gained 7.94 points, or 0.15%, to 5,291.34 and the Nasdaq Composite gained 28.38 points, or 0.17%, to 16,857.05.

Megacap technology stocks, including Amazon.com, Alphabet, Nvidia, and Microsoft, ended higher after losing ground early in the session.

Oil giants Exxon Mobil and Chevron fell 1.6% and 0.8%, respectively, as demand concerns weighed on crude prices.

Bath & Body Works slumped 12.8% after a lower revision to its quarterly profit forecast. Axos Financial dropped after Hindenburg Research disclosed a short position in the lender.

Paramount Global fell 4.4% after the media conglomerate said it was exploring strategic options or a joint venture for its Paramount+ streaming service.

Declining issues outnumbered advancers by a 1.32-to-1 ratio on the NYSE. On the Nasdaq, 1,468 stocks rose and 2,762 fell as declining issues outnumbered advancers by a 1.88-to-1 ratio.

The S&P 500 posted 19 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 40 new highs and 134 new lows.

Total volume of shares traded across US exchanges was about 10.6 billion, compared with the 12.6 billion average over the last 20 trading days.

(Reporting by Chibuike Oguh in New York; additional reporting by Lisa Mattackal and Johann M Cherian in Bengaluru; Editing by Pooja Desai and Matthew Lewis)

Nvidia leads global market cap gainers in May with AI-driven rally

Nvidia led global companies in market cap gains in May, buoyed by a stunning rally as its bumper revenue forecast reinforced investor confidence in the AI-driven surge in chip demand.

Nvidia’s market cap soared to USD 2.69 trillion at the end of May, marking a nearly 25% increase during the month, as the announcement of its stock split further boosted investor enthusiasm.

Microsoft maintained its position as the leading global company by market cap, rising 6.6% to USD 3.08 trillion in May, with shares touching record highs driven by expectations that AI will significantly boost profit growth for Microsoft and its major competitors.

Those expectations were further bolstered as the company introduced a new category of personal computers with AI features, called ‘Copilot+’ PCs, capable of handling more artificial intelligence tasks without relying on cloud data centers.

Apple remained the second-largest company by market cap, surging 12.9% to USD 2.94 trillion at the end of May, fueled by AI optimism, and increased smartphone shipments to China. Brokerage BofA Global Research noted that artificial intelligence is driving a shift from smartphones to “IntelliPhones” — AI-powered smartphones — and projected that Apple would benefit from a multi-year upgrade cycle driven by AI.

Walmart Inc. WMT experienced significant growth, with its market cap rising 10.8% to USD 530 billion at the end of last month, as the company reported better-than-expected quarterly results and raised its full-year forecast, anticipating that easing inflation will boost sales of groceries and non-essential merchandise such as clothing and electronics.

Meanwhile, Tesla’s market cap dropped nearly 3% to USD 567.9 billion, affected by a decline in its sales in Europe, slowing growth in electric vehicle demand, and tough competition impacting the demand for Tesla’s vehicles.

(Reporting By Patturaja Murugaboopathy and Gaurav Dogra in Bengaluru; Editing by Christina Fincher)

Yields hit two-week low after soft manufacturing data

Benchmark US Treasury yields fell to a two-week low on Monday after data showed that US manufacturing activity slowed for a second straight month in May, boosting expectations that a softening economy may allow the Federal Reserve to cut interest rates later this year.

Manufacturing weakened as new goods orders dropped by the most in nearly two years, while a measure of input inflation fell back from the highest since mid-2022.

US construction spending also fell unexpectedly for a second consecutive month in April on declines in non-residential activity.

“On the one hand, this (manufacturing data) is another survey that seems to show pessimism and weaker economic activity. On the other hand, these surveys aren’t as reliable as they used to be,” said Will Compernolle, macro strategist at FHN Financial in New York.

Compernolle noted that the data “comes on the back of slower personal spending that we saw last Friday and a host of other things that people are looking to for weaker economic activity.”

Traders are gauging when the Fed is likely to begin cutting interest rates as inflation remains above its 2% annual target.

Friday’s personal consumption expenditures (PCE) price index for April showed that price pressures stabilized in the month while consumer spending slowed, boosting bets that the Fed could cut rates as soon as September.

Benchmark 10-year note yields fell 11 basis points to 4.402%, and got as low as 4.392%, the lowest since May 17.

Two-year note yields fell 8 basis points to 4.818% and reached 4.814%, the lowest since May 20.

The inversion in the two-year, 10-year yield curve deepened 4 basis points to minus 42 basis points.

This week’s main US economic release will be jobs data for May due on Friday, with May’s consumer price inflation report on June 12 the next major focus.

Other jobs data this week will include the Job Openings and Labor Turnover Survey (JOLTS) report for April on Tuesday and the ADP National Employment report for May on Wednesday.

Next week’s inflation data will be critical for setting Fed expectations, and investors will be looking for further signs that inflation is easing following higher-than-expected readings in the first quarter.

The Fed will also update its economic and interest rate projections when it concludes its two-day meeting on June 12.

(Reporting by Karen Brettell; Editing by Tomasz Janowski and Will Dunham)

Oil hits four-month low as OPEC+ decision fails to allay demand worries

NEW YORK – Oil prices tumbled by USD 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.

Brent crude futures fell by USD 2.75, or 3.4%, to settle at USD 78.36 a barrel, closing below USD 80 for the first time since Feb. 7. US West Texas Intermediate crude futures also closed at a near four-month low of USD 74.22 a barrel, down by USD 2.77 or 3.6% from Friday.

Both contracts were down by USD 3 a barrel in post-settlement trading.

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.

“The communication of a surprisingly detailed default plan to unwind extra cuts makes it harder to maintain low production if the market turns out softer than bullish OPEC expectations,” Goldman Sachs analysts said.

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.

“Ultimately, a combination of factors has come into play,” independent oil analyst Gaurav Sharma said, highlighting disappointing economic indicators in the United States and China.

“When OPEC+ took the decision it did over the weekend, in a reasonably well-supplied crude market, traders factored in the macro picture alongside a dwindling risk premium (with talk of a ceasefire in Gaza) and went net short,” Sharma said.

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.

Signs of weakening demand growth have also weighed on oil prices in recent months, with data on US fuel consumption in focus.

The US 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 US driving season.

“The hard numbers are that the market is well-supplied,” said John Kilduff, partner at Again Capital.

“If we do not get a spectacular number on Memorial Day in the US, that’s going to be game over,” Kilduff added.

US gasoline futures RBc1 fell more than 3% on Monday to a more than three-month low of USD 2.34 a gallon.

US efforts to replenish the country’s Strategic Petroleum Reserve (SPR) could provide some support for oil prices. The United States is buying another 3 million barrels for the SPR at an average price of USD 77.69 a barrel, the US Department of Energy said on Monday.

(Reporting by Shariq Khan in New York, Natalie Grover in London, Mohi Narayan in New Delhi, and Emily Chow in Singapore; Editing by David Goodman, Kirsten Donovan, Sriraj Kalluvila, David Gregorio, Will Dunham, and Deepa Babington)

Wall Street ends slightly higher after soft manufacturing data, NYSE glitches

NEW YORK – S&P 500 and the Nasdaq edged higher in a choppy session on Monday amid soft manufacturing sector data and as a glitch on the NYSE briefly caused trading halts in dozens of equities.

A glitch at the New York Stock Exchange had triggered massive swings in the shares of Berkshire Hathaway and Barrick Gold. Trading in at least 60 NYSE-listed stocks was halted due to the volatility, before the bourse fixed the technical issue and activity resumed.

Benchmark S&P 500 and the Nasdaq finished higher after paring earlier losses on the sesson, while the Dow lost ground. Technology stocks were the biggest gainers, while energy equities were the biggest drag.

Markets had weighed data showing US manufacturing activity had slowed for the second straight month, raising concerns of weakening economic growth.

“It’s one of those days where people are waiting for the next catalyst with a choppy move after earnings,” said Keith Lerner, co-chief investment officer at Truist Advisory Services in Atlanta.

“There’s a bit of a tug of war between the market seeing weakening data and the expectation that the Fed may cut rates,” Lerner added.

Traders see a 59% chance that the Fed will begin cutting rates in September, up from about 53% before the ISM data was released, according to the CME’s FedWatch tool. Benchmark US 10-year note yields fell to a two-week low following the soft manufacturing data.

The Dow Jones Industrial Average fell 115.29 points, or 0.30%, to 38,571.03, the S&P 500 gained 5.89 points, or 0.11%, to 5,283.40 and the Nasdaq Composite gained 93.66 points, or 0.56%, to 16,828.67.

Nvidia rose 4.9% after CEO Jensen Huang revealed that the company’s next-generation AI chip platform would be rolled out in 2026.

Shares of other megacaps, including Apple, Amazon, Alphabet, and Meta closed higher. Microsoft and Tesla finished lower.

GameStop soared 21% after a weekend Reddit post from stocks influencer Keith Gill, also known as “Roaring Kitty”, showed a USD 116 million bet on the gaming retailer.

Investors will be eyeing a data-packed week that includes surveys on the services sector, factory orders, and Friday’s closely watched nonfarm payrolls report, which could provide clues to the Fed’s likely course of action with regards to rates.

Advancing issues outnumbered decliners by a 1.03-to-1 ratio on the NYSE. On the Nasdaq, 2,146 stocks rose and 2,171 fell as declining issues outnumbered advancers by a 1.01-to-1 ratio.

The S&P 500 posted 25 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 68 new highs and 101 new lows.

The total volume of shares traded across US exchanges was about 11.5 billion shares, compared with the 12.6 billion average over the last 20 trading days.

(Reporting by Chibuike Oguh in New York; additional reporting by Lisa Mattackal and Johann M Cherian in Bengaluru; Editing by Pooja Desai and Aurora Ellis)

Growth fears mount, ‘bad news is bad news’?

Asian markets could be in for a choppy ride on Tuesday, with investors unsure whether to interpret Monday’s steep fall in US Treasury yields and the dollar as an encouraging sign for risky assets or a warning that growth is evaporating.

Given that Asian shares on Monday posted their biggest rise this year, before the weak ISM US manufacturing report triggered the slide in yields, investors may err on the side of caution and pare back risk exposure, not add to it.

If so, it will suggest the ‘bad news is bad news’ narrative is taking hold – easing financial conditions on their own are not enough to lift asset prices; instead, the deteriorating macro conditions driving down yields and the dollar are what’s important for asset prices.

By some measures, a shift in the US economic outlook is already underway. The Atlanta Fed on Monday slashed its GDPNow model forecast for second quarter growth to 1.8% from 2.7%. Two weeks ago it was 3.5%, and three weeks ago it was over 4.00%.

The sugar high of rate cut expectations can only last so long. And in truth, rate cut expectations have not shifted all that much lately because inflation remains stickier than policymakers would like.

The US growth engine is particularly important for Asia right now because China’s post-lockdown recovery is so fragile, and uncertainty persists around Japan’s policy normalization, rising bond yields, and record weak currency.

That’s the backdrop to Asian markets on Tuesday which also sees the release of manufacturing PMI data from Malaysia and Thailand, South Korean inflation, and the official results from India’s general election.

Indian markets’ initial reaction on Monday to the weekend’s exit polls showing a decisive mandate and third term for Prime Minister Narendra Modi was overwhelmingly positive – shares hit lifetime highs, the rupee gained and bond yields dropped.

The broader Nifty index closed 3.25% higher at 23,263.90 points after touching a record high 23,338.70 earlier in the day, while the BSE index closed up 3.39% at 76,468.78 points, just off its lifetime peak of 76,738.89 also touched earlier.

India’s boom helped drive the continent’s stocks higher. The MSCI Asia Pacific ex-Japan index snapped a four-day losing streak, surging more than 2% for its best day since November.

Surprisingly strong factory activity from China, and to a lesser extent South Korea and Taiwan, also helped. China’s ‘unofficial’ Caixin/S&P Global manufacturing PMI report showed the fastest pace of growth since June 2022, contrasting with an official survey on Friday that showed a surprise fall in activity.

The Caixin survey is believed to be skewed more toward smaller, export-oriented firms, which may help explain why Asian stocks took off so much on Monday. Some of that optimism, however, may cool on Tuesday.

Here are key developments that could provide more direction to markets on Tuesday:

– South Korea inflation (May)

– India election results

– Australia current account (Q1)

(Reporting by Jamie McGeever; Editing by Josie Kao)

US equity funds hit by outflows on rising yields, rates uncertainty

US equity funds saw outflows for the first time four weeks in the seven days ended May 29, hit by rising bond yields and uncertainty over the timing and extent of Federal Reserve interest rate cuts.

According to LSEG Lipper data, net outflows from US equity funds totaled USD 7.6 billion. This came as the yield on the 10-year US Treasury note reached a four-week high, following a survey that unexpectedly showed an improvement in consumer confidence in May.

During the week, financials and consumer discretionary sector funds recorded net outflows of USD 779.8 million and USD 379.3 million respectively. At the same time, industrials and tech sector funds each attracted over USD 200 million in net inflows.

Meanwhile, US bond funds saw their first weekly net outflow of the year, driven by persistent inflation concerns and hawkish central bank rhetoric, which scaled back expectations for rate cuts to just one by the end of the year – significantly lower than the up to six anticipated at the start of 2024.

However, US Treasury yields fell on Friday after data showed US inflation stabilized in April, in line with expectations, suggesting the Fed’s rate cut plans later this year remained intact.

During the week, US high-yield and inflation-linked bond funds saw net outflows of USD 376 million and USD 254.2 million respectively, while loan participation funds saw net inflows of USD 386 million.

US money market funds also recorded their first net outflow in six weeks, totaling USD 2.3 billion.

(Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by Mark Potter)

Dollar slides after US inflation meets expectations in April

NEW YORK/LONDON – The dollar was lower and on track for its first monthly decline in 2024 after data showed that US inflation rose in line with expectations in April.

The personal consumption expenditures (PCE) price index increased 0.3% last month, the Commerce Department’s Bureau of Economic Analysis said on Friday, matching the unrevised gain in March. The data suggests the elevated pace of price increases could last longer than expected and offers little clarity on how soon the US Federal Reserve will be able to cut interest rates.

“These numbers do not give any sense that the Fed is achieving its goal,” said Joseph Trevisani, senior analyst at FX Street. “It’s already stated what its goal is, so the markets are willing to give it some time … but that time I do not think is unlimited.”

The US dollar index was last down 0.39% at 104.36.

The Fed has raised borrowing costs by 525 basis points since March 2022 in a bid to cool demand across the economy. Financial markets initially expected the first rate cut to come in March, which then got pushed back to June and now to September.

Official data showed on Thursday the US economy grew at an annualized rate of 1.3% from January through March, down from the previous estimate of 1.6% after downward revisions to consumer spending.

Although inflation is “moving in the right direction,” said Kyle Chapman, FX markets analyst at Ballinger Group, “policymakers are definitely not out of the woods yet.”

“I would caution against overinterpreting a single month’s data,” he said.

EURO ZONE INFLATION

The euro edged up after data showed price pressures in the eurozone picked up faster than expected in May, complicating the outlook for the European Central Bank.

The euro was up 0.41% to USD 1.0876. The French inflation data released earlier on Friday, and German and Spanish figures earlier this week, all came in slightly higher than expected.

The numbers have not altered the view in markets that the ECB will cut rates when it meets next week.

According to all 82 economists polled by Reuters, an ECB rate cut on June 6 appears certain, with a majority predicting further reductions in September and December.

Elsewhere, the yen JPY=EBS strengthened, leaving the dollar down 0.15% at 156.58, but off this week’s four-week high as Japan’s finance minister repeated warnings about excessive currency volatility.

The Ministry of Finance released data on Friday confirming that Japanese authorities spent 9.79 trillion yen (USD 62.2 billion) intervening in the foreign exchange market to support the yen over the past month, in moves that kept the currency from testing new lows but are unlikely to reverse a longer-term decline.

Data on Friday showed core consumer inflation in Tokyo accelerated in May, but price growth excluding the effect of fuel eased, heightening uncertainty over the timing of the Bank of Japan’s next rate hike.

The offshore Chinese yuan was broadly steady versus the dollar at 7.2594 after an official factory survey showed China’s manufacturing activity unexpectedly fell in May.

(Reporting by Hannah Lang in New York and Joice Alves; additional reporting by Brigid Riley; Editing by Kirsten Donovan)

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Philippines Trade Update: Wider deficit on strong imports

Policy Rate Updates: Policy rate updates to reassure