It’s yet another record rally for the Nasdaq and S&P 500, supported by the sharp rise in Nvidia’s shares. The chip company surpassed a valuation of $3 trillion, ahead of Apple’s market capitalisation.
🎲Recent data warms bet on Fed cuts.🥁
The latest risk to sentiment in the equity market could be attributed to investors placing greater odds of a September rate cut, given recent weaker economic data on the US economy. Indeed, we are seeing downward pressure on disposable income, which fell 0.1% in April, marking the second decline seen in the prior three months.
The savings rate also dipped to 3.6% in April and March, the lowest level seen since December 2022, which could reflect cooling consumer spending that fuels a large chunk of service inflation. Hence, it is a welcoming piece of data for the Fed.
💰A Well-Balanced Goldilock Situation🗽
Even as investors emphasize weaker growth as a positive sign, there are some green shoots in economic news. A fresh set of data from ISM showed Services MPI at 53.8%, which reflects the expansion of the services sector for 46 out of the last 48 months.
Now, all eyes will be on Friday’s morning job report for May, which is the market’s biggest test of the week.
📪What’s on the menu today? 📖
At 8.30 pm, we will have the initial jobless claim. A further slowdown in the figure will be good news for the market.
Likewise, the ECB will likely announce a rate cut by 25 basis points, making it the second central bank to cut rates after the BOC cut yesterday. This is welcoming, given the easing momentum globally.
It is Thursday, June 6, at 8:50 a.m. in Singapore and 8:50 p.m. in New York. It is a sunny and warming morning. Aloha, and have a blissful day at work and in school.
Cheers.
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