Weekly News Recap 1 – 5 July 2024

News for 1 July 2024

Gold Remains Sideways Within the Range

At the end of last week, gold prices weakened, closing at $2,326/oz. This was due to the U.S. personal inflation index meeting expectations at 0.1% and the yield on 10-year U.S. Treasury bonds rising to 4.42%, which pressured gold prices.

On July 1st at 9:00 PM, the U.S. manufacturing PMI figures will be released, with a forecast of 49.2.

Last week, although gold prices fell below the critical support level of $2,300/oz at times, it rebounded strongly before the week closed. Gold is believed to be building a base above $2,300/oz. The intraday support level is at $2,310/oz and the resistance level is at $2,340/oz.

PCE Rises 2.6% in May

The U.S. Department of Commerce reported that the headline Personal Consumption Expenditures (PCE) price index, which includes food and energy, rose 2.6% year-over-year in May, aligning with analysts’ expectations. This is down from 2.7% in April. On a monthly basis, the headline PCE was unchanged in May or increased by 0.0%, also matching analysts’ forecasts, after a 0.3% rise in April.

The core PCE price index, which excludes food and energy and is the Federal Reserve’s preferred inflation measure, also rose 2.6% year-over-year in May, in line with analysts’ expectations, down from 2.8% in April. On a monthly basis, the core PCE increased by 0.1% in May, matching analysts’ forecasts, after a 0.3% rise in April.

Saudi Arabia May Cut Crude Oil Prices for Asia for the Second Month in August – As Europe approaches early winter in three months, oil prices may rise.

Saudi Arabia might lower the prices of crude oil sold to the Asian region for the second consecutive month in August, following the decline in Dubai crude oil prices, which serve as a benchmark in the Middle East. The potential price reduction for Asia will account for about 80% of Saudi Arabia’s oil exports.

Four sources from Asian refineries indicated in a Reuters survey that the official selling price (OSP) for Arab Light crude oil sold to Asia in August might decrease by approximately 60-80 cents per barrel from July, potentially reaching the lowest level since April.

It is also estimated that European inflation may rebound to around 3% from November 2024 to February 2025, which could delay interest rate cuts in 2025. This economic downturn combined with rebounding inflation could challenge the European Central Bank (ECB).

The Best and Worst-Performing Stock Markets in the Asia-Pacific Region During the First Half of 2024

1. TAIEX Index (Taiwan): +28.45%

2. Nikkei 225 Index (Japan): +17.56%

3. Nifty 50 Index (India): +10.49%

4. BSE Sensex Index (India): +9.4%

5. FBMKLCI Index (Malaysia): +9.31%

6. KOSPI Index (South Korea): +5.37%

7. Hang Seng Index (Hong Kong): +3.94%

8. FTSE STI Index (Singapore): +2.89%

9. ASX 200 Index (Australia): +2.33%

10. CSI 300 Index (China): +0.89%

11. PSE Composite Index (Philippines): -0.59%

12. Jakarta Composite Index (Indonesia): -2.88%

13. SET Index (Thailand): -8.11%

News for 2 July 2024

Gold Continues to Rebound

On July 1, gold prices rose, closing at $2,332/oz. This increase was due to the U.S. ISM Manufacturing PMI coming in lower than expected at 48.5, along with the weakening of the dollar index to 105.83. The weaker dollar supported the rise in gold prices.

On July 2 at 8:30 PM, Federal Reserve Chair Jerome Powell will make a statement on monetary policy. Following this, at 9:00 PM, the U.S. job openings report will be released, with an expected figure of 7.96 million.

EURUSD Focuses on Political Factors

The euro appreciated against the dollar after the first round of the French elections indicated that the far-right party received fewer votes than expected, preventing them from securing a majority in the parliament. This outcome necessitates a second round of elections on July 7. As a result, EURUSD closed at 1.07404, showing signs of a rebound.

It is anticipated that President Macron may face challenges if his party holds a minority in parliament, potentially causing EURUSD to rise further.

Fitch Downgrades Intel from A- to BBB+

Fitch has downgraded Intel’s Long-Term Issuer Default Rating and Senior Unsecured Rating from A- to BBB+, with a stable outlook. This decision is based on Fitch’s assessment that Intel’s free cash flow profits will be only slightly positive on average from 2024 to 2027.

Additionally, Intel is facing competition from AMD in both the PC and data center server markets. Despite these technological challenges, Intel’s market share remains robust, according to Fitch, suggesting that the pressure might be short-term.

Bank of America (Preview) 2Q24 Appears Stable

The preview of Bank of America’s (BAC) 2Q24 budget forecasts revenue at $25.3 billion, up by 0.4% YoY but down by 2% QoQ, and earnings per share at $0.81, down by 8% YoY but up by 6% QoQ. This is attributed to stable high-level policy interest rates, which continue to forecast an increase in the difference between interest on deposits and loans to $14.30 billion from $14.03 billion. However, trading account income is expected to decline below that of 1Q24, a season historically favoring higher Q1 performance over Q2, potentially lowering %NP to 13% from 13.51% in 1Q24.

It is estimated that 2Q24 operating results may remain stable, despite potential decreases in trading account income, offset by the net interest margin (NIM) between loan and deposit interest, which could neutralize operating results. Nevertheless, the stock price has shown improvement, rising +18% YTD, resulting in a P/E trading at 14x, higher than the historical average of 11.75x and the industry average of 11-12 times.

News for 3 July 2024

Gold Remains Stable at a High Level

On July 2nd, gold prices softened slightly, closing at $2,329/oz. This adjustment was attributed to higher-than-expected job openings in the United States, totaling 8.14 million, aligning with Powell’s indication that the Fed may gradually reduce interest rates amid easing inflationary pressures. The Fed’s tight monetary policy thus exerted downward pressure on gold prices.

On July 3rd, at 7:15 PM, private sector employment figures for the US were estimated at 163k. Later, at 9:00 PM, the ISM Non-Manufacturing Purchasing Managers’ Index (PMI) was forecasted at 52.6.

Currently, gold prices are consolidating sideways. Market attention is focused on the upcoming US labor market data towards the end of the week, which could influence gold’s movement within the range of support at $2,315/oz and resistance at $2,350/oz.

Preview of Tesla’s 2Q24 Shows Signs of Recovery – Following a 15% QoQ Increase in Deliveries

Tesla’s forecast for 2Q24 anticipates revenues of $24 billion, down 4% YoY but up 13% QoQ, and earnings per share of $0.59, a decrease of 35% YoY but an increase of 31% QoQ. This is driven by Tesla’s reported production and deliveries in 2Q24, with production decreasing to 410,831 vehicles (-7% YoY, -5% QoQ).

However, deliveries of electric vehicles increased to 443,956 vehicles (+5% YoY, +15% QoQ), with the majority of sales coming from the Model 3/Y series totaling 422,405 vehicles (+14% QoQ). Initial profit margins may see a slight adjustment upwards from 17.35% in 1Q24 to 17.50-17.75%, and net profit margin is expected to increase slightly by 6%.

News for 4 July 2024

Gold Breaks Above $2,350/oz, Showing Significant Upside

On July 3rd, gold prices surged, closing at $2,356/oz, driven by lower-than-expected private sector hiring and service sector purchasing index in the US, at 150k and 48.8 respectively. This was coupled with a weakening US dollar index, dropping from 105.66 to 105.33, which supported the upward adjustment in gold prices.

Preview UnitedHealth (UNH) Stock – The 2Q24 budget is expected to increase YoY but decrease QoQ.

The forecasted performance of UnitedHealth (UNH) in 2Q24 expects revenue to reach $98.7 billion, up 6% YoY but down 1% QoQ, with earnings per share at $6.71, showing a 9% YoY increase but a 3% QoQ decrease. This is driven by UnitedHealthcare, which may have nearly 2 million users in the US, potentially supporting a total subscriber base of 28-29 million, reflecting the robustness of this revenue, which accounts for 76% of total revenue. Operating profit margins are expected to decrease from 6.2% in 1Q24 to around 6.0%-6.1% in 2Q24. Despite a foreign exchange loss of approximately $7 billion in 1Q24, it will not impact the adjusted earnings forecast for 2024 as it is non-cash.

It is estimated that the 2Q24 performance might slightly weaken QoQ, but it is anticipated that the number of service users in the United States will remain stable, given the seasonal nature of revenue that tends to stabilize in 2Q-3Q.

News for 5 July 2024

Gold Awaits Non-farm Payrolls Report

On July 4th, gold prices closed slightly higher at $2,357/oz due to a weakening dollar index at 105.12, which supported the upward adjustment in gold prices.

On July 5th at 7:30 PM, the announcement of non-farm payroll numbers and the unemployment rate in the United States is expected at 191k and 4.0%, respectively.

It is estimated that the non-farm payroll numbers may come out higher than expected but lower than previous figures. This could lead to volatility in gold prices within the range of support at $2,340/oz and resistance at $2,370/oz.

The Labour Party is Expected to Sweep the UK Parliament Elections

According to exit polls conducted by three leading UK news agencies, BBC, ITV, and Sky, the Labour Party, led by Mr. Keir Starmer, is projected to secure 410 seats in Parliament, a significant enough majority in the 650-seat Parliament. Meanwhile, the Conservative Party, which has held power for 14 years under the leadership of Mr. Rishi Sunak, is expected to secure 131 seats in Parliament.

Preview of TSM’s 2Q24 Budget – Strong recovery in both YoY and QoQ

The forecast for Taiwan Semiconductor Manufacturing Company (TSM) in 2Q24 suggests revenue could increase to $20 billion, up +30%YoY, +9%QoQ, and earnings per share at $1.39, up +23%YoY, +4%QoQ. This is driven by increased semiconductor sales in April reaching $7.28 billion, up +60%YoY, +21% MoM, aligning with May’s sales of $7.08 billion, +30%YoY, -3%MoM, reflecting robust chip demand growth.

Recently, Google confirmed production of 3-nanometer Tensor G5 chips for Pixel 10 is on track, with Samsung also manufacturing Tensor G4 chips for Pixel 9 launching soon. Additionally, TSM plans to raise the prices of its 3nm chips by about 5% in 2025, which could bolster revenue and initial profit margins.

Overall, revenue and profit trends are expected to continue positively, with TSM being a key global manufacturer. The stock price has risen +80% YTD, resulting in a P/E ratio of 33, higher than the historical average of around 24.