Weekly News Recap 17 – 21 June 2024

News for 17 June 2024

Gold Resistance Stance

At the end of last week, gold prices adjusted upwards and closed at $2,336/oz. This was due to the University of Michigan Consumer Confidence Index for the United States coming in lower than expected at 65.6. Gold, being a safe-haven asset, thus saw buying momentum.

On June 12th, at 7:30 PM, there will be an announcement of the general business conditions index for New York State, with an expected figure of -12.5.

Trump Pledges to Slash Corporate Taxes to 20% if Elected

Bloomberg News reported that Donald Trump, the Republican candidate for US President, pledged to reduce the corporate tax rate to 20%. Trump had previously lowered this tax rate during his presidency.

Trump expressed support for reducing the business tax rate during a private meeting in Washington D.C. last week, attended by approximately 100 CEOs of major US corporations, including Jamie Dimon from JPMorgan Chase & Co. and Tim Cook from Apple.

Currently, the corporate tax rate stands at 21%. Even a slight reduction could potentially save US companies billions of dollars annually.

Adobe Shows Strong Growth with 10% CAGR in Revenue Over Past Four Quarters

In 2Q24, Adobe (ADBE) reported revenue of $5.37 billion, a +10% YoY increase, and earnings per share of $4.48, up +15% YoY. This growth was driven by a $3.91 billion increase in Digital Media revenue, aligned with the Net new Digital Media ARR of $487 million. Initial profit margins increased from 87% in 2Q23 to 88%, and net profit margins increased to 30%.

However, Adobe’s management forecasts revenue and earnings per share to touch $5.33-5.38 billion and $4.50-4.55 per share, respectively. This is due to increasing trends in service users in the United States, bolstering Digital Media revenue to $3.95-3.98 billion.

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News for 18 June 2024

SPDR Prepares to Add NVIDIA in Asset Allocation Strategy

According to Matthew Bartolini, Head of Research at SPDR Americas, Microsoft and Nvidia are expected to comprise approximately 21% of the technology ETF, while Apple’s weighting will decrease to around 4.5%.

This rebalancing will take effect over one quarter, despite Apple outperforming Nvidia in the short term due to strong iPhone sales recovery in April, but the AI trend outlook remains robust.

The ETF manages assets totaling approximately $71 billion, making a 15% change in the fund significant, amounting to over $10 billion.

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News for 19 June 2024

Gold Aims to Break Resistance

On June 18th, gold closed at $2,329/oz, up from retail sales contracting by 0.1% and a weaker dollar index closing at 105.25. Gold adjusted upwards.

On June 19th, watch for the UK CPI report at 1:00 PM GMT, expecting a decrease from 2.2% to 2.0%.

BOJ Governor Signals Possible Interest Rate Hike in July

According to Reuters, Kazuo Ueda, Governor of the Bank of Japan (BOJ), stated that there might be an interest rate hike in July, depending on the economic data at that time. This indicates an intention to continue raising borrowing costs from the current level of nearly 0%. Although rising import costs due to the weaker yen may impact household spending, increased wages are expected to support consumption and moderately revive the economy.

If the BOJ raises the interest rate by 0.1% as in the previous instance, it might only help stabilize the yen. The USD/JPY range is expected to be around 150-155, considering the Federal Reserve may maintain high interest rates for an extended period.

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News for 20 June 2024

Gold Continues its Momentum

On June 19th, gold traded within a narrow range, closing at $2,328/oz as the US stock market was closed for Juneteenth, resulting in light trading.

On June 20th, at 7:30 PM GMT, the weekly jobless claims figures are expected to be announced with an estimate of 235k.

AI Boosts TSMC’s Market Cap Toward $1 Trillion

Taiwan Semiconductor Manufacturing Co., with a market cap nearing $1 trillion, sees upward price target adjustments this week from Wall Street banks including Goldman Sachs, Citigroup, and Morgan Stanley. They cite increasing demand related to AI and potential price hikes expected by 2025 to drive higher revenues.

JPMorgan suggests TSMC may “raise revenue guidance in 2024 and could push capital expenditures to the upper end of estimates,” forecasting AI to contribute 35% of total sales by 2028.

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News for 21 June 2024

Gold Breaks Key Resistance Level

On June 20, the price of gold rose, closing at $2,360/oz. This increase was due to the Philadelphia Fed Manufacturing Index coming in lower than expected at 1.3, leading to a surge in buying as gold is seen as a safe-haven asset.

On June 21 at 8:45 PM, the US will announce the Purchasing Managers’ Index (PMI) for both manufacturing and services sectors, with forecasts of 51.0 and 53.4, respectively.

BoE Holds Interest Rate at 5.25% as Expected Despite Inflation Reaching Target of 2% – Market Expects Possible Rate Cut in Late Q3 2024

The Bank of England’s (BoE) Monetary Policy Committee (MPC) voted 7-2 to maintain the interest rate at 5.25%, the highest level in 16 years. This marks the seventh consecutive rate hold since August 2023, following 14 consecutive rate hikes.

Meanwhile, UK inflation has reached the central bank’s target of 2% ahead of the US and the Eurozone. However, analysts note that high levels of services and core inflation will continue to exert upward pressure.

The market currently assesses a 30% chance of the BoE cutting rates in August 2024, with a higher possibility of a reduction in September. There is also a risk of a delay until November, similar to expectations for the US Federal Reserve.