Morning Wrap (29.05.2023)

8:45 am 29 May 2023

  • Indices from Asia-Pacific traded mixed at the beginning of a new week. Nikkei and Kospi decreased 0.12% and 1.1% respectively, Nifty 50 added 0.34% and indices from China - HKComp and CHNComp traded up to 2.3% and 2.8%% higher after the US debt-ceiling deal.

  • Although today in the US, all markets are closed due to the Memorial Day holiday US500 futures rose nearly 0.3% and US100 0.4%.

  • American equities futures and Asian shares rose as risk appetite returned to global markets following the agreement reached by Biden and House Representative Speaker McCarthy on the US debt ceiling.

  • U.S. President Joe Biden and top congressional Republican Kevin McCarthy reached a tentative deal to suspend the federal government's $31.4 trillion debt ceiling, ending a months-long stalemate.

  • The deal was announced without any celebration, in terms that reflected the bitter tenor of the negotiations and the difficult path it has to pass through Congress.

  • Goldman Sachs predicts that if the deal passes Congress, the reduction in federal spending would trim US GDP by just 0.1% next year.

  • Gold prices remained stable as the demand for safe-haven assets decreased, while both oil and Bitcoin experienced gains, indicating a more positive sentiment in the market.

  • The dollar weakened slightly against major currencies, with currency markets moving slowly.

  • Traders demanded a lower premium for US Treasury bills, indicating optimism about a deal.

  • The RBNZ in the last meeting raised rates to 5.50% but signaled a peak in the tightening cycle, with a future rate cut expected.

  • No major macro publications and central bank speeches are expected today - the Memorial Day holiday.

  • Bank of America expects no rate hike in June, but a future hike is possible.

  • Recep Tayyip Erdogan wins the Turkish presidential election, initial Presidential runoff vote results show Kilicdaroglu at 42% and Turkey’s President Erdogan at 58%.

  • ECB’s Makhlouf said that the ECB is seeing the impact of its tightening cycle.

  • Chicago Fed's Goolsbee highlighted that the Fed is improving on inflation and it can be brought down without a recession, but they have not succeeded yet. FED will receive a lot of data between now and the June FOMC Meeting.

DE30 futures has surpassed the 16,000 points level once again as positive market sentiment returns, D1 timeframe, source xStation 5

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