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July 3rd - According to CNBC, the recent slowdown in tech stock gains has shaken traders confidence in the market outlook. The volatility gap between the Nasdaq 100 and S&P 500 indices has widened to its highest level since the 2008 financial crisis. This is primarily due to a significant increase in investor appetite for Nasdaq put options, indicating rising concerns about a potential pullback in tech stocks, particularly in the AI sector. On Thursday, the Semiconductor ETF (SMH) fell by more than 5%, further reflecting the weakening momentum of previously hot tech stocks. Despite this, while market enthusiasm for call options has waned somewhat, it remains at a high level. Analysts believe that while the market is typically calmer during the summer, tech stock volatility is expected to remain higher than the broader market.On July 3, it was reported that on July 2, local time, Minister of Commerce Wang Wentao and British Business Secretary John Kell co-chaired the 15th meeting of the China-UK Joint Commission on Economic and Trade Cooperation in London, exchanging in-depth views on trade, investment, and regional and multilateral cooperation. Wang Wentao stated that China welcomes British companies to expand their investment in China and hopes the UK will provide a fair, just, and non-discriminatory environment for Chinese companies investing in the UK. Both China and the UK are important members of the WTO and should jointly implement the outcomes of the 14th WTO Ministerial Conference. China expressed serious concern about the UKs steel quota measures that came into effect on July 1 and hopes the UK will adjust the measures as soon as possible to ensure they comply with WTO rules. Kell stated that economic and trade cooperation is an important pillar of UK-China relations. Chinas vigorous development of the service sector provides significant opportunities for British companies. The UK is willing to strengthen policy communication with China and expand cooperation in the service sector through the UK-China Services Partnership and a feasibility study on the UK-China Services Trade Agreement. The UK welcomes Chinese companies to invest in the UK and is willing to provide more certainty and predictability.Fitch Ratings: Tax reforms in the Dominican Republic have mitigated the fiscal impact of the oil shock.July 3 – On July 2, local time, Minister of Commerce Wang Wentao chaired a roundtable meeting of Chinese-funded enterprises in the UK in London. Representatives from more than ten Chinese-funded enterprises in the UK, representing sectors such as finance, insurance, new energy, automobiles, retail, and telecommunications, along with the China Chamber of Commerce in the UK, attended the meeting. They introduced their business operations in the UK and raised specific requests regarding safeguarding their overseas interests and expanding practical cooperation. Wang Wentao stated that in recent years, Sino-British economic and trade relations have deepened, becoming a ballast and driving force for Sino-British relations. Facing the ever-changing international situation, Chinese-funded enterprises in the UK have withstood pressure, cultivated the UK market, and achieved good economic results, making positive contributions to Sino-British economic and trade cooperation. Looking to the future, enterprises from both countries can continue to deepen cooperation in areas such as services, innovation, and trilateral cooperation. He hoped that Chinese-funded enterprises in the UK would strengthen self-discipline, compete in an orderly manner, maintain the overall image of Chinese enterprises, and improve their international business level, risk prevention awareness, and capabilities.On July 3rd, Citigroup stated that it expects aluminum prices to bottom out within the next month, subsequently gradually recovering to the $3,300-$3,500 per tonne range between September and December. The bank believes this assessment is based on multiple factors, including a dovish stance from the Federal Reserve, declining real interest rates, improved demand prospects, and continued low inventory levels based on consumption days. Meanwhile, the recent decline in aluminum prices mainly reflects weaker-than-expected demand, a slowdown in visible inventory reduction, easing geopolitical risks, concentrated unwinding of speculative and physical positions, and rising market expectations of increased future supply. Over the past month, aluminum prices have fallen by about 20% from approximately $4,450 per tonne, shaking a more than year-long upward trend. However, Citigroup believes that shorting aluminum prices is not advisable at present, as the market was already in a supply deficit before the recent shock, and new supply is unlikely to quickly compensate for increased demand. The bank also pointed out that market concerns about a rapid return of Middle Eastern supply may be exaggerated.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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