The Dow Jones (US30) Index added 0.41% at Monday's close, while the S&P 500 (US500) Index gained 0.62%. The NASDAQ Technology Index (US100) closed positive 0.84% on Tuesday. Stock indices ended Tuesday's trading with moderate gains. Stocks found support on Tuesday thanks to lower bond yields after Fed Chairman Powell said prices show signs of resuming a disinflationary trend.

Tuesday's US economic news was hawkish for Fed policy and bearish for stocks after JOLTS job openings for May unexpectedly rose by 221,000 to 8.140 million, indicating a strengthening labor market versus expectations of a decline to 7.946 million.

Tesla (TSLA) stock price rose more than 10% to a 5-month high and led gains in the S&P 500 and Nasdaq 100 after the company reported second-quarter vehicle shipments of 443,956 units, beating the consensus forecast of 436,000 units. Bank of America (BAC) shares closed higher by more than 2% after Seaport Global Securities upgraded the stock to "buy" from "neutral" with a $48 price target. PayPal Holdings (PYPL) closed with an increase of more than 2% after Susquehanna upgraded the stock to positive from neutral with a $71 price target. Shares of Nike (NKE) closed down more than 1% after RBC Capital Markets lowered its price target on the stock to $75 from $100.

Equity markets in Europe mostly fell yesterday. Germany's DAX (DE40) fell by 0.69%, France's CAC 40 (FR40) closed down 0.30%, Spain's IBEX 35 (ES35) lost 1.30%, and the UK's FTSE 100 (UK100) closed negative 0.56%. European stocks fell on Tuesday amid hawkish comments from ECB President Lagarde, who said on Monday night that the ECB does not yet have sufficient evidence that inflation threats have passed, reinforcing expectations that the ECB will delay further interest rate cuts. European stocks also declined as political uncertainty in France remains high ahead of the second round of parliamentary elections this Sunday.

The Eurozone Consumer Price Index for June declined to 2.5% y/y from 2.6% y/y in May, which was in line with expectations. However, core CPI for June rose 2.9% y/y, unchanged from May and exceeding expectations of a decline to 2.8% y/y. ECB Governing Council spokesman Simkus said yesterday that core inflation is the "most important" indicator that will force the ECB to act and that the ECB will not rush to lower borrowing costs. Policymakers are looking at September and the months ahead for further potential interest rate cuts. Swaps estimate the odds of a 25 bps ECB rate cut at 7% for the July 18 meeting and 65% for the September 12 meeting.

WTI crude oil prices retreated from a 2-month high on Tuesday and declined after Russian crude exports rose to a 2-month high. Oil initially moved higher on Tuesday due to rising tensions in the Middle East, with Israel close to a full-scale war with Hezbollah in Lebanon and Houthi rebels in Yemen stepping up attacks on commercial ships in the region. According to API data, the US crude inventories fell sharply by 9.163 million barrels in the week ended June 28, the largest weekly decline since early August 2023 and well above market expectations for a 0.15 million barrel drop.

Natural gas prices fell for the sixth straight session on Tuesday, hitting a seven-week low. They remain under pressure as US storage inventories are +20.6% above the 5-year seasonal average, indicating ample supplies. However, the forecast for hot summer temperatures in the US is a favorable factor for natural gas prices in the coming weeks.

Asian markets were mostly up yesterday. Japan's Nikkei 225 (JP225) rose by 1.12%, China's FTSE China A50 (CHA50) gained 0.78%, Hong Kong's Hang Seng (HK50) added 0.29%, and Australia's ASX 200 (AU200) was negative 0.42%.

In New Zealand, the latest economic data fell short of expectations. Tuesday's business survey showed a significant drop in confidence in the second quarter due to high interest rates weighing heavily on demand. Markets are betting that the Reserve Bank of New Zealand (RBNZ) will cut rates as early as October.

The Caixin China Services PMI fell to 51.2 in June 2024 from May's 10-month high of 54.0, below the forecast of 53.4. This is the 18th consecutive month of growth in service sector activity.

S&P 500 (US500) 5,509.01 +33.92 (+0.62%)

Dow Jones (US30) 39,331.85 +162.33 (+0.41%)

DAX (DE40) 18,164.06 −126.60 (−0.69%)

FTSE 100 (UK100) 8,121.20 −45.56 (−0.56%)

USD Index 105.69 −0.21 (−0.20%)

Important events today:

• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – China Caixin Services PMI (m/m) at 04:45 (GMT+3);
• – German Services PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+3);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
• – US Initial Jobless Claims (m/m) at 15:30 (GMT+3);
• – US Trade Balance (m/m) at 15:30 (GMT+3);
• – US ISM Services PMI (m/m) at 17:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 17:15 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 19:00 (GMT+3);
• – US FOMC Meeting Minutes at 21:00 (GMT+3).

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