Daily Market Outlook - Friday, July 5

By Patrick Munnelly of Tickmill

Friday, July 5, 2024 5:39 AM EDT

macbook pro on black table

Image Source: Unsplash

Markets across the world are reaching all-time highs as traders await the important US jobs report on Friday. In Japan, the Topix index surpassed the previous high from 1989 during Thursday's session, setting a new record early on Friday. Korean markets surged after Samsung reported earnings above estimates. China's central bank announced it had "hundreds of billions" of yuan in securities through agreements with lenders, taking steps to sell government bonds to curb a record-breaking rise.

After Gordon Brown, Britain's first Labour prime minister is being welcomed by the markets with stability, providing an opportunity for an economic reset after turbulent years. The anticipated election victory for Keir Starmer's Labour party has already been factored into the market, with Sterling being the only G10 currency to gain against the dollar so far this year. The demand premium for holding gilts over German 10-year bonds has remained steady, reflecting market stability. The FTSE 100 futures were up in Asia, driven by a slowly growing economy and decreasing inflation. While Labour's specific economic plans are unknown, policymakers can currently operate in a calm market environment. The euro is also finding its place in the market ahead of France's parliamentary runoff, with potential vulnerability to unexpected outcomes. The U.S. jobs data is expected to show a slight slowdown, and President Joe Biden is scheduled for an interview on ABC News later in the session, which is quieter due to the Independence Day holiday. U.S. and French politics will continue to be the main market drivers. Later in the day, there may be headlines about Labour policies and early legislative priorities as the new Prime Minister, Starmer, tries to make the most of parliamentary time before the summer recess.

Overnight Newswire Updates of Note

UK’s Labour Party Wins Landslide, Sunak Concedes Defeat
Lagarde Says ECB Needs More Data To Reassure It On Inflation
Japan’s Household Spending Falls, Clouding Growth Outlook
Japan’s Suzuki: Will Closely Monitor Stock And Forex Markets With Vigilance
China's PBoC Readies Multibillion-Yuan Pool Of Bonds To Sell
Pound Firm As Investors Embrace 'Boring Is Good' With Labour Win
PBoC Salvo On Bond Rally To Have Little Impact, Analysts Say
Oil Prices On Track For Fourth Straight Week Of Gains
UK Stock Futures Rise, Pound Steady As Labour Secures Victory
Samsung Electronics Expects Surge In Second-Quarter Profit

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

EUR/USD: 1.0700 (2.1BLN), 1.0710-20 (1.5BLN), 1.0725 (379M), 1.0750 (1BLN)
1.0765-70 (1BLN), 1.0780 (404M), 1.0800 (2.9BLN), 1.0815-25 (813M),
GBP/USD: 1.2605 (533M), 1.2645-60 (689M), 1.2770 (404M)
AUD/USD: 0.6665 (780M), 0.6700 (438M), 0.6750-60 (1.7BLN)
NZD/USD: 0.6250 (436M)
USD/CAD: 1.3660-70 (889M), 1.3685-90 (962M), 1.3700 (262M)
USD/JPY: 160.00 (587M), 161.00 (450M)

CFTC Data As Of 25/06/24

Euro net short position is -8,431 contracts
Japanese Yen net short position is -173,900 contracts
Swiss Franc posts net short position of -35,057 contracts
British Pound net long position is 44,048 contracts
Bitcoin net short position is -624 contracts
Equity fund managers raise S&P 500 CME net long position by 17,079 contracts to 977,134
Equity fund managers raise S&P 500 CME net long position by 17,079 contracts to 977,134