Daily Market Outlook - Thursday, May 23

By Patrick Munnelly of Tickmill

Thursday, May 23, 2024 6:30 AM EST

Hands, Friendship, Together, Man, Woman, Human

Image Source: Pixabay

Following the release of positive quarterly results by Nvidia, US market futures experienced a surge and Asian stocks saw an increase, reigniting expectations for a global artificial intelligence boom. The prominent chipmaker surpassed expert predictions by announcing an estimated second-quarter revenue of around $28 billion. Additionally, the company raised its quarterly dividend by 150% to 10 cents per share and declared a 10-for-1 stock split. Nvidia's shares rose by up to 7% during trading hours in response to the company's performance. The gains in semiconductor manufacturers in South Korea, Taiwan, and Japan contributed to the overall rise in Asian equities. A Bloomberg index tracking chipmakers also saw a 1.9% increase, following the lead of Nvidia.

Today's flash PMI surveys for May will be closely scrutinized, especially for the UK and the Eurozone. Expect stabilization in services activity and improvements in manufacturing. Overall, the survey is expected to indicate that the economic recovery is continuing into the middle of Q2. However, there will be notable differences between sectors and between the UK and the Eurozone. In both regions, services activity is predicted to significantly outperform manufacturing. UK activity and price signals have also surpassed those of the Eurozone, aligning with the Bank of England’s cautious approach to easing policy. In contrast, the European Central Bank has indicated a high likelihood of reducing rates next month. Expect the UK and Eurozone manufacturing PMIs to increase to 50.1 and 46.2, respectively. For services PMIs, look for slight declines to 53.6 in the UK and 53.0 in the Eurozone, but they are still expected to drive the recovery. In the Eurozone, the ECB will release Q1 negotiated wage data. The most recent Q4 data showed a decrease to 4.5% from a high of 4.7% in Q3. Policymakers will be hoping for further progress towards more sustainable wage growth to promote moderation in services price inflation.

Stateside, the release of Markit flash PMIs is also scheduled, although they typically receive less market and policymaker attention than their UK and Eurozone counterparts. Additionally, US weekly jobless claims data and monthly new home sales figures are due.

Central bank speakers today include the Bank of England’s Chief Economist, Pill, who has previously expressed caution about easing policy. Yesterday’s UK CPI inflation data likely did little to ease his concerns about persistent services price inflation.

Overnight Newswire Updates of Note

Fed Officials Saw Longer Wait For Cuts After Inflation Setbacks
Goldman’s Solomon Says He Sees ‘Zero’ Rate Cuts This Year
Rick Scott Enters Race To Succeed McConnell As GOP Senate Leader
ECB’s Schnabel Sees Modest Revival In Euro-Zone Economy
BoE Will Cut Interest Rates In August, Says Goldman Sachs
Prime Minister Rishi Sunak Calls UK National Election For July 4
Japan's Factory Activity Expands For First Time In A Year, PMI Shows
Australian PMI Points To Resilience In Economy, Stubborn Inflation
Orr Says RBNZ Would Only Hike To Curb Inflation Expectations
South Korea Sets Aside Record $19 Billion To Fuel Chipmaking
Russia Pledges To Make Up For Crude Overproduction In April
Nvidia Gives Strong Forecast, Reflecting Sustained AI Momentum
Tesla Pushes Suppliers To Produce Parts Outside Of China, Taiwan
BHP Has A Week To Convince Anglo Its South African Plan Can Work
China Holds Biggest Military Drills In A Year Around Taiwan

(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: 1.0830 (250M), 1.0850 (260M), 1.0870 (246M), 1.0885 (293M)
1.0900 (1.7BLN)
EUR/GBP: 0.8510 (330M), 0.8525-30 (411M)
GBP/USD: 1.2670 (404M), 1.2690 (226M), 1.2735 (368M), 1.2750-55 (527M)
NZD/USD: 0.6125 (438M), 0.6175 (479M). AUD/NZD: 1.0900 (420M)
USD/CAD: 1.3665-75 (1.3BLN), 1.3685 (300M), 1.3755 (500M)

CFTC Data As Of 17/05/24

Japanese yen net short position is -126,182
British pound net short position is -20,075
Euro net long position is 17,155 contracts
Swiss franc posts net short position of -41,107
Bitcoin net short position is -177 contracts
Equity fund managers raise S&P 500 CME net long position by 60,168 contracts to 920,863
Equity fund speculators increase S&P 500 CME net short position by 40,882 contracts to 279,337
Gold NC Net Positions: $204.5K vs $199.6K