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While the expectations for rate cuts have diminished lately amid persistently high inflation, gold prices have continued to exhibit strength due to various underlying positive factors, Macquarie commodity strategists said in a report.

The research firm observed that gold prices have reached new highs, driven by dynamics other than U.S. interest rates and the dollar. The yellow metal has benefited from a broader risk-on sentiment in the metals markets.

Gold prices have been outperforming across various asset classes and on a macroeconomic level. It is implicitly trading on its reputation as a safe asset with no counterparty risk, rather than the opportunity cost associated with holding a zero-yield asset.

Moreover, gold prices have been supported by risk assets. Macquarie highlighted that central bank buying of gold is still tracking above reported levels, suggesting sustained institutional interest in the precious metal.

The derivative markets for gold remain long, especially when measured in U.S. dollar notional amounts rather than in lots. However, the market positions are believed to be less overstretched following two recent price corrections.

Trading volumes on the Shanghai Futures Exchange (SHFE) have settled down after a significant increase in April, but the China “arbitrage” remains high, indicating continued interest and activity in the gold market from Chinese traders.

The resilience of gold prices, despite a stronger dollar supported by relative U.S. monetary policy divergence, indicates that investors are looking beyond just the U.S. rate market when it comes to gold.

Elsewhere, industrial metals have also seen a catch-up to gold’s performance, as reflected in the gold/silver ratio, with gold setting the pace for commodities and now industrial metals taking the lead.

 

Investing.com — The U.S. economy expanded by less than anticipated in the first quarter, while a key measure of inflation slowed by more than initially expected.

The second estimate of U.S. gross domestic product growth in the three months to March came in at 1.3%, down from the first-time reading of 1.6% and slower than the growth of 3.4% registered in the fourth quarter of 2023.

Meanwhile, the quarterly personal consumption expenditures index was downwardly revised to 3.3% from the original mark of 3.4%. Stripping out volatile items like food and fuel, the so-called “core” PCE index was also updated to 3.6% from 3.7%, potentially relieving some concerns over the Federal Reserve’s ongoing push to corral U.S. inflation back down to its 2% target level.

Elsewhere, the pace of real consumer spending growth during the quarter was lowered to 2.0%. Advanced estimates had put the level at 2.5%.

“The main culprit for the weaker read is consumer spending,” analysts at Wells Fargo said in a note to clients. “Since the start of the Federal Reserve’s rate hikes more than two years ago, consumers have demonstrated resilience that defied the lessons of prior cycles. The lagged effect of monetary policy is long and variable. Are policymakers at the Fed finally getting through to the consumer?”

 

Investing.com–  The S&P 500 closed lower Thursday, pressured by a salesforce-led dent in technology and cautious sentiment ahead of key inflation data due Friday.     

At 16:00 ET (20:00 GMT), Dow Jones Industrial Average fell 330 points, or 0.9%, S&P 500 fell 0.6%, and NASDAQ Composite fell 1.1%. 

Salesforce leads tech lower

Salesforce (NYSE:CRM) fell nearly 20% to remain on track for its worst day since 2004 after reporting guidance that missed analyst estimates. The weaker results come amid a malaise in the software sector that isn’t likely to recovery in the second half of the year. 

“In our view, the malaise is broad, not Salesforce-specific, and we don’t see evidence of a 2H recovery,” UBS said in a Wednesday note after cutting its price target to $310 from $250 a share. 

Big tech also took a breather with NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc Class A (NASDAQ:GOOGL), leading to the downside, but Apple Inc (NASDAQ:AAPL) bucked the trend.

First-quarter GDP growth slows; inflation data eyed

The U.S. economy grew more slowly in the first quarter than previously estimated, as gross domestic product grew at an 1.3% annualized rate from January through March, lower than the advance estimate of 1.6% and notably slower than the 3.4% pace in the final three months of 2023.

The data came just ahead of remarks by Federal Reserve president John Williams, who pushed back against fears of a rate cut, saying the current level of monetary policy was working to restrain the economy. 

Federal Reserve policymakers have pushed back expectations for when they’ll be able to pivot to interest rate cuts, bringing Friday’s PCE price index data — the Federal Reserve’s preferred inflation gauge — firmly into focus. 

Foot Locker , but Kohl’s falters on earnings stage

Elsewhere, Foot Locker (NYSE:FL) stock rose 15% after the retailer affirmed its guidance for 2024 as its turnaround plan showed signs of progress. 

The outsized move in Footlocker’s stock was also driven by “comments that same store sales accelerated sequentially through 1Q despite the company starting to pullback on markdowns,” Evercore ISI said in a Thursday note.

Dollar General (NYSE:DG) stock fell 8% after the discount retailer posted strong first-quarter earnings, though customers spent less on average in fiscal Q1 from the same period a year earlier.

Kohl’s (NYSE:KSS) stock slipped 23% after the department store chain reported an unexpected first-quarter loss and issued a 2025 profit warning.

American Eagle Outfitters (NYSE:AEO) stock declined more than 7% after the apparel retailer’s fiscal first-quarter sales came in weaker than expected, even as revenue was 5% above the levels seen a year ago.

Energy stocks flat as oil prices drip on demand worries

Energy stocks ended just above the flatline, pressured by weakness in oil prices a larger than expected build in weekly U.S. gasoline and distillate supplies stoked fears about weaker fuel demand. 

Valero Energy Corporation (NYSE:VLO), ConocoPhillips (NYSE:COP) and Marathon Oil Corporation (NYSE:MRO) were among the biggest decliners.

(Peter Nurse, Ambar Warrick contributed to this article.) 

 

Investing.com – The 10-year Treasury yield broke out of its recent range as hawkish remarks from Federal Reserve officials and weaker Treasury auction results put the squeeze on government bonds, but the bond bears are unlikely to strengthen their grip as the U.S. benchmark yield could fall to its 4.30% to 4.50% range as soon as July. 

The 10-Year yield, which trades inversely to bond prices, broke above its trading range, but “the 10-year yield “should stabilized by July”, Evercore ISI said Wednesday, citing its Evercore ISI tactical rate index, which leads Treasury spot yields by 8 weeks. 

The “tug-of-war” between bullish factors and bearish factors kept yields in a narrow range since the last jobs report on May 3, Evercore says, but in recent weeks had titled positive as weaker-than-expected economic releases, usually a drag on yields, didn’t offset hawkish statements by Fed officials just amid a backdrop of weaker Treasury auctions and higher home and consumer prices.

Minneapolis Fed President Neel Kashkari has been the highlight of Fed speak so far this week, saying on Tuesday that he needs “many more months of positive inflation data,” to back a dial back in rates. Kashkari also didn’t ruled out the prospect of a rate hike, though said it was unlikely. 

A move for the yield on the 10-year Treasury toward the 4.30% to 4.50% range will required four key trends coming together, Evercore ISI highlights, including a slowing job growth below the working age population growth, more financial stress for consumers in the lower income bracket, a downtick in super core inflation, or services excluding housing and shelter, and the prospect of fed cuts this year.  

But none of these conditions seem firmly in place, Evercore ISI argues, though adds that seasonal factors for the 10-year Treasury should also weigh own the yield significantly in May, June and July.”

The bullish call on the 10-year Treasury, or bearish on the benchmark yield, comes just days ahead of the April PCE data, the Fed’s preferred inflation measure. The data come “amidst renewed questions about rate cuts this week after another round of robust growth data,” Deutsche Bank said, forecasting core PCE to come in at 0.26% month-on-month in April.

 

Investing.com– The Dow closed sharply lower Wednesday, driven by rising Treasury yields and weakness in industrials as airlines stocks fell sharply on concerns about demand after American Airlines cut its profit guidance for Q2. 

At 16:00 ET (20:00 GMT), Dow Jones Industrial Average fell 411 points, or 1.1%, S&P 500 fell 0.8%, and NASDAQ Composite dropped 0.6%. 

Industrials, energy stocks lead downside

Airlines stocks weighed heavily on industrials after American Airlines Group (NASDAQ:AAL) cut its guidance on Q2 profit, sending its shares more than 13% lower.

The downgrade guidance prompted some on Wall Street turn bearish amid worries that American Airlines is struggling to keep up with compettition from low and ultra cost carries.  

“AAL’s revenue challenges are likely to persist beyond this summer given escalating ultra-low cost carrier growth at its top hubs,” Seaport Research Partners said in Wednesday note as it cut its earnings outlook and downgraded American Airlines shares to neutral from buy. 

Delta Air Lines (NYSE:DAL), and Spirit Airlines (NYSE:SAVE) were also trading lower.

Falling energy stocks, meanwhile, also weighed on the broader sector, shrugging off jump in Marathon Oil Corporation (NYSE:MRO) after the latter agreed to be acquired by ConocoPhillips (NYSE:COP) in a $17.1B all-stock deal.  

US Treasury yields continue climb ahead of PCE data

Treasury yields continued to climb following a series of weaker than expected auction results, signaling weaker demand, for government bonds including the $44B of 7-year notes auctioned Wednesday. 

The move in higher in Treasury yields come ahead of key inflation data this week. PCE price index data, which is the Federal Reserve’s preferred inflation gauge, is due this Friday, and is likely to factor into the central bank’s outlook on interest rates. 

Signs of sticky inflation have led several officials to suggest in recent days that they would like to see more evidence of cooling prices before starting to bring rates down from more than two-decade highs.

Salesforce due to report earnings; Dick’s Sporting Goods jumped on beat and raise

The quarterly corporate earnings season is gradually drawing to a close, but Salesforce (NYSE:CRM) is still due to report its fiscal first quarter earnings after the bell, with Wall Street likely on the lookout for updates on the business software group’s Data Cloud division.

Dick’s Sporting Goods (NYSE:DKS) stock soared more than 15% after the retailer raised its full-year guidance after customers spent more on new sneakers and athletic gear at its big-box stores.

Robinhood in $1B stock buyback plan, BHP walks away from Anglo deal

Trading platform Robinhood (NASDAQ:HOOD) rose 3% after it unveiled a stock buyback of $1 billion. 

BHP Group Ltd ADR (NYSE:BHP) closed jump below the flatline after deciding to end plans to acquire rival Anglo American (JO:AGLJ) after the latter refused to extend talks beyond a May 29 deadline.

(Peter Nurse, Ambar Warrick contributed to this article.)

 

Investing.com– Most Asian stocks fell on Thursday amid persistent fears of sticky inflation inviting high interest rates, with the technology sector seeing the steepest declines as investors also locked-in recent profits. 

Regional markets took a weak lead-in from Wall Street, which fell on Wednesday tracking tech losses and some weak earnings, and as fears of high interest rates remained in play before key economic readings this week.

U.S. stock index futures saw extended losses in Asian trade, with focus squarely on upcoming gross domestic product data and PCE price index data- the Federal Reserve’s preferred inflation gauge- due on Thursday and Friday, respectively. 

Tech, chipmaking stocks lead losses as AI rally cools 

Tech-heavy indexes were the worst performers in Asian trade, with Japan’s Nikkei 225, Hong Kong’s Hang Seng and South Korea’s KOSPI down between 1% and 1.5%.

An initial rally in the sector, driven by hype over artificial intelligence, now appeared to be winding down, while decreased risk appetite also saw investors lock-in recent gains in the sector. 

Major chipmaking stocks- which had the highest amount of exposure to the recent AI rally- were the biggest decliners. Japan’s Advantest Corp. (TYO:6857) slid 5.5% and was the worst performer on the Nikkei, while memory chip-making major SK Hynix Inc (KS:000660) fell 2% in South Korean trade. 

TSMC (TW:2330) (NYSE:TSM)- the world’s biggest contract chipmaker- sank 1.3% in Taiwan trade.

A key outlier in the sector was Semiconductor Manufacturing International Corp (HK:0981)- the biggest chipmaker in China. The stock jumped nearly 4% after recent data showed it had become the third-largest chipmaker in the world by foundry capacity. 

The stock is also set to benefit from more supportive measures from Beijing, after the government recently unveiled a new $45 billion fund to support local chipmaking efforts.

Chinese losses limited by promises of more policy support

Chinese stocks fell relatively less than their regional peers, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes losing about 0.2% each.

Sentiment towards the country was somewhat supported by the People’s Bank promising more measures to foster economic growth. The promises come after Beijing rolled out a string of policy and funding measures over the past month, to shore up economic growth. These measures also sparked a stellar rally in Chinese markets, although it appeared to be slowing down in recent sessions.

Focus this week is also key Chinese purchasing managers index data, which is due on Friday.

Broader Asian markets retreated as sentiment soured in anticipation of more cues on U.S. interest rates. Australia’s ASX 200 slid 0.6%, extending losses after a hotter-than-expected inflation reading on Wednesday.

Futures for India’s NSEI index pointed to a negative open, with the index set for more losses as it retreated from record highs. 

 

The Chinese internet sector saw share price volatility Wednesday as the market reacted to a draft from the State Administration for Market Regulation (SAMR) focused on strengthening the business environment.

Alibaba (NYSE:BABA) shares fell 3.4% in Hong Kong, while JD (NASDAQ:JD).com and Meituan fell 3.2% and 5.3%, respectively.

The draft, which includes 10 sections and 40 measures, has drawn particular attention to two key areas: monitoring platform fee structures to reduce enterprise burdens and supporting the healthy development of the platform economy.

The latter, according to Jefferies analysts, includes measures for monitoring livestreaming e-commerce and ensuring merchants have the autonomy to set prices on platforms.

“We believe internet companies have been providing merchants with support and transparency in fee structure,” analysts said in a note.

For instance, Meituan strengthened its fee structure back in 2021, implementing a fixed technology service fee and a variable delivery service fee based on distance, order size, and time of day.

“It provides merchants with better understanding of their services with details. The fee structure enhances transparency and addresses the pain points for merchants,” analysts added.

For Alibaba (BABA), Jefferies said the e-commerce giant has been consistently providing various support to merchants, including traffic generation, tools, subsidies, and capital, to help them grow their businesses.

Meanwhile, JD.com (JD) has been building a fast-growing third-party ecosystem by waiving commissions for new merchants and reducing commissions in certain categories, fostering an environment conducive to merchant growth.

On the other hand, merchant consent is needed on automatic pricing adjustment, Jefferies highlighted.

 

Investing.com– Bitcoin price remained flat on Wednesday, staying squarely within a recent trading range as caution over U.S inflation and interest rates kept traders largely averse towards risk-driven assets such as crypto.

Earlier in the day, the world’s biggest cryptocurrency saw some price relief after media reports suggested that crypto exchange Mt Gox clarified had no immediate plans to sell its massive Bitcoin holdings, although it was preparing a plan to repay creditors.

Bitcoin stood nearly unchanged over the past 24 hours to $67,709.6 by 10:32 ET (14:32 GMT). The token remained squarely within a $60,000 to $70,000 range seen over the past two months.

Mt Gox seen mobilizing Bitcoin holdings, but no sales happen 

Bitcoin was spooked by bankrupt crypto exchange Mt Gox moving about $9 billion worth of the token this week, which sparked speculation that the exchange was planning to offload the token in order to repay its creditors and account holders.

But later reports said that the exchange had no plans to immediately offload any tokens, although it was still preparing to repay its obligations. 

Former Mt Gox CEO Mark Karpeles said that the Bitcoins being moved were likely the trustees moving the tokens in preparation for an eventual distribution, and that there was no imminent sale happening.

Mt Gox has been a key point of contention for Bitcoin traders, given that the now defunct exchange has a massive pool of tokens it is likely to liquidate to repay creditors. Such a liquidation could present massive immediate selling pressure on the world’s biggest cryptocurrency. 

Crypto price today: Altcoins slip as rate fears weigh on sentiment

Most major altcoins fell on Wednesday, with world no.2 token Ether down 2.3% at $3,771.55. The token remained close to two-month peaks, retaining a bulk of its recent gains after the Securities and Exchange Commission marked some progress towards the approval of an exchange-traded fund (ETF) that directly tracks the token.

Similar spot products also began trading in UK markets. 

Other altcoins were also in the red amid persistent concerns over high-for-longer interest rates and sticky inflation.

XRP rose 0.4%, while SOL dropped 1%. Meme tokens performed better, with SHIB jumping 6%, while DOGE added 1.8%.

Focus this week was squarely on PCE price index data, which is the Federal Reserve’s preferred inflation gauge. The reading is due on Friday and is likely to factor into the central bank’s plans for interest rates. 

The data comes as a string of Fed officials warned that rates will remain high for longer- a scenario that bodes poorly for crypto.

Blackrock (NYSE:BLK) ETF flips Grayscale’s GBTC, becomes biggest spot bitcoin ETF

BlackRock’s spot bitcoin ETF is now the largest fund of this kind, surpassing Grayscale’s GBTC following a $102 million inflow on Tuesday.

As of Wednesday morning, BlackRock’s IBIT holds nearly $20 billion worth of bitcoin, while Grayscale’s GBTC holds $19.7 billion after witnessing $105 million in outflows on Tuesday. Since its launch in January, IBIT has attracted $16.5 billion in investments, while investors have withdrawn $17 billion from the Grayscale fund.

On Tuesday, BlackRock incorporated the bitcoin ETF into its income and bond-focused funds. The firm’s Strategic Income Opportunities Fund (BSIIX) now holds over $3.5 million worth of IBIT, and its Strategic Global Bond Fund (MAWIX) holds $485,000.

The increased buying activity for IBIT comes amid a bullish trend for bitcoin and the broader crypto market. This momentum has been fueled in part by the listing approval for ether ETFs and renewed support for cryptocurrencies among U.S. political parties.

 

Bank of America raised its price target for Dell Technologies Inc. (NYSE:DELL) from $130 to $180, driven by strong AI momentum and new product launches unveiled at Dell Technologies World 2024.

The target increase and comments from BofA helped lift Dell’s shares by more than 2% on Wednesday.

The bank’s analysts reiterated their “Buy” rating on Dell, citing a positive outlook for the company heading into the fiscal second quarter of 2025.

Key factors include robust demand for AI servers, storage driven by an IBM (NYSE:IBM) mainframe refresh, and an expected PC refresh. During the recent Dell Technologies World event, the company introduced Dell AI Factory and expanded its AI portfolio with five new AI-enabled PCs, all-flash file storage, network architecture, and AI services offerings.

The bank sees these innovations supporting Dell’s growth in the coming year.

In the first quarter, Dell reported shipping $800 million worth of AI servers, with backlog doubling quarter-over-quarter to $2.9 billion and order growth of 40%. BofA expects AI server revenue to reach $1.4 billion this quarter, with backlog potentially growing to $4-5 billion.

BofA adjusted its fiscal 2025 revenue and EPS estimates to $92.9 billion and $7.84, respectively, reflecting confidence in the upside of AI demand.

The firm also noted that Dell, which it feels “remains under-owned and underweighted,” could benefit from AI-related growth and potential inclusion in the S&P 500.

This bullish outlook underscores Dell’s strategic positioning to capitalize on the expanding AI market, reinforcing its long-term growth prospects.