MARKET CLOSE
Due to the U.S. Independence Day holiday, the stock market will be closed today.
MINUTES REVEALED CAUTION
The FOMC minutes released yesterday from the June meeting indicated that while inflation is moving in the right direction, it is not decreasing quickly enough to consider lowering interest rates. The summary emphasized that while officials acknowledged recent improvements in data, they stated that more favorable data is required to confidently believe inflation is on a sustainable path toward the 2% target. In addition, the minutes showed that there were differences among the 19 central bankers, with indications some highlighting that rate hikes might still be necessary. Moreover, although futures markets anticipate two cuts starting in September, the FOMC’s “dot plot” now forecasts only one rate cut by the end of 2024 – a reduction from the three cuts predicted in the March update. Furthermore, Chair Jerome Powell and other officials underscored that decisions will be based on data, aiming to avoid compromising economic stability by reducing rates either too soon or too late.
TUMBLING TREND CONTINUED
Bitcoin’s price has dropped for the third consecutive day, nearing February levels, due to a mix of political and legal concerns. As of 8:00 AM CST, it fell as much as 4.2%, trading just above the $57,300 mark, while smaller cryptocurrencies like Solana and Dogecoin also declined. Investors are uneasy about the potential political shift if President Joe Biden steps down from the 2024 race, possibly leading to a pro-crypto Republican like Donald Trump facing a stronger Democratic candidate who might be less favorable to digital assets. Furthermore, adding to market pressure, fears grow that Bitcoin seized by the U.S. and German governments may soon be sold, with Germany recently moving about $75 million in Bitcoin to exchanges. In addition, the failed Mt. Gox exchange is also returning Bitcoin to creditors, creating uncertainty, and Bitcoin miners are under financial strain due to an April reduction in token rewards, prompting them to sell off some holdings. Nevertheless, it is worth noting that despite the pessimistic outlook, potential positive shifts could arise from new U.S. economic data or approvals for Ethereum-based exchange-traded funds, though analysts are cautious as recent drops below key moving averages may indicate further declines.
TESLA’S TRIUMPH
Tesla’s recent report showed better-than-expected vehicle deliveries, causing its stock to jump 17% in two days and costing short sellers around $3.5 billion. The company has seen its shares rise 73% since April, making it tough for those betting against it. Tesla delivered 443,956 vehicles in the second quarter, beating estimates, although this is slightly less than last year. To keep up demand, Tesla has been offering discounts and low-interest financing deals, including a three-year, 2% APR offer for Model 3 buyers in the U.S. Moreover, CEO Elon Musk celebrated the stock surge and took a jab at short sellers like Bill Gates, claiming future advances in self-driving technology and robotics will boost Tesla’s worth. However, it is important to highlight that Tesla’s brand is still facing some issues due to Musk’s political comments, which are turning off some left-leaning consumers. Furthermore, the upcoming earnings report is expected to show a small decline in revenue, which will give a clearer picture of the company’s financial health.
INTERNATIONAL NEWS
European stocks have climbed for a second straight session as the U.K.’s general election drew focus. The Stoxx 600 index rose 0.6% by late morning, with most sectors in positive territory; banks gained 1% while utilities dipped slightly by 0.38%. German manufacturer Continental AG surged 9.7% after Citi analysts upgraded the stock to a “buy” rating, citing strong performance in its automotive division. In addition, Meal-kit company HelloFresh also jumped 10%, bringing its weekly gain to nearly 33%, following JP Morgan’s removal of the stock from its Negative Catalyst Watch due to improved trends in North America. Meanwhile, yields on U.K. government bonds (gilts) slightly increased, with the two-year yield rising to 4.182%, and the British pound remained stable against both the U.S. dollar and the euro. In the Asia-Pacific region, markets were mostly up, highlighted by Japan’s Topix reaching a new all-time high of 2,886.50, surpassing its previous record set in December 1989.
