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JULY 4, 2023

MARKETS CLOSED

Due to today being a federal holiday, Fourth of July holiday, the U.S. stock market will be closed.

BITCOIN ETF RESUBMISSION

Nasdaq has resubmitted an application to the U.S. securities regulator to list an exchange-traded fund (ETF) by BlackRock Inc that tracks the price of bitcoin. The filing includes more details and states that Coinbase Global will provide surveillance for the proposed ETF. This move comes after the regulator had concerns about the initial filings by Nasdaq, which were considered unclear and incomplete. Registering a Bitcoin ETF has been difficult, particularly for spot market trading, as the SEC has raised concerns about potential fraud or manipulation.

MANUFACTURING DECLINE

Manufacturing in the U.S. continued to experience a decline in June, reaching levels comparable to the initial wave of the COVID-19 pandemic. The decrease in activity led to more factory layoffs, indicating a worsening situation compared to previous months. In addition, the ISM survey also highlighted the possibility of core goods prices falling again soon. However, there was a silver lining as price pressures at factories decreased, which is positive news for the overall economy. Moreover, the manufacturing purchasing managers’ index (PMI) dropped to its lowest level since May 2020, marking the longest period of contraction since the Great Recession. Official government data revealed a 5.3% annualized contraction in the manufacturing sector in the first quarter, further emphasizing the challenges it faces. However, there are a few industries, such as transportation equipment, that have shown some strength due to solid demand. Nevertheless, transportation equipment manufacturers expressed concerns about declining sales in the second quarter. Additionally, manufacturing is being negatively affected by a shift in consumer spending from goods to services, along with tighter credit conditions. Several industry groups, including wood products and textile mills, contracted in June, while others, including printing and primary metals, experienced growth.

GOLD REMAINS STEADY

Following the recent gains experienced in gold prices, the precious metal continued to hold steady above critical support levels, as investors eagerly awaited clarity on monetary policy from the U.S. Federal Reserve. The relief in bullion prices was prompted by lower-than-anticipated inflation levels in May and concerns over a potential slowdown in U.S. manufacturing. However, the expectation of interest rate hikes in July has created pressure on gold, leading investors shift their focus to other precious metals such as silver, platinum, and palladium, which have seen modest price increases.

INTERNATIONAL NEWS

According to the Organization for Economic Cooperation and Development (OECD), the United Kingdom stands out among the Group of Seven (G7) wealthy nations as the only country where inflation is still on the rise. The inflation rate in the G7 as a whole decreased to 4.6% in May – down from 5.4% in April, reflecting the decline in inflation experienced by most advanced economies including the U.S., Canada, France, Germany, Italy, and Japan. Nevertheless, the U.K. experienced a year-on-year inflation rate of 7.9%, which was slightly higher than the previous month. Moreover, the recent decision by the Bank of England to raise interest rates to 5%, marking the highest level since 2008, further sets the U.K. apart from other major central banks.

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