KN Market View 2024-06-02

#KNMarketView

Last week, emerging currencies traded under pressure, led by USDZAR +2.06%, USDMXN +1.81% (elections taking place today), USDCLP +1.73% and USDBRL +1.5%. On the equity front, Russia -5.47%, South Africa -3.09% and Hong Kong -2.84% got hammered.

Regarding South Africa FX and Equity movements, “South Africa's ruling ANC on Sunday said it will enter talks with other parties to form a new government, after losing its three-decade-old absolute majority in a watershed election” link.

On economic data, previous week GDP surprised India with +7.8% vs consensus of 6.7%, while Canada came in at 1.7% vs 2.2% expectations.

Energy Commodities traded on both sides, Natural Gas ended -7% lower. “Data compiled by the EIA showed that natural gas storage in the US rose by 84 billion cubic feet in the week ending May 24th, surpassing market expectations of a 77 bcf build to lift stockpiles to 15% above the corresponding period of the previous year, and 26% above the five current five-year average” link.

Oil seems to be stabilizing around current levels. “OPEC+ agreed on Sunday to extend most of its deep oil output cuts well into 2025, exceeding expectations, as the group seeks to shore up the market amid tepid demand growth, high interest rates and rising rival U.S. production” link.

Containerized Freight Index continued with its YoY rally +209.60%. More rate hikes beckon in the Red Sea-disrupted container shipping market link.

This week, the United States will report its ISM Manufacturing PMI, JOLTs Job Openings, and Unemployment Rate. European Central Bank and Bank of Canada Interest Rate Decisions are expected to lower the rate 0.25%, respectively.