Vikki Zhao

PUBLISHED June 24, 2024, 10:30 AM EST. 4 min read.


The major indices downward Last Friday. This is because this is the day marked by the quarterly expiration of options, which typically brings heightened trading volume. Despite this, the major indices have experienced significant gains over the week, hinting at a possible market correction soon.


Last Friday’s market activity is influenced by the ongoing effects of French President Emmanuel Macron’s announcement of a snap election, impacting economic sentiment in the region. Additionally, the day is marked by triple witching—the simultaneous expiration of various derivatives including equity options, index options, and futures—likely leading to increased trading volume.


AI stocks, after rallying, are showing signs of slowing down, which might lead to either consolidation or a retreat. With a strong tech presence in the S&P 500, the equal-weight index might outperform the capitalization-weighted index if tech stocks pull back. Market watchers are focused on potential support levels, starting at 5376, and are closely monitoring the 50-day moving average at 5226 for any further declines. Resistance levels to watch include 5551, followed by 5623.


The U.S. economy appears to be on track for a soft landing, according to projections by the Federal Reserve. They anticipate that U.S. GDP growth will sustain at or above 2.0% through 2026, with the unemployment rate holding steady between 4.0% and 4.2% over the next three years.


Despite extended periods of high interest rates, the Fed does not foresee any significant weakening of the economy or notable slack in the labor market. Furthermore, they expect inflation to decrease to 2.0% by 2026, maintaining stable economic growth.


AimStar analyst believes a soft landing seems to be the most likely outcome for the U.S. economy. Recently, there has been an uptick in productivity, possibly spurred by labor shortages, and this trend could persist as gains from artificial intelligence (AI) are integrated across various industries.


 While consumer spending and the labor market might experience some cooling, this slowdown likely represents a return to normal levels of growth rather than a significant economic downturn. A reduction in inflation and the initiation of a rate-cutting cycle by the Fed could also contribute to stronger economic momentum moving forward.


However, the primary risks to this scenario include the possibility that inflation does not decrease as projected or could even increase again, or that the economy or labor market weakens more than expected. Currently, the available data and economic indicators do not support these negative outcomes. Observations continue to show robust consumer spending, a strong labor market, and inflation rates that are easing more than anticipated.



Bank of Canada meeting summary released, Rate cut would be gradual in the future



Bank of Canada officials debated whether to delay cutting interest rates until July to ensure inflation was on track to hit the 2% target. Ultimately, they decided to reduce the policy rate to 4.75% at their June 5 meeting. A summary released on Wednesday indicated that four consecutive months of slowing price pressures justified the rate cut, but policymakers expressed concerns about inflation stalling and emphasized that future rate cuts would be gradual and data-dependent. They also discussed the potential impact of diverging from the US interest rate path and the risks associated with household debt and economic activity.

Ontario Premier Urges Trudeau to Match US Tariffs on Chinese Imports



Ontario Premier Doug Ford has called on Prime Minister Justin Trudeau to impose tariffs on Chinese imports, including a 100% levy on electric vehicles, aligning with recent US policies. Ford argues that China’s low labor standards and use of dirty energy flood the market with cheap EVs, threatening Canadian jobs. Ontario, a key automotive hub with major plants from GM, Ford, and Toyota, exports primarily to the US. While Canada currently imposes a small 6% tariff on Chinese vehicles, Trudeau has not committed to matching the US’s recent hike to 102.5%. Trudeau stated his government is closely monitoring actions by allies and discussing steps to protect the Canadian auto industry and consumers.

WestJet Mechanics Issue Strike Notice Amid Failed Talks



WestJet mechanics, represented by the Aircraft Mechanics Fraternal Association, have issued a 72-hour strike notice, effective as early as Thursday night. This decision follows WestJet’s request for the federal labour minister to involve the Canada Industrial Relations Board to arbitrate a new collective agreement, which the union opposes. The strike notice raises concerns about potential travel disruptions, although the airline claims that travel plans might not be affected despite the looming absence of hundreds of mechanics.



Chinese Investors Boost Hong Kong Wealth Inflows



Wealthy Chinese investors are increasingly turning to Hong Kong for investment products like insurance and high-yield deposits, seeking to protect their returns amid China’s economic downturn. This shift gained momentum after China eased ‘wealth connect’ rules in February. Mainland investments into Hong Kong reached a record 13 billion yuan ($1.8 billion) in March, surging nearly eightfold from February. April saw a further increase to 22.3 billion yuan. HSBC reported a significant rise in new account openings driven by Chinese clients. Hong Kong banks are now offering up to 10% annual interest on short-term deposits to attract these investors. Mainland Chinese are looking to Hong Kong as a safer place to park their money due to limited domestic options and lower returns at home.


HSBC Switzerland Breached Money-Laundering Rules, Swiss Watchdog Says


June 18 (Reuters) -The Swiss financial watchdog FINMA announced that HSBC’s Swiss branch violated anti-money laundering regulations concerning two politically exposed persons (PEPs). FINMA did not name the individuals but ordered HSBC to review all current business relationships with PEPs and barred the bank from entering new ones. The infractions involved $300 million in transactions between Lebanon and Switzerland from 2002 to 2015. HSBC plans to appeal against the decision.


American Express to Acquire Restaurant Booking Platform Tock for $400 Million


American Express (AmEx) is purchasing the restaurant booking platform Tock from Squarespace for $400 million. This acquisition expands AmEx’s dining industry presence, adding 7,000 new restaurants, wineries, and hospitality businesses to its network. The move builds on AmEx’s 2019 acquisition of Resy, offering exclusive dining access and deals to cardholders. AmEx is also acquiring Rooam, a contactless payments platform for restaurants and venues. These acquisitions align with AmEx’s strategy to attract premium, high-spending customers by offering added value. AmEx shares have risen 23% this year, outperforming the S&P 500’s 15% gain.


U.S. PCE index will be released this Friday



Friday morning will bring investors the May reading on the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, which should show prices on a “core” basis — which excludes food and energy — rose 0.1% last month. This would mark the slowest monthly rise since last November. On an annual basis, core PCE inflation should jump 2.6%, the least since March 2021. Earlier this month, the Consumer Price Index (CPI)  showed inflation continuing to cool, a report that bolstered investor bets the Federal Reserve would cut rates later this year. Fed forecasts released June 12 showed the central bank expects to cut rates at least once in 2024.

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