JASPER’S MARKET SQUAWK 04-07-2023

<h2>Markets Rise on Truncated Session</h2>
<p>Indices traded higher with muted volume as the US had an early close on the eve of Independence Day.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24045 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-41.png" alt="" width="1919" height="913" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-41.png 1919w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-41-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-41-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-41-768×365.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-41-1536×731.png 1536w" sizes="(max-width: 1919px) 100vw, 1919px" /><em><strong>Chart: AUDUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>China’s export ban on rare-earth metals creates price concerns</li>
<li>Tesla’s record deliveries energise Nasdaq</li>
<li>WTI spikes on Saudi Arabia and Russia’s oil squeeze announcement</li>
<li>European markets remain optimistic despite manufacturing PMI revision</li>
<li>RBA holds rates steady, cites uncertain economic outlook</li>
</ul>
<h2>China Export Ban of Rare-Earth Metals Not Fully Processed</h2>
<p>Reportedly, China will prohibit the export of gallium- and germanium-related products in August, which are key components for chips and solar panels that the US doesn’t have domestic production. Several countries responded to the reports, suggesting prices would have to increase. The export ban surfaced after the US announced an investigation into Chinese gallium exporter Innoscience over IP violations. Despite not being fully processed, the latest salvo in the trade tensions between China and Europe saw risk appetite under pressure, with the yuan weaker and the dollar higher. USD/JPY managed a 144.62 close after a bounce at 144.00, with 145.00 giving way to new territories.</p>
<h2>Tesla Record Deliveries Offer Nasdaq Helping Hand</h2>
<p>In a sign that price cutting has paid off to move inventory, Tesla reported a record number of vehicle deliveries in Q2 at 466.1K units compared to 448.4K expected, up from 254.7K last year. Production rose to 479.7K, above the 457K expected. Electric car makers rose in sympathy, helping buoy the Nasdaq by 0.2% higher but still under the peak of 15300. The 15k handle remains a major support.</p>
<h2>WTI Spikes 2% After SA, RU Announce Oil Squeeze, But Falls Back</h2>
<p>Saudi Arabia announced that it would extend its voluntary 1M bbl/d production by another month through August, while Russia announced it would reduce exports of crude by a further 500K bbl/day in August, on top of the extended 500K bbl/day cut that it already announced for the rest of the year. WTI spiked 2% to $71.70/bbl on Monday but closed in red, albeit above the $70/bbl threshold.</p>
<h2>European Markets More Optimistic Despite PMIs</h2>
<p>Energy and material shares were seen supporting European indices in the wake of China’s ban after the final June Eurozone Manufacturing PMI was revised lower by two decimals to 43.4, the 12th straight contraction. Morgan Stanley boosted its outlook for the ECB’s terminal rate to 4.0% from 3.75% (which implies 50bps more hikes from the current 3.50% rate). EUR/USD swung from a low of $1.0870 to a high of $1.0935 to close the session mixed.</p>
<h2>RBA Holds Rates Steady, As Expected</h2>
<p>By a small margin, economists and the market expected the RBA to resume its pause in the tightening cycle. The accompanying statement reiterated that inflation is too high and will remain high for a long time, and further tightening might be necessary. The RBA noted the uncertainty surrounding the economic outlook for the country. Aussie slid against the dollar after finding resistance at $0.6690, exposing $0.6635 and the 66-cent barrier.</p>
<h2>On The Docket</h2>
<ul>
<li>4th of July Holiday</li>
<li>German Trade Balance</li>
<li>Canadian Manufacturing</li>
<li>GDT Price Index</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi down by 0.25% and 0.07%</li>
<li>Euro 0.11% lower, Pound at -0.03%</li>
<li>Yen 0.02% up, while Franc 0.10% lower</li>
<li>Canadian dollar is down by 0.03%</li>
<li>Gold is 0.10 up, silver is up only 0.06%</li>
<li>WTI and Brent 0.47% higher each</li>
<li>Natural gas is down by 3.43%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-04-07-2023-24041/">JASPER’S MARKET SQUAWK 04-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>