Stock Markets Daily Recap: NVIDIA and Adobe Rally as Focus Turns to China

US Equity Markets:

On Friday (June 14), the Nasdaq Composite Index gained 0.12%. However, the Dow and S&P 500 saw losses of 0.15% and 0.04%, respectively.

Tech stocks remained the highlight for the US equity markets, with the Nasdaq extending its winning streak to five sessions. Investors reacted to softer-than-expected consumer and producer price figures, raising bets on a September Fed rate cut. The jump in expectations of a Fed rate cut drove buyer demand for tech stocks.

US Consumer Sentiment Stumbles in June

US economic indicators contributed to increasing expectations of a September Fed rate cut.

The Michigan Consumer Sentiment Index fell from 69.1 to 65.6 in June. Waning consumer confidence could affect consumer spending and dampen demand-driven inflationary pressures. Nevertheless, the Michigan Inflation Expectations Index remained steady at 3.3%, signaling uncertainty toward the Fed rate path.

Waning consumer sentiment could fuel expectations of a more dovish Fed rate path. However, downward trends in consumer sentiment could retrigger fears of a hard US landing.

The weaker-than-expected headline sentiment number influenced US Treasuries. 10-year US Treasury yields fell by 23 basis points, supporting buyer demand for tech stocks.

The Winners and Losers

On Friday, Adobe (ADBE) rallied 14.51% on better-than-expected earnings. NVIDIA (NVDA) advanced by 1.75%, with Alphabet Inc. (GOOGL) and Microsoft (MSFT) seeing gains of 0.93% and 0.22%, respectively. Meta Platforms (META) rose by 0.01%.

However, Tesla Inc. (TSLA) slid by 2.44%, with Apple Inc. (AAPL) falling by 0.82%. Amazon.com (AMZN) slipped by 0.09%.

Global Market Influences: The Fed Rate Path and China

In the near term, investor sentiment toward the Fed interest rate trajectory, the US economic outlook, and the Chinese economy remain the focal points.

Recent US economic indicators raised investor expectations of a September Fed rate cut. However, leading indicators, including consumer confidence, showed early cracks in the US economy. This week, US retail sales, jobless claims, and private sector PMIs could give further clues on whether the US is heading for a soft or hard landing.

China remains another uncertainty for the Asian and global financial markets. A possible lengthy trade war with the EU could further exacerbate market sentiment toward a Chinese economic recovery. The markets will remain sensitive to economic indicators from China, PBoC policy decisions, and stimulus chatter from Beijing.

Asian Economic Calendar: China in the Spotlight

On Monday (June 17),  industrial production, fixed asset investment, retail sales, and unemployment data from China warrant investor attention.

Weaker-than-expected numbers could dampen investor hopes of a Chinese economic recovery and buyer demand for riskier assets.

However, industrial production and retail sales figures will likely have a stronger impact on the Asian markets, unless there is an unexpected rise in the unemployment rate.

Economists forecast industrial production to rise 6.0% year-on-year in May after an increase of 6.7% in April. Additionally, economists expect retail sales to advance 3.0% year-on-year in May after a rise of 2.3% in April.

With economic data from China in focus, the People’s Republic of China will also be in the spotlight. The PBoC will announce the 1-year Medium Term Lending Facility (MLF) rate. Economists expect the PBoC to leave the 1-year MLF rate at 2.5%. A surprise cut could counter weaker-than-expected data from China.

The Hang Seng Index and the ASX 200 will be sensitive to the economic data from China and the PBoC announcement.

From elsewhere, machinery orders from Japan and stats from Australia will likely have a limited impact on the broader Asian equity markets.

Commodities and Forex Trends: Crude Oil, Gold, and Iron Ore

On Friday (June 14), gold spot (XAU/USD) rallied 1.25% to $2,333. However, WTI crude oil declined by 0.22% to $78.46, with iron ore-spot ending the Friday session down 0.21%.

Commodity price trends from Friday will influence the ASX 200. Nevertheless, economic indicators from China will impact buyer demand for ASX 200-listed stocks more.

The USD/JPY gained 0.25% on Friday, ending the session at 157.375. The USD/JPY return to 157 could drive buyer demand for Nikkei-listed export stocks.

For upcoming economic events, refer to our economic calendar.