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Wealth Daily 03 June 2022

WEALTH DAILY 2022-06-03
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US shares opened on a sour note on Thu, after Microsoft (MSFT US, +0.8%) warned that a surging US dollar would impact profits for the current quarter. Also, Fed Vice Chair Lael Brainard said that the Fed is unlikely to take a breather after probably hiking by 50 basis points (bps) both this month and next. Earlier in the week, Atlanta Fed President Raphael Bostic said the central bank might take a September “pause”. 

However, Wall Street traders shook off the negative news and bought shares. The Dow Jones Industrial Average gained 435.05 pts or 1.33% to close at 33,248.28. The Dow swung around by over 600 points during the session. The broader S&P 500 index rose 1.84%. The tech-heavy Nasdaq Composite advanced 2.69%. Microsoft was able to close in the black. The small cap Russell 2000 gained 2.31%. 

There was not much change in US Treasury yields on Thu. The yield on the 10- year Treasury note notched up 0.18 basis points (bps) to 2.9076%. 

While on the other side of the Atlantic, the German 10-year bund yield rose to a new 8-year high, as data this week boosted expectations that the European Central Bank might move faster in tightening monetary policy. Germany's 10- year government bond yield rose 4 basis points to 1.229%. 

The narrowing yield gap between US dollar and European yields boosted the euro. The euro climbed 0.5% US$1.0745, following 2 days of losses. 

The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, fell 0.66% to 101.824. 

The weaker US dollar gave a lift to precious metals. The most actively traded US gold futures (Aug) contracts settled up $22.70, or 1.23%, at US$1,871.40/oz. July silver, which is the most actively traded silver futures, rose 36 cents, or 1.64%, to end at US$22.275/oz. 

Oil producers have agreed to raise output, but it likely won’t be enough to substantially improve the current tight supply situation. OPEC+ agreed to raise the size of output hikes by about 50% to 648,000 barrels a day for Jul and Aug. 

The front-month Brent and WTI futures closed up $1.32 at US$117.61/bbl and $1.61 at US$116.87/bbl respectively. 

European equity markets finished higher on Thu, while the UK stock markets were closed for a public holiday. France's CAC 40 rose 1.27%, while the German DAX advanced 1.01%.