It was a geopolitical risk-off session on Wednesday, with equities lower across the board, although the NASDAQ outperformed and closed down just 0.2% versus a 1.4% decline in the Russell 2000. Sector performance was mixed, with Energy and Health Care outperforming, while Consumer Discretionary, Financials and Technology lagged. Energy stocks benefited from higher crude prices after the US and Iran exchanged attacks overnight, with the US striking Iran’s Qeshm Island and Iran targeting US military bases in the Middle East. Oil prices briefly pared gains after President Trump said the US is working on a deal with Iran and that Tehran had agreed not to pursue nuclear weapons. However, Iranian media pushed back on those claims, while Iran’s Foreign Minister later said communication channels remain open but that no meaningful progress has been made in negotiations. The comments helped support crude into settlement. Geopolitical tensions remained elevated after Iran claimed it had struck a US Navy command centre in the Gulf of Oman, although the report was denied by US CENTCOM. On the data front, ISM Services PMI surprised to the upside, while the employment component remained subdued and prices stayed elevated. Fed speakers Williams and Barr both reiterated that policy is in a good place, while the Fed’s Beige Book described labour market conditions as broadly stable but noted ongoing price pressures across most districts. Cross-asset price action continued to be dictated by geopolitics and energy markets. Crude settled firmly in the green, while the Dollar outperformed against most major peers. In FX, the Japanese Yen was a relative outperformer, although USD/JPY still reclaimed the 160 handle despite renewed jawboning from Japanese officials. The New Zealand and Australian Dollars lagged amid the risk-off tone, with the Kiwi additionally pressured by softer trade data overnight. Gold and silver both declined as higher oil prices boosted inflation expectations and reinforced the prospect of potentially more restrictive Fed policy. Looking ahead, attention turns to Friday’s US Non-Farm Payrolls Report following the stronger-than-expected ADP employment data for May. The headline ISM Services PMI for May rose to 54.5 from 53.6, above the 53.7 forecast. The upside was supported by rising business activity, to 57.7 from 55.9, while new orders picked up to 57.3 from 53.5. Meanwhile, Prices remained elevated at 71.3, accelerating from the prior 70.7, while employment was little changed at 47.9 (prev. 48.0). Service-sector respondents largely pointed to rising inflationary pressures, driven by higher fuel and energy costs stemming from Middle East tensions, as well as tariff-related cost increases. Businesses reported suppliers increasingly passing through higher transportation, freight and raw material costs, while some sectors are beginning to experience supply constraints and delivery delays, particularly in construction materials, technology products and energy-related supply chains. Despite these cost pressures, underlying demand remains generally resilient. Healthcare providers reported strong patient volumes, utilities continue to see robust demand, and data centre-related investment is supporting activity in power generation and industrial supply chains. However, respondents remain cautious on the outlook as elevated fuel costs, labour shortages, supply continuity concerns and broader macroeconomic uncertainty continue to weigh on planning, margins and capital spending decisions. ADP national employment for May rose to 122k from 109k, also above the expected 110k. Within the release, the wage metrics show job-stayers remained at 4.4%, while job-changes printed 6.5% from 6.6%. ADP Chief Economist Richardson said, “Hiring was more broad-based in May than we’ve seen in the last few years. The labour market continues to show sustained momentum going into the summer hiring season.” The ADP print comes ahead of US NFP metric on Friday, whereby Pantheon Macroeconomics continue to look for a 50k increase, given that payrolls overshot their trend in April, mostly due to unusually warm weather. Pantheon adds, all told, evidence that the labour market is regaining momentum remains unconvincing. Fed Member Williams said there is no obvious argument to alter interest rates currently, and monetary policy is in the correct place, and no need to move on rates. On inflation, it is up, “quite a bit”, and anticipates it peaking in the next few months, while the upside risks have increased. The New York Fed President described the job market as “healthy”, and that the market has stabilised. Elsewhere, Oil closed higher by a further 2.5% while Gold was weak ending Wednesday’s session with a loss of 1%.
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For anyone following my Platinum Service it made 300 points yesterday and is now ahead by 710 points for June after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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