* Choppy markets ahead of Powell
* STOXX 600 slightly down
* FTSE main benchmark making gains
* Autos, tech fall while energy outperforms
June 22 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
BITCOIN: "$30K WILL BE DEFENDED TO THE DEATH" (1008 GMT)
Bitcoin is ticking down again this morning after recouping
some of the losses sustained due to China's crackdown on
cryptocurrencies.
At about $31,400, many pundits are now looking closely to
the 30k bar which is seen as a critical level before some sort
of capitulation.
Commenting on Microstrategy CEO Michael Saylor doubling down
and buying more bitcoins, Neil Wilson at Markets.com expects
some drama going ahead if the market price action goes wrong.
"$30k will be defended to the death - if it goes expect a
bloodbath, and Saylor’s bet will look like a monumental
mistake", he said.
At Swissquote, Ipek Ozkardeskaya believes "the $30K support
is very solid and seems to be holding right now" but risks are
nonetheless building up.
"If the bulls can’t make it above the 200-day moving average
in the next couple of sessions, then the bears would come
seriously in charge", she reckons.
She added that "given the strength of the 30K support, we
shall see a steep selloff if the support is broken", putting the
next stop at $20K.
For Jeffrey Halley at OANDA, "failure of $30,000.00 will
open the trapdoor to a sub-$20,000.00 move".
Halley nevertheless doesn't believe "the digital day of
reckoning will be today" as the crypto king's technical
indicators are close to being oversold.
(Julien Ponthus)
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REDUCING EXPOSURE TO EM CYCLICALS (0931 GMT)
As some analysts put it, if there is something the last 16
months taught us is the power of buying-the-dip-strategy as
central banks continue pouring money into the financial system.
But while the consensus is inclined to see more upside for
equities, some views on emerging markets are changing.
“Some of the risks that we have been highlighting have
gathered steam, leading us to tactically reduce exposure to
cyclicals in Asia/EM,” BofA analysts say in a research note.
But “secular demand drivers such as de-carbonization
initiatives and capex for duplicated supply chains keep our
long-term bullish outlook for the sector intact,” they add.
“The Fed´s hawkish message lowers visibility for emerging
market assets through a possible increase in near-term
volatility in U.S. real rates and the U.S. dollar,” UBS analysts
say, but adding they don’t see the Fed removing accommodation
too quickly.
BofA analysts highlight “the decline in the China Credit
Impulse, a leading indicator for global growth/cyclicals,” while
authorities “look resolute in clamping down commodity prices to
rein in factory inflation.”
The U.S. dollar looks sets to reverse course on its weakness
that has been a pillar of support for cyclicals, they say.
BofA suggests shedding some of the cyclical overweight and
adding exposure to growth compounders instead.
(Stefano Rebaudo)
*****
OPENING SNAPSHOT: SECOND THOUGHTS ON THE REBOUND? (0734)
The mood has soured a tad and European stocks have opened
slightly in the red despite upbeat futures just about two hours
ago.
The STOXX 600 is down 0.1% with tech losing the
most with a 0.5% fall, followed by autos which had outperformed
yesterday.
The FTSE 100 in London is among the few benchmarks
making some gains with a 0.25% rise.
One has to note that Wall Street futures have also given up
most of their gains and are trading flat at the exception of the
Nasdaq's which is down 0.1% with the tech sector under pressure.
Here's how the STOXX 50 futures fell in the last hour:
(Julien Ponthus)
****
COUNTER-ATTACK: UNLEASH THE BULLS AND BACK TO REFLATION!
(0702 GMT)
It did take investors a few sessions to decide what to make
of the Fed's sudden hawkish turn last week but the overnight
rally on Wall Street sent a loud and clear signal:
counter-attack, unleash the bulls and back to reflation!
The Dow just completed its strongest session in over
three months with cash piling back in to energy and other
sectors expected to outperform as the economy rebounds from the
pandemic.
That was a stark reversal from last week, when the Fed's
tougher stance on inflation and projections for its first two
rate hikes into 2023 sparked a violent bout of profit taking
that wiped out value stocks and triggered the worst weekly
performance for the Dow and the S&P 500 in months.
The Fed's new stance also boosted the dollar and flattened
the Treasury yield curve but these moves have also partially
reversed.
The U.S. 10-year yield, which had fallen to a February low
of about 1.36% on Monday, bounced back just south of 1.50%.
It's fair to say though that with markets seemingly ready to
switch narratives in a heartbeat, all eyes and ears will be on
Federal Reserve speakers.
Investors are now waiting for Chairman Jerome Powell, due to
speak before Congress at 1800 GMT as well as several other key
Fed officials throughout the week.
History buffs will be closely watching his words as a
similar testimony by his predecessor Ben Bernanke in 2013
triggered the famous "taper tantrum" selloff in global markets.
At stake are the billions of dollars betting on the
reflation trade which has been the driving force of markets in
recent months.
Key developments that should provide more direction to markets
on Tuesday:
-UK government borrowing falls in May
-Dutch economic growth expected to recover faster
-Sweden, Finland May unemployment rates
-ECB speaker corner: Lane, Schnabel
-Euro zone consumer confidence data for June
-Italy industrial sales April
-U.S. housing data including existing homes sales for May
(Julien Ponthus)
*****
MORE UPSIDE LEFT (0527 GMT)
Yesterday's bounceback has legs it seems!
European futures are up about 0.3% and their peers on Wall
Street are also on the rise, showing no sign of a pullback after
the rally on Monday.
The risk-on turnaround has lifted stocks in Asia where
markets are ending the session in positive territory as
investors focus on economic growth rather than near-term rise in
U.S. interest rates.
The debate over when and how the Federal Reserve could begin
to reduce some of its massive stimulus for the economy was
nevertheless on full display yesterday, as two U.S. central bank
officials explained their support for an earlier withdrawal and
a third said any change was still quite a ways away.
(Julien Ponthus)
*****