Stock futures are trading primarily flat after recording one of the quietest May months in a long time. Despite all inflation concerns, some investors are still happy to support riskier assets, but this view isn’t shared by most of them, as they continue to wait for another major catalyst that is likely to set the tone for markets. This was one of the major reasons that we have not seen any decent trading volume during the last month.
Speaking of a catalyst, this week, we are going to get important economic data for the US economy, which could certainly trigger many events in the markets. On Friday this week, we will get the US jobs report, and the data is really going to bring the US economic health in front and centre. The expectations are that the US economy will create over 600K jobs, and this may help traders and investors to forget the weak reading of the US NFP that we received last month. In May, we saw the US NFP data coming well short of expectations, which left many jaws dropped. The hope this time is that the economic number will create more of a positive vibe, and that will improve the overall morale among investors.
Generally speaking, the month of June isn’t that great for the stock markets as most traders begin to wind down their positions for the summer holidays. Although, last year, June did see some exceptional trading volume, and that was chiefly due to the pandemic.
Going back to the topic of big catalyst, another economic event that everyone will be monitoring very closely will be the upcoming Fed meeting scheduled on the 15th and 16th June. We have already heard some hawkish messages from the RBNZ regarding their monetary policy, and the bank was the first bank that actually produced a hawkish narrative. As for the Fed, there are strong chances that this time we may not get the same type of jawboning from the Federal Reserve’s Chairman, Jerome Powell. There is a possibility that we may get a hint of the Fed thinking about changing its stance on the monetary policy. Such a message will be deemed as hawkish, and there are chances that market players may amplify their currency and equity bets on the back of such a narrative.
In the commodity space, gold prices continue to move higher, and currently, prices are sitting at a five-month high. Most of the moves in the gold prices are primarily due to the weakness in the dollar index, which hasn’t gained much attraction despite the fact that we saw decent PCE (Personal Consumption Expenditures) numbers for the US economy last Friday. It seems that traders have become too complacent about this trade, and they firmly believe that the major trend when it comes to the gold price is mainly skewed to the upside. They are simply just not worried about any strength coming back in the dollar index, and this is leaving them wide open to get caught for a complete surprise. This is especially true if we look at the two important events mentioned, which have massive potential to bring higher moves in the dollar index. Having said that, gold prices continue to find more bids because June isn’t one of the months when stock markets usually roar. Hence, many traders may continue to buy some protection for their portfolio, and this could come in terms of buying gold.
As for the crypto space, nothing much is going on there. It seems like everything is very much hanging in a holding pattern. The upward momentum still looks like that it lacks any major backing, and a threat for a further downward shift in the Bitcoin price is still certainly on the table. Basically, as long as the Bitcoin price doesn’t cross above the 40K and break another resistance, which is at 50K, it is unlikely we may see a beginning of another major bull rally.