investingLive Americas FX news wrap 26 May:Records Set on War Risk Fade, Chips Surge
- S&P, Nasdaq and Russell 2000 close at record levels. Dow falls on the day
- Fed’s Kashkari: The Fed could embark on a series of hikes in response to inflation.
- Micron is taking off. Shares are up 20.8% today and 860% vs a year ago.
- US treasury auctions $69B of 2 year notes at a high yield of
- Netanyahu: Military is operating in Southern Lebanon and taking control of strategic areas
- US Navy resumes escorts in Strait of Hormuz; Tanker freed after months stranded
- Dallas Fed Manufacturing Business Index for May 0.40 vs -2.30 last month
- US consumer confidence for May 93.1 vs 92 estimate
- ECB Sleijpen: ECB is between baseline and adverse scenarios
- S&P/Case Schiller Home index for March -0.2% vs 0.1 estimate. YoY 0.8% vs 1.0% est
- NEC Hassett: Energy prices will drop once the Strait of Hormuz is opened
- US National Activity Index for April 0.14 vs -0.15% last month
- The USD is higher as traders return from the Memorial Day holiday
- investingLive European FX news wrap: Hopes for US-Iran deal remain high
- UK CBI shows retailers sentiment fell at a slower pace compared to previous two quarters
The markets were once again focused on the developments in the Far East. With all the headlines, it is sometimes to difficult to discern truth from postering. Nevertheless the main themes seem to be that Iran is pursuing two goals in negotiations with the U.S.: gaining economic relief for its struggling economy while avoiding major concessions on its nuclear program. Tehran wants access to frozen overseas assets and a return to global oil markets, but remains resistant to dismantling its nuclear infrastructure or fully surrendering enriched uranium stockpiles.
Despite renewed military clashes, both sides are keeping negotiations alive. Overnight, the U.S. struck Iranian Revolutionary Guard boats accused of laying mines in the Strait of Hormuz, leading to Iranian retaliation and further U.S. strikes on missile-launch sites. Still, Iran’s top negotiator remained in Qatar for talks, signaling diplomacy remains a priority.
Discussions are focused on frozen Iranian funds, reopening and securing the Strait of Hormuz, and creating a temporary framework agreement to reduce the risk of wider conflict. Mediators from Qatar, Egypt, and Pakistan continue working to bridge gaps, although tensions remain high and hard-line factions inside Iran continue criticizing diplomacy.
Meanwhile, the Trump administration seems to be allowing Israel to conduct operations in Lebanon to weaken Hezbollah. Late in the day it was reported that Israel was successful in assinating the new Qassam commander. It is unsure how much that rope will extend as diplomatic attempts are made to reach a peace agreement and open the Strait of Hormuz. Trump reportedly spoke with Netanyahu today but there was no comment to the details of the call.
Oil prices moved lower with the July contract trading at $93.65 down -$2.95 on the day on hopes that the will is there for an agreement.
In the US debt market, the yields are lower across the yield curve with the 2 year down the most. Today, the Treasury auctioned off $69B of 2 year notes with average demand. . The 10 year yield is back below the 4.50% level. The 30 year is still above 5% but knocking on that key level to the downside.
The USD was higher vs the major currencies despite the fall in the yields and oil prices. The greenback was the strongest vs the NZD (+0.60%) and the GBP and CHF (+0.42%). The dollar was still higher vs the CAD and AUD and EUR but only by about 0.10% for each.
US stocks played catch-up to the “no war" risk from over the weekend on traders return from the Memorial Day holdiay today. The S&P, Nasdaq, and Russell 2000 all closed at record levels with the chip stocks (but not Nvidia) leading the way.
Micron was the ring leader surging by 19.29% after UBS upped its price target to $1625. With the price closing at $895.88, there is a lot of room to roam to the upside. Nevertheless, the shares did stall near topside channel trend line keeping the buyers honest to the potential for corrective waves too. The high price today reached $916.80 before rotating lower.
Looking at other chip stocks:
- Intel rose 3.07%
- Marvel rose 6.08%
- AMD rose 7.78%
- Broadcom rose 1.90%
The VanEck Semiconductor ETF closed up 4.48% on the day..
This article was written by Greg Michalowski at investinglive.com.