Morning Note: An update on today's market news.

Market News

Gold has risen to $2,357 per ounce after fresh US economic data reinforced expectations for interest rate cuts by the Federal Reserve. In June, US services activity saw its sharpest contraction in four years, defying expectations, with the survey also indicating reduced inflation. Also, continuing jobless claims rose for the ninth straight week, and June private payrolls grew at a slower rate. Meanwhile, Fed officials noted a slowing US economy at their June meeting but recommended a cautious approach before deciding on rate cuts, as per the recent FOMC minutes. The 10-year Treasury currently yields 4.35%.

US equity markets also moved higher last night – S&P 500 (0.5%), Nasdaq (0.9%) – with AI-linked stocks driving gains. This morning in Asia, markets were generally firm: Nikkei 225 (+0.8%); Hang Seng (+0.2%); Shanghai Composite (-0.8%). The yen bounced off its lowest level against the dollar since 1986, albeit it remains depressed at 161. The FTSE 100 is currently trading 0.4% higher at 8,205. Healthcare company Smith & Nephew is up 6% in early trading following a disclosure that Cevian Capital has taken a 5% stake in the company.

Sterling is steady – $1.2745 and €1.1814 – as the UK heads to the polls today, with Labour predicted to achieve a landslide. YouGov modelling showed Labour winning 431 seats for a parliamentary majority of 212, exceeding Tony Blair’s landslide win in 1997.

Staying on the political front, President Biden is struggling to contain pressure to drop his re-election bid. Donald Trump’s lead grew to six points in two polls. And Kamala Harris is having a surprise resurgence, with polls showing she’s outperforming Biden head-to-head against Trump.

The oil price remained firm at $86.60 a barrel, while copper eased after four days of gains, with investors also weighing tightening scrap supplies in China.

Source: Bloomberg