Gold is the King of Reserves

00:00:00: The S&P-Five Hundred is trading at fresh record highs again despite rising oil prices, sticky inflation worries and unresolved geopolitical tensions in the Middle East.

00:00:10: Investors remain absolutely captivated by an AI story with AI hardware names now attracting Fresh capital flows despite growing concerns over the cost of the AI race.

00:00:20: Meanwhile, gold has overtaken US Treasuries as the world's largest reserve asset held by central banks highlighting a deeper unease about debt currencies and long-term stability.

00:00:32: So, welcome to Swisscoats daily market talk.

00:00:36: It's Wednesday the third of June.

00:00:38: I'm Ipekos Kardashian and we will talk about the latest market news in how they diverge from reality.

00:00:44: but before we do as always please keep in mind that opinions are my own.

00:00:50: this is not financial advice.

00:01:00: I'll be honest, it's been hard this morning to wrap up the market news and match data with price action as Middle East tensions and rising oil prices are a result of it.

00:01:11: And rising inflation levels do no longer bother investors!

00:01:15: That is big problem because when it comes harder for me explain why the market moves in that way….

00:01:22: It often means something is about give but when?

00:01:26: Looking at the major market news yesterday, the S&P-Five hundred advanced to a fresh all time high level again as yields remained flat.

00:01:34: Meanwhile oil prices kept pushing higher on stalling peace talks between US and Iran.

00:01:41: The miscoordination or lack of coordination between the U.S.-Israel regarding Israel's operations in Lebanon.

00:01:49: and that six point seventy five million barrel fall in US oil inventories last week as per latest API data that was released yesterday.

00:01:59: The barrel of US crude is pushing above the nine to five dollar per barrel level again this morning, keeping investors alert regarding another way of higher oil prices that could revive inflation worries and sell off across global bonds.

00:02:13: But anyway, U.S session gains were shoulder by non-technology names for once with weakening appetite in big technology after Google dropped three point Eighty percent in yesterday's trading session, simply because investors didn't appreciate the eighty billion US dollar funding plans to finance extra AI spending there.

00:02:35: Other big technologies suck straight up mix as rotation out of software and mega cap AI spenders And into a high hardware names continued yesterday.

00:02:47: The biggest market move yesterday In the U?

00:02:49: S Trading Session was that thirty two percent jump in Marvel technology is surprised.

00:02:56: Not on earnings, not after announcing a new technology but after NVIDIA CEO Jensen Huang said that it could be the next trillion dollar company.

00:03:05: It took investors just one sentence from Jensen to send Marvel up by thirty two percent yesterday.

00:03:12: elsewhere.

00:03:12: HPE spiked twenty per cent After giving sales outlook.

00:03:16: at least top analyst estimates and other hardware stocks followed them all higher.

00:03:20: So today is about AI Hardware.

00:03:23: so it can be computer data centers or semi-conductors.

00:03:27: These are the companies that see their stock prices rally today, really relentlessly... Their stock prices are rising in almost vertical moves calling for quotient regarding the strength of these moves and the parabolic rise that we see here.

00:03:44: It looks like it cannot be sustainable.

00:03:48: so, its will interesting to whether this AI hardware rally could keep momentum going if big technology falls out of favor and yields push higher again.

00:03:59: I would say no, not if the market bread doesn't widen again.

00:04:02: And for the latter lower yields will just be great.

00:04:05: so i'm thinking maybe but just maybe data could help or it may well not.

00:04:10: let's see on the data from yesterdays.

00:04:12: data show that US job openings increase in April But the surge came alongside weaker hiring and lower credits.

00:04:21: suggested employers are posting jobs more readily than they're willing to.

00:04:26: Later today, the US will announce its latest ADP report and a set of SMP and ISMPMI numbers.

00:04:32: A set of strong figures here may not feel appetite if price pressures mount along with headline figures.

00:04:39: Look in Europe, the latest inflation data looked all but soothing yesterday.

00:04:43: The euro area inflation surpassed three percent mark in month May.

00:04:48: for very first time In more than two-and-a half years Poor inflation rose more than expected to level and services, inflation in the euro area jumped to a three-and-a half percent as well.

00:05:01: As all continents continue to grapple with higher energy prices due whatsoever that the European Central Bank will be raising interest rates when it meets next week.

00:05:33: After the company raises data-centered revenue outlook, while Infinion Technologies and Schneider Electric were also among stocks that rallied strongly yesterday in Europe.

00:05:44: So overall European technology sector gained up to three point four percent.

00:05:49: but equity futures are looking quite flat this morning across both sides of the Atlantic Ocean.

00:05:54: Let's see if the technology appetite could keep things together again today.

00:06:00: Elsewhere, a report from The European Central Bank show yesterday that gold has taken US treasuries as world largest reserve asset held by central banks with a twenty-seven percent share.

00:06:11: The latter comes with little surprise although you'll see many emerging market central banks including the Chinese central bank for example have been replacing their U.S treasury holdings by gold to reduce exposure to the US debt.

00:06:25: as it looks increasingly unsustainable today and U.S.-geopolitical relations with the rest of world deteriorate, but gold's rising weight in global reserves is also boosted by its valuation because the yellow metal is worth more than thirty percent today that it was last June and if we correct for valuation effects, the share of US Treasuries continue to be notably higher somewhere around twenty six percent off.

00:06:52: The global reserves while the share Of gold and Euro as reserve assets stand near sixteen percent.

00:06:58: That means both Gold and Euro have room To gain more field against U.S Dollar and the US Treasures when the geopolitical Outlook looks this.

00:07:08: Now, price-wise gold has been under pressure since the end of January when it peaked to nearly fifty six hundred dollars per ounce level and hasn't being able to perform during the Middle East war certainly due to speculative bubble burst preventing yellow metal from acting as its safe haven over past three months off conflict.

00:07:28: And the price of an ounce is now testing a two hundred day moving average to D downside with a possibility for further slide below this.

00:07:37: But the major support to the two thousand twenty four today really sits at a distant forty one fifteen dollar per ounce level, which is the major thirty eight point.

00:07:47: Two percent Fibonacci retracement that will distinguish between actual positive trend and a medium term bearish consolidation but note that long-term rising trend in gold stands near three five hundred dollars today meaning that goal remains comfortably in a positive trend when you're looking at long-term dynamics filtering out the past year's speculative bubble.

00:08:11: So gold is still interesting and long term portfolios, And the cheaper the price, The more interesting it becomes to strengthen their long-terms positions In the FX markets.

00:08:20: while U.S.

00:08:21: dollar index remains quite flat attached below the hundred psychological mark bank to Fed divergence as the dollar yen is testing Japanese officials' nerves near the one hundred and sixty level that could eventually trigger a direct FX intervention.

00:08:45: We can see or hear, it directly affects interventions to cool off selling pressure on the end in coming hours.

00:08:53: but only thing that could reverse negative tide for good would be a rate action from the Bank of Japan.

00:09:01: They said the next Bank of Japan meeting will take place on June, and no rate hike is expected this month from that meeting.

00:09:08: Investors still be looking for clues when the next move could come from the Bank Of Japan.

00:09:14: Persistent inflation and rising wages support further tightening while trade uncertainty with U.S.

00:09:21: economic fragility due to rising oil prices will keep the Bank of China quite cautious under pressure.

00:09:29: That means that if your position for a tactical short-position in the dollar yen, make sure to take your profits after potentially temporary relief if there is obviously an intervention from the Japanese officials.

00:09:42: On their quiz side, in the case Kent Carroll-Lestell The indexes up by one point eighty percent at a time.

00:09:48: I'm talking here this morning Serving on strong technology appetite lower yields compared to May peak levels In Japan and softer Japanese yet?

00:09:57: The million dollar question remains the same Will global stock rather continue as global yields rise?

00:10:03: The answer Is it depends.

00:10:05: It will mostly depend on the Middle East news but also the level of reaction or the lack thereof from global investors to the Middle East tensions, oil prices and economic data when AI news remains so shiny.

00:10:21: This is all for today.

00:10:22: I'm Ipeko Skardyshka and thank you for joining me!

00:10:25: Thank.

00:10:30: This episode of Market Talk has been helpful and it's been insightful to you.

00:10:35: So please do not hesitate to leave your comments, reactions or questions below.

00:10:41: as usual.

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00:11:01: So I will meet again tomorrow!

00:11:04: And until then, good day trading!