Author: Peter Nurse
Investing.com – Australian economy grew faster than expected, AMC AMC Entertainment wins, crude oil continues to rise. However, Wall Street looks set to have a stagnant start. Turkish lira fell to new record levels.
Here’s what you need to know in the markets on Wednesday, June 2nd:
1. Australia’s pace of growth
The Australian economy grew above expectations in the first quarter. rose 1.8% from the last quarter of 2020, when it showed revised growth of 3.2%. Economists had predicted 1.5% growth in the first quarter.
“The Australian economy has rebounded more strongly than expected and is expected to continue,” said Philip Lowe, Governor of the Reserve Bank of Australia, on Tuesday.
Lowe also stated that, unlike the last procedure, there will be a press conference after the central bank meeting on July 6, and laid the groundwork for the possibility of a return from ultra-expansionary monetary policy due to the recovery in the country’s economy.
The country’s rapid recovery has been supported by its ability to manage the Covid-19 crisis, increased consumer and business confidence, as well as global demand for the country’s abundant natural resources.
This was evident in Tesla’s (NASDAQ:) announcement on Wednesday. Tesla said it expects to spend more than $1 billion a year on battery raw materials in Australia, thanks to the country’s reliable mining industry and responsible manufacturing practices.
Rich in minerals used in batteries such as lithium and nickel, Australia will benefit from evolving supply chains for electric vehicle batteries and the environmental, social and governance focus of the green energy era, said Robyn Denholm, the company’s president.
2. Stock market will start weak, AMC Entertainment attracts attention
US stocks will open weakly before and after Tuesday’s quiet start.
It rose by 25 points, fell 0.1% and fell 0.1%.
It gained just 1% on Tuesday, falling 2 points, breaking the three-day chain of earnings. lost 0.1%.
Investors are reluctant to act too hard and expect Friday’s US jobs report to confirm a strong recovery.
U.S. jobs data, which reported just 266,000 job gains in April, also set the mood for May, ING analysts said. This led the markets to ignore the Fed’s references for reductions. The May employment report, which will be published this week, seems to determine the sentiment of the transactions in June.
There will be a few stocks trading volatile despite the calm.
Reddit favorite AMC (NYSE:) is again in the limelight after rising 22% on Tuesday after raising $230 million in a share sale.
On the other hand, Zoom (NASDAQ:) and Hewlett Packard (NYSE:), which shared strong results for the quarter, will also attract attention.
3. Turkish lira fell to record levels
The Turkish lira fell to record lows against the dollar as President Recep Tayyip Erdogan reiterated his call for low interest rates despite high inflation levels.
In an interview with TRT, the President said, “I met with our central bank president today. We have to lower interest rates. That’s why we will find these places in July-August so that the interest rates will start to fall,” he said.
The duo first saw 8.7795 after these statements. The pair rose 1.1% to 8,6264.
Erdogan has long had an unconventional belief that low borrowing costs can help slow inflation by lowering producer costs.
Erdogan’s statements can only increase the pressure on the central bank governor, Şahap Kavcıoğlu. Erdogan, who dismissed the previous president on the grounds that he had implemented too much tightening policy, replaced him with Kavcıoğlu.
In the central bank inflation report announced at the beginning of May, Kavcıoğlu stated that the current tight monetary policy would be maintained with “great patience and determination” until a stable improvement in the inflation outlook is observed.
According to the data shared at the beginning of May, inflation increased in the seventh month in April. The annual inflation rate rose from 16.2% to 17.1%, more than three times the official target of 5%.
4. OPEC support for crude oil
Crude oil rose after OPEC+ expressed optimism about a strong recovery in the US and China.
It rose 0.9% to $65.85 and rose 0.8% to $69.06.
OPEC+ decided at Tuesday’s meeting to continue its plans to gradually reduce production cuts until July.
Making a statement after the meeting, Saudi Energy Minister Prince Abdulaziz bin Salman said that there is a strong demand recovery in the USA and China, adding that the pace of vaccine distribution will only “rebalance the global oil market”.
Another thing that supported confidence in the market was the break in talks between Iran and world powers on the nuclear deal.
It is unknown whether talks will resume before Iran’s presidential election on June 18, and so the return of Iranian oil to the global market does not appear to be an urgent matter.
On the other hand, crude oil stock data and the report on Thursday will be published later in the session.
According to the International Energy Agency (IEA), oil giants are not investing enough in clean energy to help limit the dangerous rise in global temperatures.
The Paris-based intergovernmental autonomous body expects traditional fossil fuel companies to raise green energy investors by at least 4% of their capital expenditures, according to a report shared Wednesday.
“More resources need to be mobilized and directed towards clean energy technologies in order for the world to be on the path to achieving net zero emissions by 2050,” said Fatih Birol, director of the IEA.
5. Musk’s power
Let alone Waren Buffet, individual investors seem to have a new favorite: Elon Musk.
For years, every word of Buffett, dubbed the Omaha Sage, was enthusiastically embraced by the individual market as investment gold. The CEO of Berkshire Hathaway (NYSE:) will continue to have his fans, but in this world dominated by social media, Musk’s influence seems to be growing.
Musk said, “Baby Shark is smashing! Shares of Samsung (KS:) Publishing (KS:) rose 10% to hit a one-month high after tweeting about the popular YouTube song “Baby Shark” by saying “More views than people.”
Seoul, South Korea-based Samsung Publishing owns about 19% of song creator SmartStudy.
The increase in the stock once again shows the effect of Tesla CEO Musk, who has led to sharp movements in cryptocurrencies, apart from headline shares (meme stocks) and on his followers.
However, this influence also brings responsibility. The Wall Street Journal reported on Tuesday that the SEC said in a conversation with Tesla last year that Musk’s use of Twitter had twice violated an agreement that required prior approval by corporate lawyers.
The US SEC (Securities and Exchange Commission) ordered the company to review any public communications Musk made about Tesla, following a tweet in August 2018 that it had “guaranteed the funding” necessary to privatize Tesla in a $72 billion transaction.