Tech lags as stocks trade mixed on data and Powell
Updated Updated Tue, 2025 July 1 09:34
* Dollar pares losses versus the euro and swissie after better jobs data
* Powell says would have cut rates this year if not for tariffs
* AstraZeneca CEO wants to move Britian’s most valuable company
* Trump’s megabill squeaks through Senate, but House can still reject final version
FX: USD fell to a fresh low at 96.37 before enjoying some welcome buying into the US session before closing marginally lower. That’s its ninth straight day of losses. Prices actually tapped a long-term support level from the May 2011 low. Better US data helped, while Fed Chair Powell reiterated the patient Fed stance and did not set the stage for a rate cut in July. Odds of a 25bps move at the FOMC meeting at the end of July remain around 20% with a 60% chance of a third cut by the end of the year.
EUR posted another new cycle high, at 1.1829 before paring gains but still finishing higher for a ninth day in a row. Dollar strength was seen after Powell’s comments and modestly better US data backed up the Fed’s current wait-and-see, patient stance. ECB President Lagarde said little new at the Sintra forum, stating that the inflation target had been reached and the bank must remain ‘extremely vigilant’ with uncertainty high. She warned that any big shift in the global role of the USD would take considerable time.
GBP also made fresh highs at 1.3788, its highest since October 2021, before printing a doji. BoE Governor Bailey acknowledged some economic and labour market softening, while indicating interest rates are likely to trend downward. He also said it’s too soon to see the effects of tariffs on prices. There are around 55bps of BoE rate cuts priced in for 2025.
USD/JPY dipped to a low at 142.67 before the dollar saw some buying in the US session. The down trendline from the January top sits just above 142. Japan has been in US President Trump’s ire after it didn’t accept US rice, despite a rice shortage. Officials said Japan won’t do anything to sacrifice the agricultural sector in US trade talks.
AUD sold off modestly but held its initial gains and crucially kept above recent resistance/support at 0.6549. The aussie was initially buoyed by the overnight release of the Chinese Caixin Manufacturing PMI, which topped forecasts with a surprise return to expansionary territory. CAD softened versus the dollar, but the major remains below 1.37 and the 50-day SMA at 1.3771.
US stocks: The S&P 500 printed down 0.11% at 6,198. The Nasdaq closed down 0.89% at 22,478. The Dow Jones finished higher at 44,495, adding 0.91%. US indices were mixed as the tech-heavy NDX led the losses, with Technology and Communication Services the only sectors in the red amid weakness in megacap names. Materials and health led the gainers. Meanwhile, the Russell 2000 and Dow Jones both saw gains of more than 1%, with a notable divergence between the US major indices. Tesla lost 5.3% as the Trump/Musk feud restarted. Tesla new car registrations in Italy fell 66% in June. Apple bucked the sell-off in the tech titans, adding 1.3% as the company is expected to enter mass production for a more affordable MacBook.
Asian stocks: Futures are mixed. APAC equities began the new quarter mostly higher. The ASX200 consolidated just below recent highs as strength in defensives was offset by mining and material sector losses. The Nikkei 225 retraced Monday’s fresh highs as yen strength hurt stocks. A hotter Tankan raised BoJ rate hike bets too. The Shanghai Comp eked out some gains on better-than-expected Caixin PMI data, though upside was limited due to the Hong Kong holiday.
Gold enjoyed a second day of buying as it rose above the 50-day SMA, which has acted as support previously, which is now at $3,322.
Day Ahead – Jobs data
We get second tier ADP employment data released Stateside today. We wonder why this gets given so much attention as a forerunner to the main job figures of the week – non-farm payrolls. ADP typically has very little correlation with NFP and is a poor predictor of Thursday’s release.
More significantly, JOLTS numbers out yesterday beat expectations with the quits rate rising too. The report as a whole pointed to a similar picture in the weekly initial jobless claims – that is, there is a low risk of losing your job, but it’s also harder to get one. June ISM manufacturing pointed to higher prices paid and higher demand which also helped support the beleaguered dollar. If tariff uncertainty continues to diminish, and with the tax bill now done, the labour market should typically hold up.
Regarding the dollar, we note that FX traded volatility remains relatively elevated compared to levels for stock and bond markets. That points to the view that FX will likely move the most if some of the Liberation tariffs re-appear next week and beyond.
Chart of the Day – Trump/Musk feud hits Tesla
It’s only been a few weeks, but the Trump/Musk feud reared its head again after a temporary ceasefire through the latter part of June. Back and forth between the POTUS and the world’s richest man on social media is not a good look for the stock and it opened down more than 7% initially yesterday. Trump threatened to cut off billions of dollar of subsidies that Musk’s companies receive from the federal government.
Prices have recently twice struggled at the midpoint of this year’s decline at $351.40. The swing low in June is $273.21. Interestingly, the 50-day SMA is crossing above the 200-day SMA around $313/314, which is a bullish sign. The last time it did that in August last year, the stock eventually surged higher.
