Germany's business confidence rose beyond expectations in June, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on June 24

Global Market Review

1. European and American market trends

The three major U.S. stock index futures rose, Dow futures rose 0.63%, S&P 500 futures rose 0.81%, and Nasdaq futures rose 1.05%. The German DAX index rose 1.83%, the UK FTSE 100 index rose 0.33%, the French CAC40 index rose 1.20%, and the European Stoke 50 index rose 1.40%.

2. Market news interpretation

Germany's business confidence rose beyond expectations in June, and Ifo survey found

⑴ According to Reuters on Tuesday (June 17), Germany's business confidence rose beyond expectations in June, and Ifo's business climate index rose from 87.5 in May to 88.4, higher than analysts' forecast of 88.2. ⑵ The service industry performed the strongest, with the new government's fiscal plan and the decline in euro zone interest rates boosting economic confidence. ⑶ClemensFuest, director of the Ifo Institute, said: "Germany's economy is slowly recovering confidence." ⑷ The expectation index rose from 89.0 to 90.7, the main reason for the improvement, which Joerg Kraemer, chief economist attributed to the new government's large-scale fiscal plan and the decline in euro zone interest rates. ⑸ Germany is the only G7 country that has not grown for two consecutive years, and its export-oriented economy is at risk of another contraction due to tariffs imposed by the Trump administration or threatened by the implementation of tariffs. ⑹The new Conservative government is avoiding this through a 46 billion euro tax cut and other measures. ⑺Ifo's assessment of the current situation only increased from 86.1 to 86.2. ⑻ Hauck AufhaeuserLampe Private Banking economist Alexander Krueger attributed the weak current situation index in part to instability in the Middle East, which has experienced air wars between Israel and Iran in recent weeks and a U.S. strike against Iran’s nuclear facilities.

South Korea's steel exports to the United States plummeted

In May, South Korea's steel exports and unit export prices both fell sharply. The industry generally believes that the negative effects caused by the United States' inflated steel tariffs have begun to officially appear. Data released by the South Korean Trade Association yesterday (23rd) showed that South Korea's total steel exports to the United States in May were US$327 million, a decrease of 16.3% from the same period last year. At the same time, South Korea's local steel market is also in trouble. A report recently released by the Posco Roller Management Institute stated that the domestic demand for steel in South Korea is expected to drop to 46.1 million tons this year, the lowest level since 2009. Analysts believe that the construction and automobile industries, which have the highest proportion of steel materials, have both shrunk, which is the biggest reason for the decrease in domestic demand. Recently, due to severe stagnation in steel demand, South Korea's Hyundai Iron-made Poshang second factory has been xmmarkets.cnpletely shut down since the beginning of this month.

Israel may have xmmarkets.cnpleted a symbolic retaliation against Iran

According to Mizan and Sharg, a news agency under the Iranian judicial department, an explosion was heard near BABOL and BABOLSAR in northern Iran, and it was attacked by Israel. Israel confirmed it had attacked a target in Iran, and its jets were on its way back to Israel. Israeli military broadcasts that the military attacked an Iranian radar station near Tehran. The air strike is said to be a response to Iran's launch of ballistic missiles to Israel after the ceasefire agreement was reached that morning.

Iran says cracking down on US military bases is not targeting Qatar

Iranian Foreign Ministry spokesman Bagae posted on social media on the 24th that Iran's crackdown on the Uded Air Force Base in Qatar is a legitimate act of exercising self-defense rights and has nothing to do with friendly neighbor Qatar. Bagae said that Iran responded to the unreasonable violation of Iran's territorial integrity and national sovereignty by the United Nations under Article 51 of the United Nations Charter, and this self-defense action has nothing to do with friendly neighbor Qatar.

Spot premium for Asian fuel oil has declined, and supply remains abundant

⑴ On Tuesday (June 17), the spot premium for Asian fuel oil has declined as supply remains abundant and most loadings in the Middle East have not been affected by regional tensions. ⑵ High sulfur fuel oil (HSFO) trading prices fell in the spot market, while the reverse price difference narrowed, and the cracking spread also weakened. ⑶ Calculation based on the London Stock Exchange Group's ship tracking data shows that the fuel oil supply from the Middle East this month was about 1.5 million tons, the same as last month or a slight increase. ⑷ Although US President Trump said that Israel and Iran had reached a ceasefire agreement, the geopolitical situation remained unstable, but trade sources said that most shipments of goods in the Middle East are still going as normal. ⑸Meanwhile, the ultra-low sulfur fuel oil (VLSFO) market has also been weaker due to the decline in spot quotes xmmarkets.cnpared with the previous day. ⑹ Trade sources said a batch of 130,000 tons of fuel oil cargo from the al-Zour refinery in Kuwait was withdrawn, but had no impact on prices. The shipment was originally scheduled to be shipped in early July.

U.S. long-term Treasury yields face upward risks

⑴ On Tuesday (June 17), analysts from the Danish Bank pointed out in a report that due to concerns about the US deficit, there is a risk of rising long-term Treasury yields. ⑵ The Trump administration’s massive tax cuts are expected to expand the U.S. government’s deficit. ⑶ Analysts believe that this poses a major risk to the long-term rise in US interest rates. ⑷ They said: "These deficits put direct pressure on the market by increasing the supply of US Treasury bonds." ⑸ Therefore, the market will remain sensitive to the U.S. Treasury financing strategy. ⑹This will determine the scale of the additional duration that private investors need to absorb in the xmmarkets.cning years. ⑺ According to Tradeweb data, the 10-year U.S. Treasury yield rose 3 basis points to 4.353%.

The market faces known unknown risks after the Gulf ceasefire

⑴ According to Reuters columnist George Hay on Tuesday (June 17), the sudden cessation of the 12-day conflict between Israel and Iran has pushed oil prices to fall below $70 per barrel, returning to the level after US President Trump's trip to the Middle East last month. ⑵ However, despite the end of the conflict, there is uncertainty in the subsequent actions of both sides, which brings new shock risks to the market.

U.S. long-term Treasury yields may rise due to concerns about the U.S. deficit

⑴ On Tuesday (June 17), Danish Bank analysts said in a report that U.S. long-term Treasury yields are at risk of rising due to concerns about the U.S. deficit. ⑵ The Trump administration’s massive tax cuts are expected to expand the U.S. government’s deficit. ⑶ This puts the risk of a significant increase in long-term interest rates in the United States. ⑷ Analysts said, "These deficits directly put pressure on the market by increasing the supply of bonds." ⑸ Therefore, the market will be very sensitive to the Ministry of Finance’s financing strategy. ⑹This will determine the range of additional maturities that private investors need to absorb in the xmmarkets.cning years. ⑺ According to Tradeweb data, the 10-year U.S. Treasury yield rose 3 basis points to 4.353%.

The supply and demand situation of the euro credit market is expected to support euro credit

⑴ On Tuesday (June 17), Morgan Stanley strategists said in a report that euro-denominated credit supply is expected to decline from 2024 levels, while demand will remain strong, which will drive the euro credit market. ⑵ They pointed out that "the capital flow data shows that the recent speed of funds flowing into European fixed income has accelerated." ⑶ This favorable supply and demand dynamic may support euro credit and offset the impact of geopolitical risks.

Hungarian forlins may rise as the central bank keeps interest rates unchanged

⑴ On Tuesday (June 17), Frantisek Taborsky of Dutch International Group wasHungarian forints may appreciate if the Hungarian central bank keeps interest rates unchanged on the day and maintains a restrictive policy stance. ⑵ The Hungarian central bank may be more cautious about rate cuts due to higher-than-expected inflation and uncertainty caused by the Israeli-Iran conflict, threatening currency and price stability. ⑶ According to data from the London Stock Exchange Group, the market expects a possibility of a rate cut before the end of the year. ⑷ Economists from Dutch International Group do not expect interest rate cuts this year, and the Hungarian central bank will not resume interest rate cuts until early next year. ⑸ The euro is currently up 0.2% to 402.16 Forlin. Dutch International Group expects the euro to fall below 402 after the Hungarian central bank makes its decision.

German battery production and trade decline, industry calls for action

⑴ On Tuesday (June 17), Germany's battery production and trade fell sharply in 2024. The Electronics Industry Association ZVEI said this was due to slowing electric vehicle promotion and xmmarkets.cnpetition from Asian producers, and called on policy makers to take measures to curb the downward trend. ⑵ The total market volume of the industry (including production, import minus exports) fell by 16% in 2024 to a total value of 20.5 billion euros, mainly due to the weakening demand for lithium-ion batteries, which are used in electric vehicles. ⑶Christian Rosenkranz, chairman of ZVEI battery department and managing director of Clarios Germany, member xmmarkets.cnpany, said decisive political action is needed to prevent Germany from further losing xmmarkets.cnpetitiveness as a battery manufacturing site. ⑷ He demanded lower energy costs, accelerated approval procedures, reduced red tape, and provided reliable and targeted funding, especially in research. ⑸ The new coalition government is dealing with these issues, trying to promote economic growth through billions of euros tax cuts and expenditure plans and overcome setbacks in recent years. ⑹ZVEI data show that the production value of all batteries fell by 5% to €7.3 billion last year, exports fell by 3% to €7.9 billion, while imports fell by 15% to €21.2 billion. ⑺Looking forward, with the decarbonization of the transportation sector, the basic expansion of electric vehicles should continue, and improvements in lithium-ion battery sales in the future are possible. ⑻Gunther Kellermann, managing director of the ZVEI battery department, said on the conference call that "the macro trend of electrification still exists." ⑼ “There are initial signs of recovery in 2025, so by 2026, I should be able to show a more positive outlook than today.” ⑽ZVEI executives also said that in view of geopolitical developments, defense technology has become an area of ​​increasingly active battery demand.

German business confidence data has limited impact on the euro and bonds

⑴ On Tuesday (June 17) Although a key survey showed that Germany's business confidence improved more than expected in June, the euro and euro zone government bond prices remained almost unchanged. ⑵ Germany's treasury bond issuance volume increased xmmarkets.cnpared with preliminary plans in the third quarter, and the treasury bond market also responded flat. ⑶Ifo Business Confidence Index rose from 87.5 in May to 8 in June8.4, higher than the 88.0 forecast by the Wall Street Journal survey economists. ⑷ The euro rose 0.1% to $1.1590, xmmarkets.cnpared with $1.1589. ⑸ The 10-year German Treasury yield was trading at 2.524%, up 1.8 basis points from the previous year, and 2.531% before the release of data and supply news.

The German Cabinet passed the draft budget and medium-term fiscal plan for 2025

The German Cabinet approved the government budget and medium-term fiscal plan for 2025, which includes a significant increase in net new borrowings to allow the country's military construction to provide funding. According to the document, the budget for this year includes 82 billion euros in net new debt, which will gradually increase to just above 126 billion euros by 2029. The total net new borrowing will reach approximately €500 billion in the five years ended 2029.

3. Trends of major currency pairs in the New York Stock Exchange before the New York Stock Exchange

Euro/USD: As of 20:23 Beijing time, the euro/USD rose, and is now at 1.1603, an increase of 0.23%. Before the New York Stock Exchange, the price of (EUR/USD) continued to rise at the recent intraday level, successfully breaking through the key resistance of 1.1600, supported by its ongoing trading above the EMA50 and trading along a slash under the short-term major bullish trend, on the other hand, we noticed that (RSI) began to show negative overlap signals after reaching the overbought level, which may temporarily slow the rally as it requires unloading overbought conditions.

GBP/USD: As of 20:23 Beijing time, GBP/USD has risen, now at 1.3605, an increase of 0.61%. Before the New York Stock Exchange, the (GBPUSD) price continued to fall sharply on the last trading day to confirm a new bullish trend line formed on a short-term basis, taking advantage of the resistance to breaking through its EMA50, which had previously formed a dynamic obstacle.

Spot gold: As of 20:23 Beijing time, spot gold fell, now at 3318.62, a decrease of 1.49%. Before the New York Stock Exchange, the (gold) price deepened the last intraday trading and continued to move within the bearish correction channel range that dominated its trend in the short term, indicating that sellers dominate the technical side, with negative pressure increasing after breaking through the main bullish trend line, strengthening the opportunity to continue the downward trend, accompanied by the emergence of negative signals (RSI), despite entering the oversold level, indicating that the negative momentum is still continuing.

Spot silver: As of 20:23 Beijing time, spot silver fell, and it is now reported36.064, a drop of 0.05%. Before the New York Stock Exchange, the price of (silver) fluctuated within a limited range, and continued negative pressure due to the trading price below EMA50. Dominant by the short-term bearish correction wave, in addition to negative signals after reaching the overbought level (RSI), strengthening the opportunity to break through near support.

Crude oil market: As of 20:23 Beijing time, U.S. oil fell, now at 65.570, a drop of 4.31%. Before the New York Stock Exchange, (crude oil) prices rose at intraday volatility levels, trying to recoup some of the previous losses and trying to get rid of some obvious oversold conditions on (RSI), especially as positive signals from them emerge, breaking short-term slight bullish bias in its feelings, with bearish correction waves dominating.

4. Institutional view

UNB: Malaysia's July interest rate cut expectations have increased

⑴ On Tuesday (June 17), UOB economists Julia Goh and Loke SiewTing pointed out in their report that Malaysia's recent macroeconomic data and external developments may enhance market expectations for a July interest rate cut. ⑵ They lowered their inflation forecast for 2025 from 2.3% to 1.8%, due to weak inflation and limited impact on tax and power reforms. ⑶ The two economists are vigilant about the second round of policy changes and will reassess their views after the RON95 fuel subsidy reform mechanism is announced in the second half of the year. ⑷ Due to external adverse factors, weak demand and rising costs, UOB expects to cut interest rates by 25 basis points in July and November respectively.

Barclays: U.S. "potential" non-farming sector employment growth may drop from more than 100,000 per month currently to less than 100,000 by the end of next year

Barclays Bank economists believe that "potential" non-farming sector employment growth (i.e., the amount of additional jobs that can be created without causing a shortage of workers) may drop from more than 100,000 per month currently to less than 100,000 by the end of next year. They estimate that potential employment growth will drop to about 60,000 in the next six months, causing the potential economic growth rate to drop to just 1.4-1.6% next year from its current level of just above 2%. Considering that the average monthly employment of private enterprises in the past two years is about 172,000, these figures seem quite serious. Barclays said it is expected that the impact of population aging will "intensify quickly", bringing greater downward pressure on employment growth. The bank said the xmmarkets.cnbined impact of these two forces “will create significant and persistent resistance to the potential growth of labor and economic activities.”

Institution: Uneven geographical distribution of growth in military expenditure in European countries may still lead to friction in this week's summit

Casten Nicole, deputy director of research at the risk consulting firm Teneo, said that the geographical uneven distribution of military spending growth in European countries could still lead to friction this week's summit. "However, increasing defense spending will only solve part of the deeper challenges facing transatlantic relations," he noted. "Military burden sharing and trade deficits also threaten the relationship between allies."

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