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Good evening,
Today’s market focus was centred in London where trade negotiations are taking place between the US and China, and the main issue was a demand by Washington for Beijing to accelerate the exports of rare-earth minerals and magnets in exchange for access to US-made semiconductors. Stocks on Wall Street ended a touch firmer with tech names outperforming on the back of this news while the S&P 500 and Dow Jones Industrials finished unchanged. The small-cap Russell 2000 and the S&P Mid-Cap 400 indices are the only ones among the leading US equity benchmarks to remain underwater on a year-to-date basis.
In economic data today, the main release was China’s inflation figures which once again reflect the deflationary pressure as CPI dropped 0.1% YoY (-0.2% MoM), the fourth straight month of price falls. On the trade side, imports plunged 3.4% YoY, also accumulating four months of weakness while exports rose by 4.8%, a sharp deceleration as exports to the US plummeted 35% YoY in May, the worst month since the Covid days.
Bond yields fell a few basis points across the curve with 10-yr Treasuries ending the day at 4.48% and on the short-end, the 3-month Bill auction was priced at 4.25% and the 6-month at 4.15%, in line with the previous bond sale. In currency markets, the $ index fell marginally and remains below the 100-point level, the precious metals complex gained with platinum outperforming (+4.5%) while gold was little changed. Bitcoin rallied 4% on Monday to $109k, is nearing its all-time high and has accumulated a 16% gain YTD. There were no significant moves in commodity markets as crude oil advanced 1% driven by the positive trade talks news and the whole energy complex is firmer in the past week.
In corporate deals, semiconductors giant Qualcomm (mcap $171bn) acquired Alphawave (mcap £1.3bn), a Canadian chip designer listed in London for £1.8bn, a fraction of the value when it went public in 2021. Shares in Alphawave rallied 19% today and accumulated a 110% appreciation this year.
Private equity firm Advent International signalled interest in taking over industrial group Spectris Plc (mcap £3.24bn) of the UK in a £4.4bn deal including debt. Spectris provides high-tech instruments for pharma and semiconductors companies. Shares rallied 60% today.
US quantum computers company IonQ Inc (mcap $10bn) acquired UK-based start-up Oxford Ionics in a $1.1bn all-stock deal.
On the data front this week, we’ll get US consumer inflation on Wednesday, US producer inflation and UK’s GDP on Thursday,
See you tomorrow.
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