Main US indexes were trading marginally lower as fresh data continued to show the Fed has room to cut interest rates this year, but there have been some concerns about the health of the US economy. The JOLTS job openings fell way more than forecasts to 8.059 million, the lowest level since February 2021, in a sign the labour market continues to cool. Meanwhile, factory orders rose slightly more than expected while the ISM PMI released yesterday showed a surprising weakness in the factory sector. The energy sector was the biggest loser with Exxon Mobil down 2.1% and Chevron losing 1.6% after oil prices hit a 4-month low. Among megacaps, Microsoft (-0.8%), Amazon (-1%), Meta (-0.5%) and Alphabet (-0.6%) were all in the red while Apple (0.1%) and Nvidia (0.1%) booked small gains.

The yield on the US 10-year Treasury note fell to 4.35% on Tuesday, the lowest in about three weeks, as recent data out of the US continues to reinforce the view that the Fed is ready to start the easing cycle in September. JOLTS job openings fell way more than forecasts to 8.059 million, the lowest level since February 2021, in a sign the labour market continues to cool. Yesterday, the ISM PMI showed a surprising weakness in the factory sector sending the benchmark yield almost 10bps lower. Investors now see a 65% chance of a September cut and 77% of a November one.

New orders for US manufactured goods rose by 0.7% from the previous month to $588.2 billion in April of 2024, the same as in March, and marginally above market expectations of a 0.6% increase. Orders for durable goods industries rose by 0.6% carried by sharp increases for machinery (1.9%), primary metals (1.3%), computers and electronic products (0.6%), and transportation equipment (1.1%). In the meantime, orders for nondurable goods industries rose by 0.8%. Excluding the volatile heavyweight transportation equipment, new orders rose by 0.7%, above market expectations of 0.4%.

The Brazilian GDP expanded by 0.8% in the first quarter of 2024, rebounding from the revised 0.1% contraction in the fourth quarter of 2023 and in line with market expectations. It reflected some traction in the Brazilian economy after two periods of muted-to-negative growth, largely due to increased government transfers in President Lula’s second year in office, which helped consumers’ spending power offset the elevated real interest rates set by the Brazilian central bank. Growth was carried by a sharp expansion in the agricultural sector (11.3%) to rebound from the contraction in the earlier quarter, although harvests fell short of last year’s records. Meanwhile, services grew by 1.4%, with government transfers lifting commerce (3%) and communication output (2.1%). On the other hand, the industrial sector notched a slight contraction (-0.1%), pressured by competition from export markets. From the previous year, the Brazilian GDP expanded by 2.5% in the first quarter.

The BSE index tanked by almost 6% to close at 72,079.1 on Tuesday, recording its worst intraday percentage fall in four years, after early vote counts suggested that Prime Minister Narendra Modi's alliance had failed to achieve the anticipated landslide victory. The BJP-led alliance currently holds a lead in nearly 300 seats, with opposition parties leading in approximately 200 seats. This situation may complicate the continuation of policies that markets deem crucial for India's recent robust growth momentum. Additionally, recent high valuations contributed to the overall decline. On the corporate front, several sectors were hardest hit, particularly state-run companies, banks, realty and energy stocks. The only gainers were shares of fast-moving consumer goods (FMCG) companies, including Hindustan Unilever and Nestle India, alongside TCS, Asian Paints and Sun Pharma.

The Logistics Manager’s Index in the US jumped to 55.6 in May 2024, from a four-month low of 52.9 in April. With this reading, the index has now expanded in 9 of the last 10 months and for the last six months in a row. The biggest change was recorded for the transportation prices which soared to the highest level since June 2022 (57.8 vs 44.1), due to higher demand and as diesel fuel prices dropped again in the last week of May. Transportation prices are now slightly higher than transportation capacity (57.3 vs 61.4). The other significant change in May is a contraction in inventory levels (46.5 vs 51) although warehousing utilization increased (64 vs 55.1). While this may seem at odds with contracting inventories, it is partially explained by a similar split between downstream (69.4) and upstream (61.3) firms. Finally, firms continue to be largely optimistic about the future of the logistics industry, predicting an overall growth rate of 65.5, the highest in two years.