New tensions between the US and China provoked investors to return to safe-haven assets

By JustForex

According to analysts at JPMorgan, the US stock market is ready for further growth, likely starting as early as the second half of this year. Easing inflation expectations and falling bond yields indicate that the peak of the hawkish sentiment has probably already passed, and for this reason, analysts at JPMorgan believe that the US economy will avoid recession, despite the negative GDP growth for two consecutive quarters. JPMorgan’s year-end target for the S&P 500 is 4,800 points, which represents a growth potential of 17% from current levels.

Cleveland Fed President Loretta Mester said yesterday that it would take some time to get inflation back to the 2% level and brushed aside concerns about a slowing economy, stressing that a slowdown is necessary. The comments came just hours after San Francisco Fed President Mary Daly said the Fed’s work on lowering inflation is far from over and that raising interest rates another 0.75% at the September meeting is also under active consideration by the Committee.

As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 1.22%, and the S&P 500 Index (US500) lost 0.66%. The NASDAQ Technology Index (US100) fell by 0.10%.

An American special flight carrying US House Speaker Nancy Pelosi landed in Taipei, the administrative capital of Taiwan. According to preliminary information, Taiwanese fighters escorting Nancy Pelosi’s plane opened warning fire on Chinese fighters that had entered the air defense zone of Taiwan. The Chinese Foreign Ministry summoned the US ambassador and protested about Nancy Pelosi’s visit to Taiwan. “China’s response will be powerful and strong,” the Chinese ambassador to the US said. The US military installations in the Indo-Pacific region are on high alert.

Geopolitical tensions rose higher during the day after Chinese battery giant CATL said it would suspend plans to invest billions of dollars in a new battery plant in the United States because of House Speaker Nancy Pelosi’s trip to Taiwan.

Uber Technologies (Uber) reported its first positive cash flow and earnings that beat expectations. The company’s stock jumped by 17% on the report. Pinterest (PINS) jumped more than 12% despite quarterly results missing the Wall Street estimates. Caterpillar (CAT) showed a drop in earnings as a business exit from Russia, higher costs, and a stronger dollar impacted performance. The company’s stock is down more than 4%.

Booking (BKNG), Moderna (MRNA), Regeneron Pharma (REGN), Nintendo ADR (NTDOY), MetLife (MET), eBay (EBAY), and others report today.

Stock markets in Europe were mostly down on Tuesday. German DAX (DE30) fell by 0.23%, French CAC 40 (FR40) lost 0.42%, Spanish IBEX 35 (ES35) gained 0.15%, British FTSE 100 (UK100) closed down by 0.06%.

Challenging summer conditions, including extreme heat and drought, led to new highs in European energy prices. Rivers are too warm to cool nuclear plants in France, and water levels are too low to deliver coal to power plants, limiting Europe’s electricity supply. This means countries rely even more on gas to meet additional electricity demand. Further cuts in Russian supplies to the continent will further exacerbate the situation. Analysts believe that electricity prices in Europe will rise even higher.

Energy stocks, meanwhile, remained flat amid uncertainty over whether major oil producers will decide to raise production at Wednesday’s meeting. Commerzbank said the outcome of the OPEC+ meeting is impossible to predict for now, but there is speculation that the current output will remain unchanged.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.42%, Hong Kong’s Hang Seng (HK50) ended down by 2.36%, and Australia’s S&P/ASX 200 (AU200) was up by 0.07%.

S&P 500 (F) (US500) 4,091.35 −27.28 (−0.66%)

Dow Jones (US30) 32,396.76 −401.64 (−1.22%)

DAX (DE40) 13,449.20 −30.43 (−0.23%)

FTSE 100 (UK100) 7,409.11 −4.31 (−0.058%)

USD Index 106.25 +0.80 (+0.76%)

• – US FOMC Member Bullard Speaks (m/m) at 01:45 (GMT+3);
• – New Zealand Unemployment Rate at 01:45 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – China Caixin Services PMI (m/m) at 04:45 (GMT+3);
• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+3);
• – German Services PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
• – US ISM Services PMI (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.