29 Aug

Nvidia’s good report did not impress investors. The Bank of Japan intends to keep raising rates

August 29, 2024

By JustMarkets

At Wednesday’s close, the Dow Jones (US30) was down 0.39%, while the S&P 500 (US500) decreased by 0.60%. The NASDAQ Technology Index (US100) closed negative 1.12%. The US stocks fell on Wednesday as investors awaited Nvidia’s much-anticipated earnings report. All sectors were down, with the tech sector declining as Nvidia shares fell 2.6% in the main session. After the close of trading, Nvidia reported earnings that beat expectations and contained a positive outlook for the current quarter but failed to impress investors, causing the stock price to fall 7% after the bell.

Swap prices reflect the consensus for the Central Bank to cut rates by around 100bps in the three remaining decisions this year. Nevertheless, signs of resilience in US growth, most recently evidenced by a surge in durable goods orders, have raised doubts about the extent of overall rate cuts in the coming easing cycle.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.54%, France’s CAC 40 (FR40) closed 0.16% higher, Spain’s IBEX 35 (ES35) added 0.05%, and the UK’s FTSE 100 (UK100) fell 0.02%.

The ECB left rates unchanged at its last meeting but opened the door for a possible rate cut at its next meeting in September. Since then, data has generally been cooler than expected, leading markets to suggest up to three rate cuts before the end of the year. With the ECB only scheduled to meet three more times, this means a rate cut at each meeting.

WTI crude oil prices fell 1.3% to $74.5 a barrel on Wednesday, extending a 2.4% drop from the previous session, impacted by a smaller-than-expected decline in US crude inventories and ongoing demand concerns in China. Major banks revised their price estimates downward, citing economic concerns in key markets like China and a shift to electric vehicles reducing fuel consumption. In Europe, diesel demand is projected to fall below pre-pandemic levels due to a downturn in production and changes in vehicle fleets. These negative factors are putting downward pressure on prices. The latest EIA report showed a modest 0.846 million barrel decline in US crude oil inventories last week, falling short of the expected 3 million barrel decline.

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Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) added 0.22%, China’s FTSE China A50 (CHA50) was down 1.04%, Hong Kong’s Hang Seng (HK50) lost 1.02%, and Australia’s ASX 200 (AU200) closed at its opening price.

Deputy Governor Ryozo Himino said the Bank of Japan will raise interest rates as long as inflation moves in line with the bank’s prognoses, signaling the Central Bank’s unchanged stance despite the turmoil in financial markets earlier this month.

S&P 500 (US500) 5,592.20 −33.60 (−0.60%)

Dow Jones (US30) 41,091.42 −159.08 (−0.39%)

DAX (DE40) 18,782.29 +100.48 (+0.54%)

FTSE 100 (UK100) 8,343.85 −1.61 (−0.019%)

USD Index 101.11 +0.56 (+0.55%)

Important events today:
  • – US FOMC Member Bostic Speaks at 01:00 (GMT+3);
  • – German Consumer Price Index (m/m) at 15:00 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US GDP (q/q) at 15:30 (GMT+3);
  • – US Pending Home Sales (m/m) at 17:00 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
  • – Switzerland SNB Chairman Jordan Speaks at 19:00 (GMT+3);
  • – US FOMC Member Bostic Speaks at 22:30 (GMT+3).

By JustMarkets

 

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.


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