InvestMacro

By JustMarkets

At Wednesday’s close, the Dow Jones Index (US30) was down 0.60%, while the S&P 500 Index (US500) decreased by 0.77%. The NASDAQ Technology Index (US100) closed negative 1.05%. Yesterday, chip stocks gave up early gains and retreated, which had a negative impact on the overall market.

Stocks on Wednesday initially went up on positivity from a rally in Japanese stocks amid dovish comments from Bank of Japan (BoJ) Deputy Governor Uchida, who pledged to refrain from raising interest rates amid volatile markets. Financial markets have been in turmoil since last week, when the BoJ unexpectedly raised interest rates, causing the yen to surge to a 7-month high against the dollar and contributing to a rapid unwinding of yen trading that pulled down risk assets around the world.

Airbnb (ABNB) closed down more than 13% after estimating third-quarter revenue of $3.67 billion to $3.73 billion, below consensus estimates of $3.84 billion, and warning of weaker demand from US vacationers. Illumina (ILMN) closed higher by more than 4% after reporting second-quarter revenue of $1.11 billion, above the consensus prognosis of $1.09 billion.

The Canadian dollar strengthened to 1.37 per US dollar, recovering from an eight-month low of 1.388 hit on August 1, thanks to an improving outlook for foreign exchange inflows and reduced fears of a US recession, which restored global risk appetite. A recovery in oil prices, driven by a sixth consecutive week of declines in US inventories and fears of supply disruptions from the Middle East, further supported the loonie. However, the recent rate cut by the Bank of Canada (BoC) and expectations of further easing of up to 150 basis points over the next year will create headwinds for the Canadian dollar.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 1.50%, France’s CAC 40 (FR40) closed 1.91% higher, Spain’s IBEX 35 (ES35) added 2.01%, and the UK’s FTSE 100 (UK100) closed positive 1.75%.

WTI crude oil prices rose to around $75.5 per barrel on Thursday, rising for the third consecutive session, driven by a larger-than-expected decline in US crude inventories. EIA data for Wednesday showed crude inventories fell by 3.728 million barrels, the sixth consecutive weekly decline, well above the expected 0.4 million barrel drop. However, gasoline and distillate inventories rose over the period.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) rose by 1.19%, China’s FTSE China A50 (CHA50) added 0.13%, Hong Kong’s Hang Seng (HK50) gained 1.38%, and Australia’s ASX 200 (AU200) was positive 0.25%.

The Reserve Bank of India (RBI) kept the benchmark repo rate at 6.5% for the ninth consecutive meeting in August 2024 to ensure inflation falls to the medium-term target of 4% while supporting growth, in line with market expectations. The latest move came after annual inflation accelerated to a four-month high of 5.08% in June 2024, driven by rising food prices, but remained within the RBI’s acceptable target range of 2–6% In addition, the Central Bank maintained its economic growth estimate for FY 2025 at 7.2%, keeping inflation expectations at 4.5%.

S&P 500 (US500) 5,199.50 −40.53 (−0.77%)

Dow Jones (US30) 38,763.45 −234.21 (−0.60%)

DAX (DE40) 17,615.15 +260.83 (+1.50%)

FTSE 100 (UK100) 8,166.88 +140.19 (+1.75%)

USD Index 103.20 +0.24 (+0.23%)

• – Australia NAB Business Confidence (m/m) at 04:30 (GMT+3);
• – China Trade Balance (m/m) at 06:00 (GMT+3);
• – New Zealand Inflation Expectations (q/q) at 06:00 (GMT+3);
• – US Initial Jobless Claims (m/m) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (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.

Why monetary inflation has been shrinking

By Elliott Wave International

Nearly everyone who buys groceries, fills their car tank with gas, pays rent, buys car insurance and so on is talking about the high cost of living. And it’s true that consumer price inflation is higher today than before the pandemic – although, it’s nowhere near as high as it was two years ago, when the annual inflation rate spiked to a 40-year peak of 9.1%.

Since then, the pace of inflation has slowed way down. In fact, the latest reading of the Consumer Price Index, or CPI, came in at 3%, close to the Federal Reserve’s “ideal” target of 2% a year.

But that’s price inflation. There is another measure of inflation that has to do with money supply. It’s the so-called monetary inflation, or the supply of printed money. It has also declined over the past two years and is likely set to decrease even more. And while it sounds like a good trend, it’s actually the opposite.

Here’s insight from our just-published July Elliott Wave Theorist:

Monetary inflation … is unlikely to continue. Why? because since early 2022 the Fed’s clear aim has been to reduce the size of its balance sheet. Over the past two years, the value of the Fed’s assets, representing “printed” money, has gone from $8.94 trillion to $7.22 trillion, a decline of nearly 20 percent.

The July Elliott Wave Theorist continues:

This shrinkage of base money, moreover, has taken place even as total debt has expanded. This situation cannot maintain. The dichotomy will soon rock the financial system. It’s just a matter of when.

Indeed, U.S. household debt – which is part of that “total debt” The Theorist is referring to — grew by $800 million from 2022 to 2023, including a 16.6% growth in credit card debt, according to Marketwatch.

The financial website had this headline on June 20:

Americans Are Carrying Record Household Debt into 2024

Interestingly, Washington D.C. has the highest per capita credit card debt in the country.

And speaking of the nation’s capital, out of control spending has led to a national debt of nearly $35 trillion.

As CBS News noted earlier this year (March 1):

U.S. interest payments on its debt are set to exceed defense spending.

The Congressional Budget Office projects the annual interest on the debt will hit $1.4 trillion by 2033.

And this does not even consider the huge amount of debt at the state and local levels – as well as the debt of corporations.

U.S. household debt is growing and will only get bigger. In turn, so will the scale of the news coverage about “the importance of the household debt to economic activity.” Regardless of where in the world you live or invest, staying ahead of the trends in the U.S. stock market and economy is worth your while. Elliott Wave International has a free must-read issue on U.S stocks that I suggest you check out, on www.elliottwave.com.

By JustMarkets

At Tuesday’s close, the Dow Jones (US30) Index was up 0.76%, while the S&P 500 (US500) Index was up 1.04%. The NASDAQ Technology Index (US100) closed positive 1.03%. US stocks recovered strongly on Tuesday, rebounding after a three-day sell-off. Dip buyers emerged yesterday, pushing stocks higher after Monday’s sharp decline. The sharp rise in Japanese stocks today provided support for US stocks. All sectors were up, with real estate and technology leading the way. Japan’s Nikkei Stock Index (JP225) rose more than 10% today as a weaker yen sparked a rally in Japanese exporters after the Bank of Japan (BoJ) said it will hold a trilateral meeting with the Ministry of Finance and the Financial Services Agency in Tokyo to discuss international markets.

Nvidia (NVDA) shares are up more than 5% after New Street Research upgraded the stock to “buy” from “neutral” with a $120 price target. Uber Technologies (UBER) is up more than 7% after reporting second-quarter gross orders of $39.95 billion, better than the consensus estimate of $39.70 billion Palantir Technologies (PLTR) is up more than 10% after reporting second-quarter revenue of $678.1 million, better than the consensus of $652.8 million, and raising its full-year revenue outlook

The US trade deficit narrowed to $73.1 billion in June from a revised $75.1 billion in May but was larger than expectations of $72.5 billion and a negative for second-quarter GDP. The market consensus expects second-quarter earnings for S&P 500 companies to rise 9% year-over-year. About half of the companies in the S&P 500 have already reported. According to Bloomberg data, most of the companies that reported beat consensus on earnings, but only 43% beat revenue expectations, the lowest in five years.

Equity markets in Europe traded mixed yesterday. Germany’s DAX (DE40) rose by 0.09%, France’s CAC 40 (FR40) closed down 0.27%, Spain’s IBEX 35 (ES35) fell 0.32%, and the UK’s FTSE 100 (UK100) closed positive 0.23%. Eurozone retail sales fell by 0.3% m/m in June, weaker than expectations of 0.1% m/m and the biggest decline in 6 months. German factory orders rose by 3.9% m/m in June, which was stronger than expectations of 0.5% m/m and was the largest increase in the last 6 months. Swaps discount the probability of a 25bp ECB rate cut at the September 12 meeting to 100%.

The US crude oil inventories rose by 4.495 million barrels in the week ended August 2, 2024, after declining by 4.495 million barrels in the previous week, data from API’s weekly statistical bulletin showed. This marked the fifth consecutive week of decline in crude inventories and was below market expectations of a 0.85 million barrel increase.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up 10.23%, China’s FTSE China A50 (CHA50) was down 0.66%, Hong Kong’s Hang Seng (HK50) lost 0.31% by Tuesday’s close, while Australia’s ASX 200 (AU200) was positive 0.41%.

The offshore yuan slipped to 7.18 per dollar, falling short of the seven-month peak reached earlier this week, as traders reacted to the latest economic data from China. On Wednesday, China reported a trade surplus of $84.65 billion for July 2024, up from $80.22 billion in the same month a year earlier but short of market expectations of $99 billion. Exports rose 7% year-on-year in July, below the 9.7% growth estimate and the slowest growth since April. In contrast, imports posted the fastest growth rate since April, rising 7.2% from a year earlier and well ahead of the prognosis of 3.5% increase.

New Zealand’s unemployment rate rose to 4.6% in the three months to June 2024, following an upwardly revised 4.4% in the previous quarter. This is the highest rate since the first quarter of 2021 and slightly below market expectations of 4.7%. This will increase the likelihood of an earlier rate cut by the RBNZ and will harm the kiwi.

S&P 500 (US500) 5,240.03 +53.70 (+1.04%)

Dow Jones (US30) 38,997.66 +294.39 (+0.76%)

DAX (DE40) 17,354.32 +15.32 (+0.09%)

FTSE 100 (UK100) 8,026.69 +18.46 (+0.23%)

USD Index 102.96 +0.27 (+0.26%)

• – New Zealand Unemployment Rate (q/q) at 01:45 (GMT+3);
• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – German Trade Balance (m/m) at 09:00 (GMT+3);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (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.

By JustMarkets

At Monday’s close, the Dow Jones (US30) Index was down 2.60%, while the S&P 500 (US500) Index fell by 3.00%. The NASDAQ Technology Index (US100) closed negative 3.43%. The S&P 500 and Nasdaq 100 Indexes fell to 3-month lows, and the Dow Jones Industrials Index fell to a 7-week low. The fall in global stock markets on Monday triggered a flight into government debt and drove bond yields lower, with the 10-year T-note yield falling to a 14-month low and the 10-year German bund yield falling to a 7-month low. The fall in equities on Monday led to a de-risking of asset markets, with the price of bitcoin (BTCUSD) falling more than 14% to a 5-month low and WTI crude oil falling to a 6-month low.

Why did such a massive sell-off occur? Economists have several theories, but the most real is the Japanese yen theory, where there is a forced closing of curry-trade positions. Funds have to pay higher interest rates on borrowed yen. Their USD assets may not be enough to repay the JPY loans. This has caused a massive sell-off of trading positions to attract more USD, converting them back into JPY to repay the loans. Expect an emergency Fed meeting against this backdrop only if the current volatility triggers risks to financial stability. It has nothing to do with recession risks at the moment, although it could trigger/accelerate them. However, after such an upsurge in volatility, some market participants will be forced to cut risks/shoulders by reducing positions, creating conditions and inertia for the process to continue. The Middle East conflict and political uncertainty in the US are adding to the fear and panic.

Chicago Fed President Goolsbee said last month’s jobs data “came in weaker than expected, but does not yet look like a recession” as US economic growth continues at a “fairly robust level.” Markets rate the odds of a 25bp rate cut at the September 17–18 FOMC meeting at 100% and a 50bp rate cut at the September 17–18 FOMC meeting at 95%.

Equity markets in Europe were mostly falling yesterday. Germany’s DAX (DE40) fell by 1.82%, France’s CAC 40 (FR40) closed down 1.42%, Spain’s IBEX 35 (ES35) lost 2.34%, and the UK’s FTSE 100 (UK100) closed negative 2.04%. The S&P Eurozone Composite PMI for July was revised upward by 0.1 to 50.2 from the previously reported 50.1. Swaps discount the odds of a 25 bp rate cut by the ECB by 99% at the September 12 meeting.

WTI crude oil prices rose to around $74 a barrel on Tuesday after declining for three consecutive sessions, helped by continued supply risks from rising tensions in the Middle East. Fears of a regional war intensified as Israel braced for possible attacks following Iran’s threats to retaliate after the recent assassinations of a senior Hezbollah commander in Lebanon and Hamas’ top political leader in Iran. Due to anti-government protests and security concerns, oil prices also received support from the shutdown of production at Libya’s largest oil field, Sharara.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 12.40%, China’s FTSE China A50 (CHA50) was down 0.59%, Hong Kong’s Hang Seng (HK50) was down 1.46%, and Australia’s ASX 200 (AU200) was negative 3.70%.

Japan’s Nikkei 225 Index soared 10.7% early Tuesday, a day after a record 12.4% drop. By late morning, the index had given up some ground and was up 8.7% at 34,211.83. The rise followed sharp losses on Wall Street, which were dramatic but not as widespread as Monday’s crash in Tokyo. The losses of the past few sessions followed the Bank of Japan raising its main interest rate from nearly zero last week. That move helped to boost the value of the Japanese yen, but it also forced traders to exit trades in which they had borrowed money in Japan for virtually free and invested it elsewhere in the world.

The Reserve Bank of Australia (RBA) left interest rates unchanged for the sixth consecutive meeting but reiterated that it did not rule out further rate hikes to control inflation. The Central Bank kept the official money rate at a 12-year high of 4.35%, as expected, and emphasized that monetary policy should remain restrictive enough to ensure inflation returns to the target range of 2–3%. In addition, RBA chief Michele Bullock effectively ruled out the possibility of an interest rate cut in the near future.

In New Zealand, investors and some economists expect the Reserve Bank (RBNZ) to start cutting interest rates next week as markets around the world raise bets on imminent monetary easing. ANZ estimates the Central Bank will cut the official money rate by 25 bps to 5.25% at its August 14 meeting, with two more cuts to 4.75% expected by the end of the year.

S&P 500 (US500) 5,186.33 −160.23 (−3.00%)

Dow Jones (US30) 38,703.27 −1,033.99 (−2.60%)

DAX (DE40) 17,339.00 −322.22 (−1.82%)

FTSE 100 (UK100) 8,008.23 −166.48 (−2.04%)

USD Index 102.74 −0.46 (−0.45%)

• – Australia RBA Interest Rate Decision (m/m) at 07:30 (GMT+3);
• – Australia RBA Monetary Policy Statement (m/m) at 07:30 (GMT+3);
• – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+3).
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
• – US Trade Balance (m/m) at 15:30 (GMT+3);
• – Canada Trade Balance (m/m) at 15:30 (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.

By JustMarkets

At the end of Friday, the Dow Jones Index (US30) fell by 1.51% (for the week -2.28%), and the S&P 500 Index (US500) lost 1.84% (for the week -2.37%). The NASDAQ Technology Index (US100) closed negative 2.43% (for the week -3.83%). On Friday, the US dollar fell to a twenty-week low against a basket of currencies due to weak US jobs data, which heightened fears of a possible recession and raised the stakes for more Fed rate cuts. The US economy added 114,000 jobs in July, which was below market expectations of a 175,000 increase. In addition, the unemployment rate unexpectedly rose to its highest level since 2021, and wage growth slowed more than expected. This followed weak manufacturing data, with the ISM manufacturing PMI showing a larger-than-expected contraction in factory activity. This raised fears of a recession in the US and also increased expectations of a dovish Federal Reserve rate hike. Markets now believe there is a more than 70% chance of a 50 basis point Fed rate cut in September, with a total easing of around 155 basis points this year and next.

Bitcoin fell 10% to below 53,000 on Monday, hitting a more than five-month low, as rising fears of a US recession prompted investors to shed risky assets, including digital currencies, stocks, commodities, and risk-sensitive currencies. The moves came amid weak US jobs data, which heightened fears that the Federal Reserve may already be too late to cut interest rates as the US economy may already be entering recession.

Equity markets in Europe mostly fell on Friday. Germany’s DAX (DE40) fell by 2.23% (week ended -4.75%), France’s CAC 40 (FR40) closed down by 1.61% (week ended -3.92%), Spain’s IBEX 35 (ES35) fell 1.67% (week ended -4.89%), and the UK’s FTSE 100 (UK100) closed negative 1.31% (week ended -1.34%).

ECB official Stournaras emphasized that inflation could fall below the 2% target due to problems in the Eurozone economy. As for the data, Eurozone annual inflation unexpectedly accelerated to 2.6% in July, but services inflation fell for the first time in three months. In addition, preliminary estimates suggest that the Eurozone economy grew 0.3% faster than expected in Q2, driven by growth in France, Italy, and Spain. On the other hand, Germany’s economy unexpectedly contracted.

WTI crude oil prices fell to $73 a barrel on Monday, declining for the third consecutive session as fears of recession in the US, the world’s top oil consumer, outweighed supply risks caused by geopolitical tensions in the Middle East. Markets are also watching the reaction of Iran, which vowed to avenge the assassination of Hamas leader Ismail Haniyeh after an airstrike in Tehran killed a top Hezbollah commander.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 5.85%, China’s FTSE China A50 (CHA50) declined 0.86%, Hong Kong’s Hang Seng (HK50) lost 2.08% over 5 trading days, while Australia’s ASX 200 (AU200) was positive 0.28%.

In Asia, investors await the Reserve Bank of Australia’s (RBA) interest rate decision on Tuesday, where a rate hold is widely expected. The probability of an RBA rate cut in November is around 75%, much earlier than previous estimates that suggested a rate cut in April next year. The Melbourne Institute’s monthly inflation gauge rose 0.4% in July 2024 after rising 0.3% in the previous two months. It was the fifth straight month of growth and the sharpest reading since December last year.

The overall Caixin China PMI fell to 51.2 in July 2024 from June’s reading of 52.8, indicating the lowest since last October and marking the ninth month of expansion in sector activity.

S&P 500 (US500) 5,346.56 −100.12 (−1.84%)

Dow Jones (US30) 39,737.26 −610.71 (−1.51%)

DAX (DE40) 17,661.22 −421.83 (−2.33%)

FTSE 100 (UK100) 8,174.71 −108.65 (−1.31%)

USD Index 103.22 −1.20 (−1.15%)

• – Japan Monetary Policy Meeting Minutes at 02:50 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (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);
• – US ISM Services PMI (m/m) at 17:00 (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.

By ForexTime 

• Risk assets (global stocks, cryptos, etc.) plummeting
• Higher US unemployment rate fuelling US recession fears
• Markets fear Fed may be too late to fend off recession
• Safe havens JPY, CHF rising against all G10 peers
• Volatile markets present trading opportunities galore, including for NAS100 index

Markets are a sea of red today!

Various asset classes, from stocks to cryptos, are plummeting after the recent US jobs shocker.

Last Friday (August 2nd), we learned that the US unemployment rate for July 2024 rose to 4.3%, its highest since October 2021 (back when the US economy was still recovering from the Covid pandemic).

That 4.3% unemployment rate has now officially triggered the “Sahm rule” – a historically accurate predictor of US recessions.

What is the “Sahm rule”?

This “rule” stipulates that a US recession begins when the 3-month moving average of the US unemployment rate rises by half (0.5) a percentage point, compared to its 12-month low.

Although the architect of this rule, former Federal Reserve economist Claudia Sahm, has sought to downplay the significance of such backward-looking data, markets were in no mood to hang around to give the benefit of the doubt to the world’s largest economy.

Can the Fed prevent a recession?

It’s still possible, but such odds appear less likely in light of the sudden jump in the US unemployment rate.

The Fed may yet shore up support for the economy by triggering larger-than-usual rate CUTS.

Still, markets fear that the Fed rate cuts may arrive too late.

After all, Fed rate cuts need six months or more before they are truly felt in the real economy.

Prior to last Friday’s US nonfarm payrolls data release, markets had forecasted just a 31% chance that the Fed will cut interest rates by 50-basis points at its September FOMC meeting.

Remember that the norm is a 25-basis point adjustment per meeting. A 50-bps cut would be double the typical rate move.

At the time of writing, markets have fully priced in a 50-basis point cut in September.

How are markets reacting?

Markets are extending the selloff across “risk assets” following Friday’s US jobs report.

So far today (Monday, August 5th):

• US500 = down 2.9%
• NAS100 = down 4.7%
• Bitcoin = down 11.7%
• Ethereum = down 16.4%

On the flip side, “safe havens” are climbing.

NOTE: Safe havens are assets that help protect investors’ wealth during times of heightened fear and uncertainty, as we’re seeing right now.

Typical safe havens are the Japanese Yen (USDJPY falling 3.1%) as well as the Swiss Franc (USDCHF falling 1.2%).

No surprise that both these safe haven currencies are stronger against all of their G10 peers today.

Back to “risk assets” …

How long will the selloff last?

Unfortunately, there’s no definite answer.

Even as “fear begets fear”, there are signs that point to prices reacting either way: a rebound, or further declines.

• Potential rebound?

Focusing on the NAS100 index, traders may draw clues from these technical events:

• 14-day relative strength index (RSI): the past 2 instances when this indicator reached the 30 level (which is the textbook threshold for “oversold” conditions), the NAS100 went on to stage a stunning rebound.
• 200-day simple moving average (SMA): the past 2 instances when prices reach this technical indicator, in March and October 2023, prices then duly soared.

If recent history is to be the guide, and such technical signals prove true once more, that should set the stage for a recovery for the NAS100 stock index, and potentially broader US stock markets as well.

• Further declines?

However, the fundamental picture is different this time around, compared to the last time we saw the above-listed technical events.

As mentioned earlier, the US unemployment rate at 4.3% is at its highest since 2021.

The risks of a US recession loom larger, compared to during the 2023 selloff across US stock markets.

If the US economic outlook turns darker, and markets believe that the Fed is unable to fend off a recession, that could heap more downward pressure on the NAS100.

If so, the NAS100 index could be dragged down to the psychological 17,000 mark over the near term.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By JustMarkets

On Thursday, US indices were declining, with the Dow Jones (US30) Index down 1.21% and the S&P 500 (US500) Index down 1.37%. The NASDAQ Technology Index (US100) closed negative 2.30%. Weaker-than-expected US economic news caused a liquidation of equity positions due to concerns that the Fed is behind schedule and waiting too long to cut interest rates. US weekly initial jobless claims rose by 14,000 to a near 1-year high of 249,000, indicating a weaker labor market than expected at 236,000. The US ISM Manufacturing Index for July unexpectedly fell by 1.7 to 46.88, weaker than expectations of a rise to 48.8 and the sharpest contraction in 8 months. US construction spending in June unexpectedly declined by 0.3% m/m, weaker than expectations for a 0.2% m/m increase.

Moderna (MRNA) is down more than 21% and topped the list of losers in the S&P 500 and Nasdaq 100 after cutting its full-year revenue guidance to $3.0–3.5 billion from the previous estimate of $4 billion, which was weaker than the consensus prognoses of $4.14 billion. Etsy (ETSY) closed down more than 7% after reporting second-quarter earnings per share of 41 cents, weaker than the consensus expectation of 45 cents, and estimating a third-quarter adjusted EPS margin of 27%, weaker than the consensus estimate of 28.9%. Meta Platforms (META) is up more than 4% and topped the Nasdaq 100 after reporting second-quarter revenue of $39.07 billion, beating the consensus estimate of $38.34 billion. Amazon (AMZN) shares fell nearly 8% after the company said in a report that online sales growth slowed in the second quarter and noted that consumers are looking for cheaper shopping options. Intel (INTC) said Thursday it will cut more than 15% of its workforce (about 17,500) and suspend its dividend starting in the fourth quarter as the chipmaker seeks to turn things around by focusing on its loss-making manufacturing business. Intel’s shares fell by 20% in extended trading, leaving the chipmaker poised to lose more than $24 billion in market value. About a third of the companies in the S&P 500 have already reported. Most of the companies that reported beat consensus earnings estimates, but only 43% beat revenue expectations, the lowest in five years.

Equity markets in Europe were mostly falling yesterday. Germany’s DAX (DE40) decreased by 2.30%, France’s CAC 40 (FR40) closed down 2.14%, Spain’s IBEX 35 (ES35) lost 1.90%, and the UK’s FTSE 100 (UK100) closed negative 1.01%.

Thursday’s economic news showed that the Eurozone unemployment rate for June unexpectedly rose, pointing to labor market weakness that is dovish for ECB policy. The Eurozone unemployment rate for June unexpectedly rose by 0.1 to 6.5%, indicating a weaker labor market compared to expectations of no change at 6.4%. The S&P Eurozone Manufacturing PMI for July from S&P was revised upward by 0.2 to 45.8 from the previously reported 45.6. ECB Governing Council spokesman Stournaras said yesterday that he still expects two more ECB rate cuts this year if disinflation continues. In addition, economic growth has been weaker than expected, which also supports lower interest rates.

Switzerland’s annualized inflation rate for July 2024 was 1.3%, unchanged from the previous month and in line with market expectations. The core rate, which excludes volatile items such as unprocessed food and energy, was unchanged at an annualized rate of 1.1% in July.

The US natural gas prices (XNGUSD) surpassed the $2.05 per MMBtu mark, weakly holding the week’s gains amid supply risks and expectations of higher demand. The latest data from the EIA showed that US utilities added 18 billion cubic feet of gas in the week ended July 26, half as much as financial markets had expected. That added to fears of declining US supply after reports that Freeport LNG, the second-largest US export facility, produces more than 2 billion cubic feet of gas daily and is on track to return to full production.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) was down 2.49%, China’s FTSE China A50 (CHA50) lost 0.71%, Hong Kong’s Hang Seng (HK50) decreased by 0.23%, and Australia’s ASX 200 (AU200) was positive 0.28%.

The Australian dollar fell to its lowest level in three months as risk sentiment declined after weak US economic data added to recession fears. Markets feared that an expected interest rate cut by the Federal Reserve may come too late to stave off a recession. Domestically, the Australian dollar also came under pressure from softer-than-expected second-quarter inflation data, which reduced the chances of another rate hike by the Reserve Bank of Australia (RBA) this month.

S&P 500 (US500) 5,446.68 −75.62 (−1.37%)

Dow Jones (US30) 40,347.97 −494.82 (−1.21%)

DAX (DE40) 18,083.05 −425.60 (−2.30%)

FTSE 100 (UK100) 8,283.36 −84.62 (−1.01%)

USD Index 104.34 +0.58 (+0.57%)

• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+3);
• – Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
• – US Unemployment Rate (m/m) at 15:30 (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.