InvestMacro

By JustMarkets

At the end of Wednesday, the Dow Jones (US30) Index gained 0.61%, and the S&P 500 (US500) Index closed with an increase of 10.38%. The NASDAQ Technology Index (US100) closed yesterday positive 0.03%. Stocks found support on Wednesday after the US CPI report for July came in slightly weaker than expected, reinforcing the likelihood that the Fed will cut interest rates next month.

Wednesday’s US CPI report for July eased speculation that the Fed will cut rates by 50 bps next month instead of 25 bps. US CPI for July fell to 2.9% y/y from 3.0% y/y, slightly better than expectations of no change at 3.0% y/y and the lowest annualized growth in over three years. The July core CPI excluding food and energy, fell to 3.2% y/y from 3.3% y/y in June, matching expectations and the smallest annualized gain in over 3 years.

According to data compiled by Bloomberg, most of the companies that reported beat consensus on earnings, but only 43% beat revenue expectations, the lowest in five years.

Alphabet (GOOG) shares fell by 2.3% yesterday following a report that the US Department of Justice is considering options, including a possible company separation.

The Canadian dollar strengthened to 1.37 per US dollar, hitting a near one-month high, while the US dollar weakened to one-year lows after softer-than-expected inflation data. Meanwhile, Canada’s unemployment rate was unchanged at 6.4% in July, the highest in two and a half years, indicating a weakening labor market.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 0.41%, France’s CAC 40 (FR40) closed higher by 0.79%, Spain’s IBEX 35 (ES35) added 0.27%, and the UK’s FTSE 100 (UK100) closed up 0.56%.

The FTSE 100 (UK100) Index rose 0.79% on Wednesday as UK Consumer Price Inflation for July rose less than expected, reinforcing expectations of a Bank of England rate cut. All sectors rose except for mining, which fell nearly 1% as sentiment weakened due to a larger-than-expected credit contraction in China.

WTI crude oil prices fell by 1.7%, marking a second straight day of losses following President Biden’s comments that Iran may not attack Israel if a ceasefire in Gaza is reached. A new round of ceasefire talks is due to begin Thursday in Qatar, but Hamas said the group does not intend to participate in the talks. Also, the EIA reported an unexpected rise in US crude inventories, with a 1.357 million barrel increase last week, ending a six-week decline and defeating expectations of a 2 million barrel drop.

The US natural gas prices (XNGUSD) rose more than 5% to $2.27/MMBtu on Wednesday, the highest in about a month, thanks to lower production and prognoses of hotter weather in late August. The hotter weather is expected to increase the use of air conditioners, boosting gas demand.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up 0.58%, China’s FTSE China A50 (CHA50) was down 0.50%, Hong Kong’s Hang Seng (HK50) decreased by 0.35%, and Australia’s ASX 200 (AU200) was positive 0.31%.

The offshore yuan weakened to 7.16 per dollar, retreating from a one-week high, as traders reacted to mixed economic data from China. In the real estate sector, new home prices in 70 major cities fell 4.9 percent from a year earlier in July 2024, the sharpest decline since June 2015 and underscoring the deepening real estate crisis despite Beijing’s efforts to stabilize the sector. Industrial production also showed signs of weakness, with growth slowing to 5.1% in July from 5.3% in the previous month, the weakest since March. In addition, the unemployment rate rose to 5.2% in July after remaining at 5% for the previous three months. On a more positive note, retail sales rose, which increased at a 2.7% annualized rate in July, up from 2% in June, marking the 18th consecutive month of retail sales growth. Overall, the latest data paints a complex picture of China’s economic trajectory, heightening concerns and calling into question the strength of the country’s economic recovery.

The Australian dollar climbed above $0.66, resuming its recent rally as investors reacted to mixed reports on the country’s economy. A private survey showed that expectations for consumer inflation in Australia rose to 4.5% in August from 4.3% in July, the highest since April. Meanwhile, the country’s unemployment rate unexpectedly rose to 4.2% in July, the highest in two and a half years.

S&P 500 (US500) 5,455.21 +20.78 (+0.38%)

Dow Jones (US30) 40,008.39 +242.75 (+0.61%)

DAX (DE40) 17,885.60 +73.55 (+0.41%)

FTSE 100 (UK100) 8,281.05 +45.82 (+0.56%)

USD index 102.59 +0.03 (+0.03%)

• – Japan GDP (m/m) at 02:50 (GMT+3);
• – Australia Unemployment Rate (m/m) at 04:30 (GMT+3);
• – China Industrial Production (m/m) at 05:00 (GMT+3);
• – China Unemployment Rate (m/m) at 05:00 (GMT+3);
• – China Retail Sales (m/m) at 05:00 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – UK GDP (q/q) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – UK Trade Balance (m/m) at 09:00 (GMT+3);
• – Switzerland Producer Price Index (m/m) at 09:30 (GMT+3);
• – Norwegian Norges Interest Rate Decision at 11:00 (GMT+3);
• – Eurozone Account of Monetary Policy Meeting (m/m) at 14:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Retail Sales (m/m) at 15:30 (GMT+3);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US FOMC Member Harker Speaks at 20:10 (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

On Tuesday, the Dow Jones (US30) Index gained 1.04%, while the S&P 500 (US500) Index closed 1.68% higher. The NASDAQ Technology Index (US100) closed yesterday at a positive 2.43%. Stocks found support on Tuesday thanks to lower bond yields after US producer prices for July rose less than expected, reinforcing expectations that the Federal Reserve will begin cutting interest rates next month. Strengthening in semiconductor stocks and technology mega majors on Tuesday also supported gains in the overall market. In addition, Starbucks closed higher by more than 24% following the appointment of a new CEO.

The July US FMCG price index declined to 2.2% y/y from 2.7% y/y in June, less than expectations of 2.3% y/y. Additionally, the July food and energy price index declined to 2.4% y/y from 3.0% y/y in June, better than expectations of 2.6% y/y.

On Tuesday, Atlanta Fed President Bostic made dovish comments that supported stocks, stating that he would likely be willing to support a Fed rate cut. Markets are awaiting the release of Wednesday’s consumer price report, which should also help clarify the likely timing and size of any Fed interest rate cut. The July CPI is expected to be unchanged from June at 3.0% y/y, while the core July CPI, excluding food and energy, is expected to decline to 3.2% y/y from 3.3% y/y in June. Indicators that show only a slight cooling could reinforce fears that the Fed has derailed the economy by leaving rates at high levels for too long. This would increase recession fears, which could cause new volatility in the market and trigger more stock index sell-offs. The strong upward surprise would be worse for the market, as the Fed could not quickly reduce the rate even though the economy lost growth.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 0.48%, France’s CAC 40 (FR40) closed higher by 0.35%, Spain’s IBEX 35 (ES35) added 0.73%, and the UK’s FTSE 100 (UK100) closed up 0.30%.

Frankfurt’s DAX (DE40) index marked its sixth consecutive session in the green on Tuesday with strong support from technology and industrial giants. In spite of this, the indicator of economic confidence ZEW fell stronger than expected, as in the Eurozone and Germany, strengthening the danger of the economy’s growth.

WTI crude futures fell below $79 a barrel on Tuesday, breaking a five-day winning streak. Traders weighed the potential glut amid escalating tensions in the Middle East. A monthly report from the International Energy Agency showed inventory drawdowns would weaken in the final quarter, and OPEC cut demand forecasts for this year and next. Due to weak demand in China, OPEC cut its 2023 demand growth forecast by 135,000 barrels a day and lowered its 2025 growth forecast to 1.78 million barrels a day.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 3.45%, China’s FTSE China A50 (CHA50) closed at its opening level, Hong Kong’s Hang Seng (HK50) gained 0.36% over yesterday and Australia’s ASX 200 (AU200) was positive 0.17%.

The New Zealand dollar fell by 1.1% to around $0.60 on Wednesday after the Reserve Bank of New Zealand unexpectedly cut interest rates. The RBNZ cut the official money rate by 25 basis points to 5.25%, the first cut since March 2020. The central bank said price pressures are easing and expects annual inflation to return to a target range of 1% to 3% in the third quarter. The bank cautioned that policy should remain restrictive for some time but still forecasts the money rate at 4.92% by the end of the year and 3.85% by the end of 2025.

The Australian dollar is at three-week highs as it weakened on lower-than-expected US producer inflation data, which boosted bets on more aggressive interest rate cuts by the Federal Reserve. The Aussie also rose against the Kiwi after the Reserve Bank of New Zealand surprised markets by cutting its money rate.

S&P 500 (US500) 5,434.43 +90.04 (+1.68%)

Dow Jones (US30) 39,765.64 +408.63 (+1.04%)

DAX (DE40) 17,812.05 +85.58 (+0.48%)

FTSE 100 (UK100) 8,235.23 +24.98 (+0.30%)

USD index 102.62 −0.52 (−0.50%)

• – New Zealand RBNZ Interest Rate Decision (m/m) at 05:00 (GMT+3);
• – New Zealand RBNZ Monetary Policy Statement (m/m) at 05:00 (GMT+3);
• – New Zealand RBNZ Press Conference at 06:00 (GMT+3);
• – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
• – UK Producer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone GDP (q/q) at 12:00 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – New Zealand RBNZ Gov Orr Speaks at 21:00 (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 JustMarkets

At Monday’s close, the Dow Jones (US30) Index was down 0.36%, while the S&P 500 (US500) Index closed at its opening level. The NASDAQ Technology Index (US100) closed positively, 0.21%. Strengthening chip stocks supported the overall market, led by Nvidia’s (NVDA) 4% gain. Additionally, energy stocks rose, with the price of WTI crude oil up more than +%.

This week, markets await US producer and consumer price reports, which should help clarify the likely timing and size of any Fed interest rate cut. On Tuesday, July’s PPI is expected to decline to 2.3% y/y from 2.6% y/y in June, while July’s core PPI, excluding food and energy, is expected to decline to 2.7% y/y from 3.0% y/y in June. On Wednesday, July’s CPI is expected to remain unchanged at 3.0% y/y from June, while July’s core CPI, excluding food and energy, is expected to decline to 3.2% y/y from 3.3% y/y in June. Markets rate the odds of a 25bp rate cut at the September 18 FOMC meeting at 100% and a 50bp rate cut at 57%.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.02%, France’s CAC 40 (FR40) closed down 0.26%, Spain’s IBEX 35 (ES35) added 0.07%, and the UK’s FTSE 100 (UK100) closed up 0.52%.

WTI crude futures rose by 4.2% to close at $80.06 a barrel on Monday, rising for a fifth straight day amid an escalating conflict in the Middle East that threatens to cut global oil supplies. The Pentagon is beefing up its military presence in the region, with Defense Secretary Lloyd Austin ordering the deployment of an aircraft carrier strike group and additional forces in response to potential Iranian aggression against Israel. OPEC cut its forecast for global oil demand growth in 2024 to 2.11 million bpd from 2.25 million, citing weak data and weaker demand in China. OPEC+ extended production cuts through September with a phase-out in October.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.56%, China’s FTSE China A50 (CHA50) climbed 0.05%, Hong Kong’s Hang Seng (HK50) gained 0.13%, and Australia’s ASX 200 (AU200) was positive 0.46%.

India’s annualized consumer inflation rate fell sharply to 3.54% in July 2024 from 5.08% in the previous month, well below market expectations of 3.65%, marking the softest rise in consumer prices since August 2019. Inflation fell below the RBI’s target range of 4% for the first time in nearly five years, although the sharp decline was largely due to a large base effect in food prices, and the Central Bank does not expect price growth to remain as low for the rest of the year.

The Australian dollar rose to $0.66, near its highest level in three weeks, as risk sentiment continued to improve and investors digested mostly positive reports on the domestic economy. Data showed that consumer confidence in Australia rose sharply in August as tax cuts lifted sentiment, although concerns about the Reserve Bank of Australia’s (RBA) hawkish stance dampened sentiment. Business confidence also rose in July, while wages rose less than expected in the second quarter.

The Reserve Bank of New Zealand (RBNZ) will hold a monetary policy meeting as early as tomorrow. Economists do not expect any changes, but there is a growing consensus among economists that the RBNZ will announce a 25bp cut in the cash rate. 12 of 21 economists surveyed by Bloomberg expect the Reserve Bank to keep the official money rate at 5.5%, but nine predict it will start the easing cycle. Further supporting the case for policy easing was the RBNZ’s survey of inflation expectations, which showed the lowest level of expectations in more than three years. A rate cut would result in a weaker New Zealand dollar. If policymakers decide not to cut rates, they are expected to open the door for a move to the two remaining 2024 decisions. However, it will give the New Zealand dollar an advantage over other currencies, where central banks have already started a downward cycle (EUR, GBP, CAD).

S&P 500 (US500) 5,344.39 +0.23 (+0.0043%)

Dow Jones (US30) 39,357.01 −140.53 (−0.36%)

DAX (DE40) 17,726.47 +3.59 (+0.02%)

FTSE 100 (UK100) 8,210.25 +42.15 (+0.52%)

USD Index 103.13 −0.01 (−0.01%)

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
• – Australia Wage Price Index (q/q) at 04:30 (GMT+3);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US FOMC Member Bostic Speaks at 20:15 (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

On Friday, the Dow Jones (US30) was up 0.13% (for the week+1.17%), while the S&P 500 (US500) was up 0.47% (for the week+3.75%). The NASDAQ Technology Index (US100) closed positive 0.51% (for the week+6.57%). That day, all sectors ended trading in positive territory except for commodities. Notable highlights included Expedia, whose shares rose by 10.2% after the company reported second-quarter results that beat expectations.

Canada’s unemployment rate remained unchanged at 6.4%, the highest in two and a half years. While the data came in slightly below market expectations, it did indicate a weakening labor market. The cooling labor market, as well as the continued contraction of the manufacturing sector and sluggish economic growth, further fueled expectations of further rate cuts by the Bank of Canada (BoC).

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) rose by 0.24% (for the week +1.13%), France’s CAC 40 (FR40) closed 0.31% higher (for the week +2.40%), Spain’s IBEX 35 (ES35) added 0.76% (for the week +2.26%), and the UK’s FTSE 100 (UK100) closed 0.28% higher (for the week -0.08%).

Norway’s annualized consumer inflation rate rose to 2.8% in July 2024 from a three-and-a-half-year low of 2.6% in June, which is in line with market expectations. This increases the likelihood that Norway’s Central Bank (Norges Bank) will leave rates unchanged at this week’s meeting.

European natural gas futures are trading near an 8-month high of €40/MWh. They are on track for a 9% weekly gain, driven by concerns over the stability of gas supplies after Ukrainian troops took control of the Suja gas transportation station in Russia’s Kursk region. Despite ongoing conflicts around this key transit point, Russian gas continues to flow through Ukraine. As the gas transit agreement expires at the end of the year, any early disruption could have a significant impact on Central European countries that depend on these supplies.

Oil prices rose last week as comments from Fed officials about the possibility of a rate cut as early as September eased demand concerns, while fears of widening conflict in the Middle East continue to increase supply risks. For the week, Brent crude rose more than 3.5% and WTI crude rose more than 4%. Concerns about the prospect of recession have subsided, boosting the demand outlook.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 0.64%, China’s FTSE China A50 (CHA50) declined by 0.18%, Hong Kong’s Hang Seng (HK50) gained 2.48% over 5 trading days, and Australia’s ASX 200 (AU200) was negative 2.08%.

In New Zealand, investors await the RBNZ’s decision on Wednesday. The Central Bank is expected to keep its monetary rate unchanged at 5.5% for the ninth consecutive time, although concerns about the economy’s strength remain. The latest data showed New Zealand’s unemployment rate rose less than estimated in the second quarter. However, inflation expectations fell to three-year lows in the third quarter, bolstering the case for a rate cut.

The offshore yuan weakened to 7.18 per dollar as traders await the release of key economic data from China. Traders are eagerly awaiting data on outstanding loan growth, new yuan loans and M2 money supply for the year to be released today. Industrial production, retail sales, and unemployment rate data are also expected later in the week. This expectation follows last week’s reports that showed an unexpected acceleration in China’s annual inflation rate, which beat market expectations and reached the highest level since February.

S&P 500 (US500) 5,344.16 +24.85 (+0.47%)

Dow Jones (US30) 39,497.54 +51.05 (+0.13%)

DAX (DE40) 17,722.88 +42.48 (+0.24%)

FTSE 100 (UK100) 8,168.10 +23.13 (+0.28%)

USD index 103.15 −0.06 (−0.05%)

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.