InvestMacro

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.

By JustMarkets 

On Tuesday, US stocks traded mixed: the Dow Jones Index (US30) gained 0.24%, while the S&P 500 Index (US500) rose 1.28%. The NASDAQ Technology Index (US100) closed positive 2.64%. Stocks soared to highs when Fed Chair Powell said that upside risks to inflation have diminished due to a cooling labor market and a Fed rate cut “could be” at the September FOMC meeting. The FOMC, as expected, left the target federal funds rate unchanged at 5.25%–5.50% and said it was not going to cut interest rates “until it has more confidence that inflation is moving steadily toward 2%.” However, the FOMC changed its statement after the meeting, saying it was “closely monitoring the risks to both sides of its dual mandate” instead of emphasizing only inflation risks.

Wednesday’s flurry of bullish news also contributed to a surge in shares of chip companies. Shares of Nvidia (NVDA) rose more than 12% after Morgan Stanley called it the best-performing stock in the US and said the recent selloff has opened up a good entry point. Also, shares of ASML Holding NV rose more than 8% after Reuters reported that the Biden administration plans to exempt chip equipment makers in Japan, the Netherlands, and South Korea from upcoming export restrictions. Additionally, Advanced Micro Devices (AMD) rose more than 7% after unveiling an optimistic revenue outlook. This week, companies such as Meta (META) will report after the close on Wednesday, while Apple (AAPL) and Amazon (AMZN) will report on Thursday. Nvidia (NVDA) is expected to report earnings on August 28.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.53%, France’s CAC 40 (FR40) closed higher by 0.73%, Spain’s IBEX 35 (ES35) fell by 1.23%, and the UK’s FTSE 100 (UK100) closed positive 1.13%.

According to economists, the Bank of England is set to begin its easing cycle today, cutting its key benchmark rate by 25 bps to 5% from a 16-year high of 5.25%. However, the decision will not be a clear-cut one, as many investors believe the Central Bank may prefer to keep rates unchanged due to concerns over inflation. Core inflation was unchanged at 2% in June, remaining at its lowest level since 2021. Services inflation, however, was strong at 5.7%, beating the Bank of England’s estimate of 5.1%. Meanwhile, unemployment remained at 2021 levels, and wage growth, although slowing, was still strong. The Bank of England will also unveil new growth and inflation prognoses.

WTI crude oil prices rose to $78.7 a barrel on Thursday, extending gains after a more than 4% jump in the previous session, amid continued concerns over possible supply disruptions due to the growing threat of wider conflict in the Middle East. Hamas leader Ismail Haniyeh was killed in Tehran early Wednesday after Israel said an airstrike on Beirut on Tuesday killed Hezbollah’s top commander. Iran vowed revenge, saying Israel would “pay a heavy price.” Meanwhile, EIA data showed a larger-than-expected 3.43 million barrel decline in US crude oil inventories, well above market expectations for a 1.6 million barrel decline and extending a similarly large drop in inventories the previous week, marking the fifth consecutive decline in inventories.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 1.49%, China’s FTSE China A50 (CHA50) climbed 1.64%, Hong Kong’s Hang Seng (HK50) gained 2.01%, and Australia’s ASX 200 (AU200) was positive 1.75%. The Nikkei 225 Index (JP225) was down 2.49% at the market open today, and the broader Topix Index was down 3.24%, wiping out gains from the previous session as the Bank of Japan raised its discount rate to 0.25% and said it is willing to raise it further if the economy demands it. Markets are betting on two more rate hikes this fiscal year, which ends in March 2025, with the next rate hike coming in December.

The S&P Global Vietnam Manufacturing PMI for July 2024 stood at 54.7, remaining at its highest level since May 2022. New orders rose for the fourth consecutive month, but the pace of growth is slightly slower than the near-record pace in June. New export orders also increased, albeit at a much lower rate compared to total new orders. As a consequence, manufacturers increased output at the second-highest rate on record. On the price side, input cost inflation was only slightly weaker than the two-year high last month, pushing up input costs for the third consecutive time.

S&P 500 (US500) 5,522.30 +85.86 (+1.58%)

Dow Jones (US30) 40,842.79 +99.46 (+0.24%)

DAX (DE40) 8,508.65 +97.47 (+0.53%)

FTSE 100 (UK100) 8,367.98 +93.57 (+1.13%)

USD Index 104.02 −0.54 (−0.51%)

• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Australia Trade Balance (m/m) at 04:30 (GMT+3);
• – German Manufacturing PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
• – UK BoE Interest Rate Decision (m/m) at 14:00 (GMT+3);
• – UK BoE Monetary Policy Statement (m/m) at 14:00 (GMT+3);
• – UK BoE Gov Bailey Speaks at 14:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – Canada Manufacturing PMI (m/m) at 16:30 (GMT+3);
• – US ISM Manufacturing PMI (m/m) at 17:00 (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.

By JustMarkets

US stocks traded mixed on Tuesday, with the Dow Jones (US30) Index up 0.50% and the S&P 500 (US500) Index down 0.50%. The NASDAQ Technology Index (US100) closed yesterday negative 1.28% and fell to an 8-week low. Stocks gave up early gains on Tuesday and traded mixed amid escalating geopolitical risks after the Israeli military struck a Hezbollah target in Beirut, threatening to widen conflict in the Middle East. A drop in shares of chip companies also pressured the broader market on Tuesday.

Tuesday’s US economic news was stronger than expected, hawking Fed policy and weighing on stocks. The S&P CoreLogic composite-20 US home price index for May rose 6.81% y/y, stronger than expectations of +6.60% y/y. The US June JOLTS open job openings fell by 46,000 to 8.184 million, showing a stronger labor market than expectations of 8.000 million.

The US Federal Reserve will hold its monetary policy meeting today. The Fed is expected to keep the federal funds rate at a 23-year high of 5.25-5.50% for the 8th consecutive meeting in July 2024. However, policymakers will likely signal a possible rate cut in September amid signs of cooling inflation and a strong but slowing labor market. Annualized core inflation fell to 3% in June, the lowest level since June 2023, and core inflation hit a more than three-year low of 3.3%.

Microsoft (MSFT) shares fell 2.7% after the disappointing news. The US tech major said Tuesday it will spend more money on artificial intelligence infrastructure even as growth in its cloud business slows, which is another sign that the return on big technology investments may take longer than Wall Street had hoped.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 0.49%, France’s CAC 40 (FR40) closed higher by 0.42%, Spain’s IBEX 35 (ES35) climbed 0.76%, and the UK’s FTSE 100 (UK100) closed negative 0.22% on Tuesday.

Airbus (AIR) reported strong results for the first half of 2024 on Tuesday. The company delivered 323 commercial airplanes, up from a year earlier, and boosted revenue to 28.8 billion euros. The company also reported an order book of 8,585 commercial aircraft at the end of June 2024. “The main success was achieved in Airbus’ commercial segment.

WTI crude prices rose to $76.2 a barrel on Wednesday, recovering from a more than 1% drop in the previous session, as rising tensions in the Middle East posed risks to oil supplies. Hamas leader Ismail Haniyeh was killed in Tehran early Wednesday after Israel said it had killed a top Hezbollah commander in an airstrike in Beirut on Tuesday in response to an attack on the Golan Heights over the weekend. At the same time, a drawdown in US inventories is driving prices higher. API data showed US crude inventories fell by 4.5 million barrels in the week ending July 26, marking the fifth week of inventory declines and the biggest drop in a month.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) was up 0.15%, China’s FTSE China A50 (CHA50) decreased by 0.93%, Hong Kong’s Hang Seng (HK50) lost 1.37% and Australia’s ASX 200 (AU200) was negative 0.46%. Hong Kong stocks rose by 1.5% in early trading on Wednesday amid widespread gains across all sectors. Traders perked up after Beijing said it would step up fiscal policy measures and deepen tax reforms to spur economic recovery.

The Bank of Japan (BoJ) raised its key short-term interest rate at its July 2024 meeting to 0.25% from the previous range of 0 to 0.1% set in March. The central bank added that it will reduce monthly bond purchases to JPY3 trillion in January-March 2026 from the current pace of JPY6 trillion to conduct a more normalized monetary policy. Starting in August, the BOJ will offer to buy JPY400 billion worth of 5 and 10-year JGBs in each transaction, reversing the current offer range of JPY400-550 billion. The changes are part of the central bank’s plan to shrink its nearly $5 trillion balance sheet and gradually withdraw from the bond market. In its quarterly forecast, the BOJ predicted core inflation in fiscal 2024 will be around 2.5%, down from its April forecast of 2.8%.

The ASX 200 Index (AU200) jumped 1.75% to close at 8,092 on Wednesday, hitting a new all-time high as softer-than-expected domestic inflation data refuted bets on another rate hike by the Reserve Bank of Australia. The data showed that Australia’s core inflation slowed more than expected in the second quarter annually and quarterly to 3.9% and 0.8%, respectively. Markets now believe that the probability of an RBA rate cut in November is around 50%, much earlier than previous forecasts that suggested a move by April next year.

S&P 500 (US500) 5,436.44 −27.10 (−0.50%)

Dow Jones (US30) 40,743.33 +203.40 (+0.50%)

DAX (DE40) 18,411.18 +90.51 (+0.49%)

FTSE 100 (UK100) 8,292.35 +6.64 (+0.08%)

USD Index 104.47 −0.09 (−0.09%)

• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – Australia Consumer Price Index (m/m) at 04:30 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – China Manufacturing PMI (m/m) at 04:30 (GMT+3);
• – China Non-Manufacturing PMI (m/m) at 04:30 (GMT+3);
• – Japan BoJ Monetary Policy Statement (m/m) at 07:00 (GMT+3);
• – Japan Interest Rate Decision (m/m) at 07:00 (GMT+3);
• – Japan Quarterly Outlook Report (m/m) at 07:00 (GMT+3);
• – German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
• – Canada GDP (m/m) at 15:30 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – US FOMC Statement (m/m) at 21:00 (GMT+3);
• – US Fed Interest Rate Decision (m/m) at 21:00 (GMT+3);
• – US Fed Press Conference (m/m) at 21:30 (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.