Round up of today’s market news

North American News

Tech and Small Caps Drive Market Higher; Nasdaq and Russell 2000 Lead the Charge

The closing bell saw the Nasdaq and Russell 2000 indices leading the market higher, with tech and small-cap stocks driving significant gains. Both indices rose by approximately 1.6% today, while the Dow lagged after a strong performance last week. The Nasdaq and Russell 2000’s performance highlights a shift from large-cap tech stocks to small-cap equities.

Key Points:

1. Market Performance:
   • Dow Jones Industrial Average: Up 127.91 points (+0.32%) at 40,415.45.
   • S&P 500 Index: Up 59.41 points (+1.08%) at 5,564.40.
   • NASDAQ Index: Up 280.63 points (+1.58%) at 18,007.57.
   • Russell 2000: Up 36.30 points (+1.66%) at 2,220.64.
2. Sector Performance:
   • Tech sector and small-cap stocks saw notable gains.
   • The Russell 2000 outperformed the Nasdaq last week, reflecting a rotation from high-cap tech to small-cap stocks.
3. Notable Gainers:
   • Nvidia: +4.76%
   • Meta Platforms: +2.23%
   • Alphabet: +2.26%, ahead of earnings report on Tuesday after market close.
   • Microsoft: +1.33%
   • Tesla: +5.15%, with earnings scheduled for after market close tomorrow.
   • AMD: +2.83%

Today’s market movement underscores a strong performance in the tech and small-cap sectors, with investors closely watching upcoming earnings reports for further direction.

United States 6-Month Bill Auction

• Actual: 4.990%
• Previous: 4.985%

United States 3-Month Bill Auction

• Actual: 5.190%
• Previous: 5.195%

United States Chicago Fed National Activity (Jun)

• Actual: 0.05
• Expected: -0.09
• Previous: 0.23

Verizon $VZ

• EPS. vs Forecast
• 1.15 / 1.15

• Rev. vs Forecast
• 32.8B / 33.05B

Market Cap: 175.19B

Federal Open Market Committee blackout period began on the weekend

The ‘blackout’ policy from the Federal Reserve limits the extent to which Federal Open Market Committee participants and staff can speak publicly or grant interviews. The period begins the two Saturdays preceding a Federal Open Market Committee (FOMC) meeting and ends the Thursday following the decision (decisions are always on Wednesdays).

VP Harris: Biden’s legacy of accomplishment is unmatched in modern history

• Biden is feeling better
• Legacy of Biden accomplishment is unmatched in modern history

As things stand

Meanwhile, billionaire Michael Bloomberg is putting support behind the Dems and says: Democrats now have a chance for fresh start, have four weeks to take pulse of the voters before the convention starts.

Initial thoughts that WV Sen. Manchin would make a run toward the White House, has died down. Today he said:

• “I am not running for office,” Manchin told “CBS Mornings” Gayle King.
• Earlier on CNN “This Morning,” he told host Kasie Hunt “people are pushing in that direction” when asked if he was seeking the nomination.

Michigan Governor Whitmer has endorsed Harris for Pres, saying she will serve as co-chair of Harris campaign.

Whitmer was elected to serve as Michigan’s 49th Governor in 2018 and then won re-election in 2022, defeating Republican Tudor Dixon by nearly 11 points.

Whitmer is a potential Vice President running mate. Michigan is a key battleground state, along with Wisconsin, Ohio, Pennsylvania, in the Rust Belt which will make or break the Presidential election. Other key states for 2024 include NC, Georgia, and Arizona.

ICYMI: BIDEN, 81, PULLS OUT OF PRESIDENTIAL RACE

U.S. President Joe Biden ended his re-election campaign on Sunday after fellow Democrats lost faith in his mental acuity and ability to beat Donald Trump, leaving the presidential race in uncharted territory.

Commodities

Gold Prices Slide for Fourth Consecutive Day Amidst Political and Economic Shifts

Gold prices have fallen for the fourth straight day, trading at $2,397, down 0.14%. The decline comes amidst political uncertainty following President Joe Biden’s exit from the presidential race and his endorsement of Vice President Kamala Harris. This shift has created uncertainty in the markets and has undermined gold’s safe-haven appeal.

Key Points:

1. Gold Price Trends:
   • Gold is trading at $2,397, extending its losses for the fourth day.
   • The price remains near $2,400 but is pressured by rising US Treasury bond yields.
2. Political Developments:
   • President Biden’s decision to exit the presidential race and endorse Vice President Kamala Harris has introduced political uncertainty.
   • The endorsement positions Harris to compete against former President Donald Trump in the November 5 elections.
3. Market Reactions:
   • Wall Street has opened positively following Biden’s announcement.
   • The US Dollar Index remains steady at 104.34.
4. Upcoming Economic Data:
   • Durable Goods Orders: Expected to rise from 0.1% to 0.4% MoM.
   • Q2 GDP: Forecasted to increase from 1.4% to 1.9% QoQ, suggesting economic acceleration.
   • Core PCE: Anticipated to dip from 2.6% to 2.5% YoY, indicating a potential easing of inflation.
5. Market Expectations:
   • Recent CPI data indicates a continuation of disinflation, which has previously boosted gold prices.
   • The December 2024 fed funds rate futures contract suggests a policy easing by 48 basis points by year-end, down from 50 basis points last Friday.

Gold traders are closely watching these economic indicators and political developments, as they could influence future movements in gold prices.

Crude oil futures settle at $79.78

• Settles down $0.35 or -0.44%

Crude oil futures settled at $79.78. That’s down $0.35 or -0.44% The low today reached $77.55. The high price was at $79.13.

Base metals trade downwards – TDS

Now is not the time to kick off supercycle trades. The breakdown in base metals is intensifying as commodity demand sentiment plummets, TDS senior commodity strategist Daniel Ghali notes.

Aluminum and Copper turn to the downside

“LME Aluminum is now likely to come under additional pressure as CTA selling activity mounts with algos now starting to build up a notable net short position. We expect trend followers to sell an additional -15% of their max size as trend signals continue to deteriorate, with some scope for additional selling activity shortly below current prices.”

“While Copper’s plunge is consistent with fundamentals, the Red Metal’s descend has been aided by the export arbitrage weighing on bullish spec positions, defying expectations for the supercycle to buoy prices to stratospheric heights.”

EU News

European stocks rally at session close

• Major European indices end with gains led by Germany’s DAX

The major European indices are closing the session with gains. The gains are led by the German DAX which closed up 1.35% on the day.

A snapshot of the closing levels shows:

• German DAX, +1.35%
• France CAC, +1.18%
• UK FTSE 100 +0.62%
• Spain’s Ibex +0.59%
• Italy’s FTSE MIB +1.12%

France French 12-Month BTF Auction

• Actual: 3.341%
• Previous: 3.355%

France French 3-Month BTF Auction

• Actual: 3.576%
• Previous: 3.602%

France French 6-Month BTF Auction

• Actual: 3.540%
• Previous: 3.537%

Switzerland M3 Money Supply (Jun)

• Actual: 1,138,129.0B
• Previous: 1,135,611.0B

SNB total sight deposits w.e. 19 July CHF 461.3 bn vs CHF 458.9 bn prior

• Latest data released by the SNB – 22 July 2024
• Domestic sight deposits CHF 452.9 bn vs CHF 450.3 bn prior

Bundesbank calls for rate cuts to be “carefully considered” as inflation risk persists

• The German central bank comments in its monthly report

• Some of the factors supporting the economy are making it more difficult to achieve inflation target
• The labour markets is still operating at a high capacity
• Wage growth is brisk and prices are rising strongly, particularly in the services sector
• Possible further interest rate cuts should therefore be carefully considered in light of current data

ECB’s Kažimír: Market pricing of two rate cuts by year-end is not entirely misplaced

• But Kažimír also says that such pricing isn’t a given at the moment

• No need to rush decisions
• Data will set the stage for September decision
• The door remains open to additional easing should conditions warrant it

Asia-Pacific-World News

Nvidia reportedly working on version of new flagship AI chip just for Chinese market

• That will make it compatible with current US export controls, according to Reuters

The report cites three sources familiar with the matter. And it pertains to Nvidia’s “Blackwell” chip series, which was unveiled during March. The chip is due to be mass produced later this year with the sources saying Nvidia will work with Inspur, who is one of the firm’s major distributors in China, on the launch and distribution of the chip. It is currently tentatively named the “B20” chip.

For some context, this should mirror the “B2000” chip within the “Blackwell” series – which is believed to be 30 times faster than the series before it when delivering on tasks such as serving up answers from chatbots. The move by Nvidia here comes as the US has tightened export controls of cutting-edge semiconductors to China since last year.

PBOC lowers standing lending facility rates by 10 bps

• This will apply across all maturities, as announced by China’s central bank

This continues with their moves from earlier.

China cuts 1 and 5 year loan prime rates by 10 basis points each

• The PBOC earlier cut the 7-day repo rate and also loosened MLF collateral requirements

The People’s Bank of China has cut one- and five-year loan primce rates.

The one-year rate has been cut to 3.35%

• prior 3.45%

The five-year rate has been cut to 3.85%

• prior 3.95%

PBOC sets USD/ CNY reference rate for today at 7.1335 (vs. estimate at 7.2624)

• PBOC CNY reference rate setting for the trading session ahead

In open market operations:

• PBOC injects 58.2bn via 7-day RR, sets rate at 1.7% (this is the new rate announced earlier, from 1.8%)

PBOC to lower collateral for Medium-term Lending Facility (MLF) loans

• People’s Bank of China easing continues

• To lower collateral requirements for medium term lending facility loans from july
• The move is meant to increase the size of tradable bonds in the market
• Move is to alleviate pressure on supply and demand of bonds in the market

PBoC announces cut to 7-day reverse repo rate

• Will strengthen counter-cyclical adjustment to better support the real economy

People’s Bank of China has cut its interest rate for the 7-day reverse report to 1.7% from 1.8%

• PBOC will strengthen the counter-cyclical adjustment to “better support the real economy”

Trouble for China hedge funds? Reuters: Brace for upheaval from tough new rules

• Obvious implications for China asset markets

Reuters with the info:

In brief:

• China’s $715 billion hedge fund industry is facing renewed pressure from stringent regulations coming into effect next month, forcing some investment firms to seek fresh capital from white knights or even shut shop.
• New guidelines for the fragmented industry from Aug. 1 will impose higher asset thresholds for funds to operate, and also stricter norms for their investments and marketing.
• Nearly 300 such funds out of the more than 8,000 in China have already terminated business so far this year

More at that link above

New Zealand trade balance surplus for June (MoM)

• Still a deficit on the year
• Actual: 699M
• Expected: 294M
• Previous: 54M

New Zealand Trade Balance (YoY) (Jun)

• Actual: -9,400M
• Previous: -10,210M

New Zealand Exports (Jun)

• Actual: 6.17B
• Previous: 7.00B

New Zealand Imports (Jun) $NZD

• Actual: 5.47B
• Previous: 6.94B

Hong Kong CPI (YoY) (Jun)

• Actual: 1.50%
• Previous: 1.20%

Hong Kong CPI (MoM) (Jun)

• Actual: 0.50%
• Previous: -0.20%

JAPAN’S BUDGET REQUEST TO EXCEED $698 BILLION FOR FOURTH STRAIGHT YEAR, DRAFT SHOWS

Japanese ministries’ budget demand for the next fiscal year is likely to exceed 110 trillion yen ($698 billion) for the fourth straight year, according to a government draft seen by Reuters, as expected interest rate hikes boost debt-servicing costs.

JAPAN RULING PARTY EXECUTIVE URGES BOJ TO CLARIFY RATE-HIKE RESOLVE, NIKKEI SAYS

The Bank of Japan should more clearly indicate its resolve to normalise monetary policy, including through steady interest rate hikes, senior ruling party official Toshimitsu Motegi was quoted as saying by the Nikkei newspaper on Monday.

Cryptocurrency News

Explosive Week Ahead for Ethereum: ETFs Launch, Bitcoin Conference, and Market Inflows

Ethereum (ETH) is poised for a potentially explosive week due to a series of significant events and market developments. With the launch of several Ethereum Exchange-Traded Funds (ETFs) scheduled for Tuesday and the Bitcoin 2024 Conference set to begin on July 25, bullish sentiment is building among investors. Despite a minor dip in ETH’s price on Monday, the combination of these events could drive a substantial rally for Ethereum.

Key Points:

1. Ethereum ETFs Launch:
   • Spot Ethereum ETFs are set to go live on Tuesday.
   • The SEC is expected to finalize updates on these products today.
   • NYSE Arca has confirmed approvals for Grayscale Ethereum Trust and Bitwise Ethereum ETF listings.
   • Cboe announced the launch of Fidelity Ethereum Fund, Franklin Ethereum ETF, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and 21Shares Core Ethereum ETF.
2. Bitcoin 2024 Conference:
   • Starts on July 25, coinciding with the Ethereum ETFs launch.
   • Republican nominee Donald Trump will discuss a potential US Bitcoin strategy.
   • A Bitcoin rally is anticipated, potentially boosting Ethereum due to their positive correlation.
3. Market Inflows and Investor Sentiment:
   • Ethereum investment products saw $45 million in inflows last week, bringing the year-to-date net flows to $103 million.
   • Analysts from Bitwise and Galaxy predict $3 billion to $5 billion in inflows for ETH ETFs within the first six months of their launch.

With these developments on the horizon, Ethereum traders and investors are closely watching for potential market movements, despite some uncertainty. The convergence of these events makes this week a critical period for Ethereum’s market performance.

Ripple CEO Anticipates Lawsuit Resolution, XRP Trades Around $0.60

Ripple CEO Brad Garlinghouse has expressed optimism about a potential resolution to the ongoing SEC lawsuit. In a recent Bloomberg interview, Garlinghouse hinted that a settlement could be imminent, sparking significant interest among XRP traders. The cryptocurrency has been trading around the key psychological level of $0.60, sustaining over 21% gains from the past week.

Key Points:

1. Lawsuit Resolution Anticipated:
   • Brad Garlinghouse expects the lawsuit with the SEC to end soon.
   • During a Bloomberg interview, he indicated that a private meeting with the SEC on July 25 could lead to a settlement.
2. XRP Market Performance:
   • XRP is trading around $0.60, maintaining significant gains from the past week.
   • The altcoin recently achieved its highest weekly gain of 2024, over 40%, and has sustained nearly 21% of these gains.
3. Impact of SEC Lawsuit and Bitcoin Trends:
   • The lawsuit and Bitcoin price trends have been key market movers for XRP in July.
   • The correlation between Bitcoin and XRP is moderate at 0.67.
4. Comments from Ripple CEO:
   • Garlinghouse emphasized that XRP is not a security in secondary-market sales or across exchange platforms, as upheld by Judge Analisa Torres.
   • He criticized SEC Chair Gary Gensler for worsening the regulatory situation over the past five years.
   • Despite not being able to comment directly on the settlement, Garlinghouse was quoted saying, “we can expect a resolution soon.”

XRP traders are closely monitoring the upcoming private meeting with the SEC, hopeful for a positive outcome that could bring much-needed regulatory clarity and potentially boost XRP’s market performance further.

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