North American News
U.S. Indices Surge as Lower PPI Data Fuels Optimism Ahead of CPI Release
Market Overview: U.S. stock indices ended the day on a high note, driven by lower-than-expected Producer Price Index (PPI) data, which boosted investor confidence. The Nasdaq led the charge with a substantial gain of over 400 points, marking a 2.43% increase. Investors now turn their attention to tomorrow’s Consumer Price Index (CPI) report, which is anticipated to provide further insight into inflation trends.
Key Developments:
- PPI Data Impact: The PPI data, which came in lower than expected, provided a positive catalyst for the markets. While the PPI doesn’t directly translate to CPI, it does have some crossover with the Personal Consumption Expenditures (PCE) index, which will be released later this month.
- CPI Expectations: Tomorrow’s CPI is expected to show a 0.2% increase, following a -0.1% surprise decline last month. The year-on-year CPI is forecasted to remain steady at 3.0%, while the Core CPI is expected to edge down slightly to 3.2% from 3.3%. Although these figures are above the Federal Reserve’s 2% target, the upcoming months could see a downward trend as larger gains from 2023 drop out of the calculations.
Market Performance:
- Dow Jones Industrial Average: +408.63 points (+1.04%) to 39,765.63
- S&P 500 Index: +90.06 points (+1.69%) to 5,434.44
- Nasdaq Composite: +407.00 points (+2.43%) to 17,187.61
- Russell 2000: +33.11 points (+1.61%) to 2,095.19
Sector Highlights:
- Information Technology: The standout performer, surging by 3.00%, driven by strong gains in semiconductor stocks.
- Consumer Discretionary: Rose by 2.42%, reflecting investor confidence in consumer spending.
- Energy: The only sector to post a loss, down 1.02%, as oil prices declined.
Top Individual Performers:
- Nvidia: +6.4%
- Intel: +5.73%
- Tesla: +5.26%
- Broadcom: +5.18%
- First Solar: +5.04%
- Super Micro Computers: +4.89%
- Qualcomm: +4.06%
Magnificent 7 Overview:
- Meta: +2.44%
- Apple: +1.72%
- Amazon: +2.06%
- Alphabet: +1.15%
- Microsoft: +1.77%
Summary: U.S. indices rallied across the board, with the Nasdaq leading the way, thanks to encouraging PPI data that sparked optimism ahead of the crucial CPI release. The technology sector, in particular, saw significant gains, buoyed by strong performances from major tech stocks. As investors brace for the CPI report, the focus remains on inflation trends and their potential impact on Federal Reserve policy decisions.
US PPI Final Demand MoM 0.1% vs 0.2% estimate. YoY 2.2% vs 2.3% estimate
- US PPI for July
- Prior month 2.6% YoY revised to 2.7%
- Ex Food and energy MoM 0.0% vs 0.2% estimate
- Ex Food and energy YoY 2.4% vs 2.7% estimate. Prior month 3.0%
- Ex Food and Energy/Trade 3.3% vs 3.2% (revised from 3.1%
- Ex Food and Energy/Trade MoM 0.3% vs 0.1% last month (revised from 0.0%)
Final Demand for good and services
- Good +0.6%. This was the largest increase since 1.1% in February. Nearly 60% can be attributed to energy which moved up 1.9%
- Services -0.2%. This was a largest decline since March 2023. The decline can be attributed to final demand for trade services which fell -1.3%
Final Demand Goods
- Prices increased 1.0% over the year.
- Final demand foods increased 1.1%.
- Final demand energy decreased 1.4%.
- Final demand goods less foods and energy increased 1.8%.
Final Demand Services
- Prices increased 3.5% over the year.
- Trade services prices increased 2.7%.
- Transportation and warehousing services prices were nearly unchanged at 0.2%.
- Services less trade, transportation, and warehousing increased 4.2%.
Final Demand Construction
- Prices decreased 0.6% over the year.
The data should be good for the PCE data released later this month (some components feed into the PCE. The CPI data will be released tomorrow. Today’s data does not necessarily influence the CPI data.
US July NFIB small business optimism index 93.7 vs 91.5 prior
- Latest data released by NFIB – 13 August 2024
That’s the highest reading since February 2022 but it still sits below the 50-year average of 98. That’s the 31st straight month that it holds below said threshold now. Looking at the details, much of the improvement owes to a jump in the Expected Business Conditions component (+1.8) though while most other components were relatively unchanged.
Goldman Sachs sees July US core CPI slightly below estimates
- Goldman economists see core CPI up 0.16%
The US CPI report is due out on Wednesday and it should add to the case that price pressures are no longer a market preoccupation.
Goldman Sachs is out with its estimate of core CPI, which they peg at 0.16%, below the 0.2% unrounded consensus. They continue to see a decline in core goods, which are forecast down 0.11% m/m but that’s counteracted by services, up 0.23%. The main driver of that is owners’ equivalent rent, which is seen up 0.29% along with hotel prices up 0.50%.
Another driver is car insurance, which has made headlines for some eye-watering renewal rates hitting Americans. They saw there is still some catch-up working its way through the numbers and they see a 0.7% rise.
Atlanta Fed Pres. Bostic: Recent inflation data give me more confidence we can get back to 2%
- Fed’s Bostic is speaking
- Balance of risks in economy is getting back to level
- Our rate posture is restrictive
- That’s not where we want it to be forever
- Recent inflation data give me more confidence we can get back to 2%.
- We need to see a little more data
- We need to make sure inflation trend is real
- It would be really bad if we cut rates and then had to raise them again.
- I am willing to wait for first rate cut but it is coming.
- If economy evolves as I expect, there would be a rate cut by the end of the year.
- Housing inflation has come down in an important way, the last couple of months.
- Unemployment rate in the grand scheme of things is still historically low.
- Still a strong solid labor market.
- But we need to make sure we don’t go from a heart labor market to a freezing cold one.
- contact don’t tell me there are many layoffs, if that continues will be in a good place.
- Recession not in my Outlook
- Labor market can slow but without considerable concern
Reuters poll: US 10 year treasury note yield to rise to 4.03% in three months
- Reuters poll sees higher yields from current levels
- The US 10-year yield to rise to 4.03% in three months. At the last poll the expectation was 4.25% (rates were higher at the time). The current 10 year yield is at 3.861%
- US 2-year yield to rise to 4.20% in 3 months. Last month, the expectation was for the yield to reach 4.50%. The current 2 year yield is at 3.960%
Commodities
Crude Oil Futures Slide to $78.35, Decline of 2.14%
Crude oil futures ended the day at $78.35, marking a drop of $1.71 or 2.14%. The intraday high was $80.11, nearly hitting the 100-day moving average, where selling pressure emerged. With the 200-day moving average now at $77.91, a decline below this level could shift control further into the sellers’ hands.
Share of Russian material in LME stocks falls for Nickel and Copper and rises for Aluminium – Commerzbank
Meanwhile, concentration is falling elsewhere: according to LME statistics, the share of Nickel stocks of Russian origin fell from 27% at the end of June to 24% at the end of July, and from 27% to 21% for Copper, Commerzbank’s commodity analyst Barbara Lambrecht notes.
Share of Russian Aluminium in LME stocks rises
“However, the main reason for this was an increase in stocks from other sources – probably also thanks to newly approved types of Nickel in Indonesia and China, while stocks of Russian material hardly changed following the tightening of sanctions in April.”
“The opposite is true for the more closely monitored Aluminium stocks: although stocks of Russian origin also hardly changed in July, Aluminium stocks of other origins registered on the LME fell, meaning that the proportion rose from 50% to 65%. The reduction in stocks occurred in particular for Aluminium from India, where there had been a significant build-up in May.”
IEA makes no change to 2024 world oil demand growth forecast in latest report
- But they trim the outlook for 2025, saying that weak growth in China is weighing
- 2024 world oil demand growth forecast unchanged at 970k bpd
- 2025 world oil demand growth forecast seen at 950k bpd (previously 980k bpd)
- Chinese oil demand has contracted for third consecutive month
- Weak growth in China now significantly dragging on global gains
- OPEC+ cuts are tightening physical markets
- Could see a supply deficit as US summer driving season is set to be strongest since the pandemic
EU News
European indices close higher
- Gains led by Spain today
The European indices are dragged higher by the US stocks, but gains are more subdued.
Closing numbers:
- German DAX, +0.48%
- France CAC +0.35%
- UK FTSE 100 +0.30%
- Spain’s Ibex +0.73%
- Italy’s FTSE MIB +0.24%
The ZEW economic sentiment indicators in Germany came in much weaker than expectations.
Germany August ZEW survey current conditions -77.3 vs -75.0 expected
- Latest data released by ZEW – 13 August 2024
- Prior -68.9
- Outlook 19.2 vs 32.0 expected
- Prior 41.8
Spain July final CPI +2.8% vs +2.8% y/y prelim
- Latest data released by INE – 13 August 2024
- Prior +3.4%
- HICP +2.9% vs +2.9% y/y prelim
- Prior +3.6%
UK June ILO unemployment rate 4.2% vs 4.5% expected
- Latest data released by ONS – 13 August 2024
- Prior 4.4%
- Employment change 97k vs 3k expected
- Prior 19k
- Average weekly earnings +4.5% vs +4.6% 3m/y expected
- Prior +5.7%
- Average weekly earnings (ex bonus) +5.4% vs +5.4% 3m/y expected
- Prior +5.7%
- July payrolls change 24k
- Prior 16k; revised to 14k
Asia-Pacific-World News
PBOC sets yuan midpoint at 7.1479 vs 7.1744 at the last close
- The latest midpoint
- 7.1479 versus the previous fix at 7.1458
July Australia NAB business conditions +6 vs +4 prior
- July business conditions from the National Australia Bank
- Prior was +4
- Business confidence +1 vs +4 prior
Australia Q2 wage price index +0.8% vs +0.9% expected
- The second quarter wage price index from Australia
- Prior was +0.8%
- Wage price index y/y +4.1% vs +4.0% expected
- Prior was +4.1% y/y
New Zealand June net migration 2710 vs 1410 prior
- New Zealand migration and visitors data for June
- Prior was 1410 (revised to 3430)
- Overseas visitors change y/y +3.8% vs +12.1% prior
Japanese June PPI +3.0% y/y vs +3.0% expected
- Japan June 2024 corporate goods price index
- Prior was +2.9%
- Prices +0.3% m/m vs +0.3% expected
- Prior m/m +0.2%
Japan parliament to hold a special session to discuss Bank of Japan rate hike
- Lower House will hold a special session on August 23
The Japanese Lower House will hold a special session and likely ask BOJ Governor Ueda to attend, according to sources cited by Reuters.
Cryptocurrency News
Ethereum Faces Potential Drop if It Can’t Break Crucial Trendline Amid Ongoing Investor Buying Spree
Market Overview: Ethereum (ETH) is showing mixed signals as it attempts to stabilize following recent fluctuations. While investor accumulation supports a bullish outlook, technical indicators suggest that ETH could face a significant decline if it fails to break through a critical trendline.
Key Developments:
- ETF Flows: Ethereum ETFs experienced a net inflow of $5 million on Monday, marking a shift from the recent outflow trend. This includes minor inflows into Fidelity’s FETH and Bitwise’s ETHW, while VanEck’s ETHV recorded its first outflows.
- Investor Accumulation: Increased outflows from Ethereum exchanges and a decrease in exchange reserves highlight continued investor accumulation. Since August 5, there has been a net outflow of over 306,000 ETH, with exchange reserves dipping to a one-month low of 16.8 million ETH.
Technical Outlook:
- Trendline Resistance: Ethereum faces a crucial technical hurdle with a key trendline that has historically provided resistance. If ETH fails to overcome this trendline, it risks a potential decline of up to 25%, approaching the psychological level of $2,000.
- Bullish Potential: Despite the risk of a decline, the ongoing accumulation and declining exchange reserves suggest that there is significant buying pressure. This could provide support and potentially mitigate a severe drop if the technical resistance is breached.
Daily Market Movers:
- ETF Activity: Grayscale Ethereum Trust (ETHE) halted its streak of outflows, marking a positive development for ETH ETFs. This comes alongside notable inflows into other Ethereum-focused ETFs, indicating a shift in investor sentiment.
- On-Chain Metrics: The net exchange outflows and reduced ETH reserves indicate an ongoing accumulation trend, suggesting that investors are positioning for a potential price rally.
Summary: Ethereum’s technical indicators and ETF flows present a complex picture. While the risk of a 25% decline looms if ETH fails to break through key trendline resistance, the ongoing accumulation and declining exchange reserves offer some bullish support. The interplay of these factors will be crucial in determining ETH’s price direction in the coming weeks.
Ripple Makes Steady Gains as XRP On-Chain Metrics Turn Bullish
Market Overview: Ripple’s XRP is showing promising signs of recovery, with the token gaining ground following recent developments. XRP extended its gains to $0.57, with potential for a 10% rally towards $0.63 if bullish momentum continues.
Key Developments:
- SEC Lawsuit Ruling: The conclusion of the SEC lawsuit against Ripple has contributed to market optimism. XRP has managed to hold above the critical support level of $0.57 as traders process the ruling.
- Stablecoin Testing: Ripple has begun private beta testing for its stablecoin, RippleUSD (RUSD), signaling ongoing innovation despite the regulatory scrutiny. The token is currently not available for trading pending regulatory approval.
On-Chain Metrics:
- Supply on Exchanges: According to Santiment, XRP’s supply on exchanges is steadily declining. This reduction in available tokens for sale is indicative of diminished selling pressure, suggesting potential upward price movement.
- Whale and Retail Activity: Large XRP holders have reduced their token holdings, while retail investors have been accumulating since the recent market crash. This shift in supply dynamics supports the bullish outlook for XRP.
Technical Outlook:
- Resistance Levels: XRP is approaching resistance levels and aiming for a 10% increase to $0.63. The bullish scenario hinges on the continuation of the current upward trend and overcoming key technical hurdles.
Summary: XRP is demonstrating strong bullish potential, supported by positive on-chain metrics and significant developments in Ripple’s ecosystem. The decline in XRP supply on exchanges and the accumulation by retail traders, combined with Ripple’s stablecoin innovation, points to a constructive outlook for the token in the near term.
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