Round up of today’s market news

North American News

Dow Hits Record High Again; S&P and Nasdaq Show Modest Gains

Markets Edge Up with Focus on Upcoming Earnings Reports

The Dow Jones Industrial Average closed at a record level for the second consecutive day, marking a marginal gain of 0.02%. The S&P 500 and Nasdaq Composite also saw modest increases, rising by 0.16% each, following a decline on Monday.

Daily Market Summary:

• Dow Jones: Up 9.96 points (+0.02%) to 41,250.51
• S&P 500: Up 8.94 points (+0.16%) to 5,625.79
• Nasdaq Composite: Up 29.05 points (+0.16%) to 17,754.82
• Russell 2000: Down 14.92 points (-0.67%) to 2,202.99

Key Movers:

• Nvidia: Shares rose 1.46% ahead of their earnings report scheduled after the close tomorrow.
• Meta Platforms: Down 0.39%
• Apple: Up 0.37%
• Amazon: Down 1.36%
• Alphabet: Down 0.89%
• Microsoft: Up 0.08%
• Tesla: Down 1.88%

Upcoming Earnings Reports:

• Nvidia: Earnings announcement after the close tomorrow.
• Salesforce and Crowdstrike: Also reporting after the close.

Market Focus: The upcoming earnings reports from Nvidia, Salesforce, and Crowdstrike are set to be the major events influencing market sentiment. The mixed performance of the Magnificent 7 highlights ongoing volatility and sector-specific trends.

US 2-year note auction results 3.874% vs 3.880% WI

• Results of the $69 billion sale of 2-year notes

• Bid-to-cover ratio 2.68 vs 2.81 prior
• High yield 3.874%, vs presale WI yield 3.880%
• Awards 51.01% of bids at high
• Primary dealers take 11.93%
• Direct 19.11%
• Indirect 68.96%

Dallas Fed services sector outlook index -7.7 vs -0.1 prior

• The services sector outlook from the Dallas Fed

• Prior was -0.1
• Revenue index +8.7 vs +7.7 prior
• Employment +0.6 vs -0.2 prior
• Company outlook -3.1 vs +1.0 prior
• Six month index +12.4 vs +20.5 prior

Comments in the report:

Utilities

• I feel that a recession is going to hit the U.S.

Warehousing and storage

• Things are relatively stable, prices increasing but not at such a rapid pace that we have any undue concerns.

Publishing industries (except internet)

• Our data supports the thesis that consumer spending is paring back materially. We will start seeing significant negative impacts to our business if spending continues to decline at the current rate through the end of the year. We are very concerned that the Federal Reserve has waited too long to trim rates and that by the time any future cuts begin impacting the economy, consumer spending will be at recession levels.
• We are looking forward to some modest cooling expected on compensation increases and some purchasing budgets.

Data processing, hosting and related services

• Costs continue to rise while pressure from customers and prospects to decrease prices is continually increasing.

Credit intermediation and related activities

• The economy is subject to fluctuating market changes caused by anticipated interest rate variations and political instability. Loan activity is slowly improving, but liquidity is continuing to be a challenge with competition for deposits remaining active.
• The Federal Reserve lowering rates will decrease our cost of funds immediately.

Securities, commodity contracts and other financial investments and related activities

• Farm and cattle incomes are up this year. Oil and gas activity and tourism have slowed.
• The amount of political noise is disruptive to business owners. Political ads are proliferating, providing little value and worrying business owners.
• Activity is stalled slightly due to increasing personal debt along with [interest] rate uncertainty.

Insurance carriers and related activities

• New projects and new home purchase customers (for insurance) seem to have slowed somewhat.

Real estate

• As stress percolates through the multifamily real estate industry, we see litigation increasing. Desperate owners and suppliers are filing absurd suits against anyone they think they can blame or collect from.
• Anticipated lower interest rates will certainly improve the outlook for commercial real estate investments heading into 2025.
• I feel that the election will dampen activity until after the inauguration, at which time things will pick back up, barring no major problems with the election.

Rental and leasing services

• We are a large, heavy equipment distributor in Texas, Oklahoma and New Mexico At the end of July we were down 6.3 percent. That decline in this year versus last year has been consistently increasingly throughout the year. We were only down 10 percent during the pandemic of 2020, and we average 10.7 percent increase in sales per year over 65 years. So, this year’s decline is unusual for us and is unsettling! People are out of money. They’re parking their cars and throwing their keys to the dealership or banker, as it’s car or food for the family. And worst of all, I think it has just begun.
• Hiring has become easier. Importing our equipment has become easier. We don’t import directly, but our rental equipment is manufactured in Korea, and we buy from the importer. Tariffs on Korea would really foul us up if that happened next year. We would have to pass on those costs to our customers, which would inflate our prices in proportion to the tariff.

Professional, scientific and technical services

• It’s curious that news headlines say inflation is going down, but in the design and construction industry, we have not seen prices going down. In fact, they’re going up. For example, a door that cost $3,000 a year or so ago is now pricing in at $10,000. There is less competition in the market. There are fewer local companies. Many have closed due to difficulty in maintaining a workforce and owners close to retirement. Others have sold out. There are still long lead times for items such as transformations and generators.
• From 2022 we are down 40 percent. We only sold two building permit expediting jobs last month. In July of 2022, we sold over 30. New construction is dwindling. This is much worse than during the Great Recession.
• It seems like everyone is pretty sure about the way the election and the economy are going. We are not seeing the uncertainty that we normally see in the third quarter of a presidential election year. Our biggest problem is finding qualified engineers. We could grow our business a lot if we could find the right people.
• Understanding that the psychology of people and the market is a major driver of the economy, the upcoming election will determine the course of American business for the next four years. Honestly, I do not think this economy can withstand the ravages of what it has experienced since 2021.
• As interest rates remain high, the overall real estate market continues to retract. Orders for both commercial and residential transactions have continued to decline, and we feel the market will not recover until interest rates decrease.
• We are seeing a little increase in real estate and finance transactions
• The market and the economy are top priorities.
• The cost of health care and liability insurance is significantly affecting our business outlook.
• We continue to get business inquiries and new contracts, though we are experiencing a delay in accounts receivable. We are spending more time trying to get some clients to pay. They are paying eventually, but it is taking longer.
• We continue to see delays in purchase decisions. We have come to the conclusion that some of it may be due to a fractured decision-making process within our clients’ firms. While a decision was made in a group setting previously, with more distributed workers, these conversations are now a series of one-on-one conversations. These conversations take quite a bit of additional time and in each conversation, they can decide to delay or cancel a project, but all conversations must be positive for approval.

Administrative and support services

• The biggest issue keeping companies from doing much, in my opinion, is politics.
• We cannot hire in the wage bracket we compete in.
• As a search and staffing firm in the business of hiring not only in North Texas but across Texas and the U.S., we have felt like we are in a recession now for months. Senior vice presidents of talent acquisition at 40,000 employee businesses have told us confidentially they are not backfilling roles when existing employees leave the company. Fortune 100 clients have put hiring freezes in place. Mid-market companies are posting fake jobs to pipeline candidates for when they can hire again, as they are not allowed to fill the roles they are posting. Clients are taking longer to pay their invoices, and the few who are hiring are taking longer to make decisions. I have eliminated one position already and am reducing the wages of the staff I have left. Please lower interest rates. I’m very worried you are already too late. But we have to try to get the economy back on track.
• We are concerned about interest rates and their impact on real estate and general business activity. Financial performance remains strong for those companies not heavily leveraged.

Educational services

• Higher education enrollment patterns in Texas are finally starting to incorporate national trends, with declines in undergraduate student populations. Although it is early, we expect this decline is likely to increase, creating higher uncertainty and reduced revenue in the coming year.

Ambulatory health care services

• Customers are having difficulty coming up with funds to pay for our services.
• One opines that interest rates a bit too high.
  Many borrowers in pain and let out a sigh.
  We plead with grace
  Bring rates to a place
  Where capital formation does not result in a cry!

Texas Retail Outlook Survey

Amusement, gambling and recreation industries

• Weather has been the real negative factor for our business.

Accommodation

• In my 15 years at this location, this summer has been the worst business period I have seen in my area (not including COVID). Several factors are contributing to this including construction around the area and lack of group business in the market.

Food services and drinking places

• Revenue struggles continue mostly due to poor back-to-office reality compared to reports of improved office occupancy. Same for business travel Monday through Thursday. Also, there are clear signs of customers pulling back spending due to our increased prices necessitated by continuing increases in COGS [cost of goods sold] price and wage pressures.
• The rise in utility bills, insurance and property taxes, plus the fear of recession, are changing my customers’ buying habits.

Merchant wholesalers, durable goods

• So much depends on the election and what happens after that!

Motor vehicle and parts dealers

• The sales price per new and used vehicle sold has not changed. However, the volume has increased substantially. With the possibility of lower interest rates, we are optimistic for increased unit volumes over the next six months.
• Auto sales continue to soften on new vehicles and used vehicles.
• August has been very soft, even more than usual. Back to school usually sees us slow down some, but not at the current level.

Food services and drinking places

• A softening in credit terms is resulting in renewed expansion planning as the company looks to new markets and measured expansion in existing markets. The supply of labor seems to have increased, leading to slightly longer employment terms and reduced turnover. Enormous fiscal irresponsibility at the federal level is a continuing concern and will continue to temper leverage and growth.

US August consumer confidence 103.3 vs. 100.7 expected

• US consumer confidence data from The Conference Board for August 2024

• Consumer confidence 103.3 vs. 100.7 expected
• Present situation 134.4 vs. 133.1 prior.
• Expectations 82.5 vs. 81.1 prior.
• 16.4% of consumers said jobs were “hard to get,” from 16.0%
• 12 month inflation expectations 4.9% vs 5.4% prior — lowest since March 2020
• Confidence declined among consumers under 35 while it increased for those 35 and older

“Overall consumer confidence rose in August but remained within the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “Consumers continued to express mixed feelings in August. Compared to July, they were more positive about business conditions, both current and future, but also more concerned about the labor market.”

“Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic. This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income.”

Richmond Fed August manufacturing index -19 versus -14 expected

• August services and manufacturing data from the Richmond Fed

• Prior month -17
• Services index -11 vs +5 last month
• Manufacturing shipments -15 vs -21 last month

Other details:

• Employment -15 versus -5 last month
• Wages 14 versus +15 last month
• Prices paid 2.45 versus 3.00 last month
• Prices received 1.87 versus 1.31 last month
• New orders -26 versus -23 last month
• Backlog of orders -27 versus -20 last month
• Capacity utilization -17 versus -13 last month
• Capital expenditures -14 versus -9 last month
• Services expenditure -12 versus -14 last month

Fifth District manufacturing activity slowed in August, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index edged down from −17 in July to −19 in August. Of its three component indexes, shipments rose from −21 to −15, new orders decreased from −23 to −26, and employment fell from −5 to −15.

Firms grew less optimistic about local business conditions, as the index decreased from −21 to −24. The index for future local business conditions fell notably from 7 to −18 in August, with fewer than 10 percent of respondents expecting conditions to improve in the next six months. However, the future indexes for shipments and new orders remained solidly in positive territory, suggesting that firms continued to expect improvements in these areas over the next six months.

The vendor lead time index decreased slightly into negative territory. On balance, firms continued to report declining backlogs in August as that index remained negative.

The average growth rate of prices paid decreased in August. The average growth rate of prices received increased somewhat, although it remained relatively low. Firms expected little change in price growth over the next 12 months.

US June Case-Shiller home price index +0.4% m/m vs +0.3% expected

• Case-Shiller home price index and the FHFA house price index, both for June 2024

• Prior was +0.3%
• Prices 6.5% y/y vs +6.0% expected
• Prior was 6.8% y/y

FHFA data:

• -0.1% m/m vs +0.0% prior
• Prices +5.1% y/y vs +5.7% prior

Fed discount rate minutes: Chicago and New York directors favored cuts

• The discount minutes sometimes show a soft dissent

At times the discount minutes can offer a preview of something like a coming dissent at the FOMC meeting but it’s very well telegraphed that a cut is coming.

Current pricing is 64% for 25 bps and 36% for 50 bps but that will make a big swing based on next week’s non-farm payrolls report.

UBS hikes US recession odds to 25% from prior 20%

• Via Reuters

UBS Global Wealth Management raises odds of a U.S. recession to 25% from 20% previously.

Commodities

Gold Gains Ground as Fed Signals Dovish Stance

Safe-Haven Demand Surges with US Dollar and Treasury Yields Softening

Gold prices edged higher on Tuesday, benefiting from a risk-on environment and a weaker US Dollar. The precious metal trades at $2,524, up over 0.20%, despite robust US economic data failing to support the Greenback.

Daily Market Movers:

• Fed’s Dovish Remarks: Jerome Powell’s dovish stance has kept US Treasury yields stable, while the US Dollar, hitting a 12-month low, has provided a supportive backdrop for Gold.
• US Economic Data: The US Dollar Index (DXY) fell 0.31% to 100.55, and the 10-year Treasury yield remained virtually unchanged at 3.829%. Despite stronger-than-expected economic data, including an increase in August Consumer Confidence to 103.3 from July’s revised 101.9, Gold continued its upward trajectory.
• Upcoming Data: Focus now shifts to Friday’s core Personal Consumption Expenditures Price Index (PCE) and job market data. The core PCE, the Fed’s preferred inflation gauge, is anticipated to rise from 2.6% to 2.7% YoY. Additionally, Initial Jobless Claims data on August 29 will provide further insight into the labor market, which could influence future Fed decisions.

Technical and Market Insights:

• US Dollar Weakness: The Greenback’s decline has enhanced Gold’s appeal as a safe-haven asset.
• Treasury Yields: Steady yields have lessened the opportunity cost of holding non-yielding Gold.
• Inflation and Employment Data: Weak economic data could fuel expectations for a larger rate cut by the Fed, further supporting Gold prices.

Summary:

• Gold’s Rise: Supported by a dovish Fed and a weakened US Dollar, Gold is showing resilience and potential for further gains.
• Economic Data Impact: Strong US economic figures have so far failed to undermine Gold, but upcoming PCE and job data could shape future movements.
• Outlook: With the Fed’s dovish stance and a risk-on market environment, Gold prices are likely to remain supported in the near term.

Oil private survey of inventory shows a headline crude oil draw

• This is from the privately surveyed oil stock data ahead of official government data tomorrow morning out of the US.

• Crude -3.4 million (exp. -3 million)
• Gasoline -1.86 million
• Distillates -1.4 million
• Cushing -486,000
• SPR +700,000

The EIA estimates to be released tomorrow:

• Crude oil drawdown of -2.265 million barrels
• Gasoline inventories drawdown of -1.587 million
• Distillates drawdown of -1.083 million

Aluminium price: Last week’s outperformer – Commerzbank

The Aluminium price recorded the strongest increase among the LME metals last week, rising by 7.5% compared to the previous week. It was not only the hope of rapid interest rate cuts in the US that provided a boost, Commerzbank’s commodity analyst Barbara Lambrecht notes.

Aluminium prices are falling slightly again today

“There were also concerns on the supply side after the futures price for alumina, the intermediate product between bauxite and refined Aluminium, rose significantly on the Shanghai Future Exchange due to a sharp decline in inventories registered on the SHFE. At the end of last year and then again in May, a sharp rise in the price of alumina had already driven Aluminium prices up sharply. However, prices on the alumina market quickly fell again at the time, and the LME price also fell as a result. In fact, alumina prices have already fallen again somewhat this time too.”

“Even though we generally consider Aluminium to be well supported, as capacities at the main supplier China are only being expanded slightly and at the same time the medium-term demand prospects are positive because the metal is in demand during the transformation process, we believe that prices have risen a little too quickly in recent days and that the upside potential has now been exhausted in the short term. After trading on the LME was closed yesterday, Aluminium prices are falling slightly again today.”

Two Libyan oilfields shut and another at lowest output

• Via Reuters

Two oilfields in southeast Libya shut down, another oilfield reduced production to lowest capacity – engineers.

Goldman cuts Brent forecast and eyes $70-85 range for 2025

• Brave after yesterday’s example of unpredictability in the oil market

Goldman has cut it’s average 2025 Brent forecast by $5.

EU News

European equities close mostly higher

• Closing changes in the main European bourses:

• Stoxx 600 +0.2%
• German DAX +0.4%
• Francis CAC -0.2%
• UK’s FTSE 100 +0.3%
• Spain’s IBEX +0.5%
• Italy’s FTSE MIB +0.3%

German detailed YY GDP 0.0% vs -0.1% expected

• German Q2 detailed GDP data

• German detailed QQ GDP for Q2 (seasonally adjusted): 0.1% vs -0.1% expected
• German detailed YY GDP for Q2 (non-seasonally adjusted): 0.3% vs 0.3% expected
• German detailed YY GDP for Q2 (seasonally adjusted): 0.0% vs -0.1% expected

German Consumer sentiment -22 vs -18.2 expected

• German sentiment data for September

German Consumer Sentiment for September:-22 vs -18.2 expected

UK CBI Distributive Trades -27 vs -43 prior

• Data for Aug 2024

GB CBI Distributive Trades -27 vs -43 prior

Swedish PPI YY for July -0.1 vs 0.8% prior

• Swedish PPI data for July 2024

• Swedish Household Lending Growth YY for July: 0.7 vs 0.7% prior
• Swedish PPI YY for July: -0.1 vs 0.8% prior
• Swedish PPI MM for July: -1.4 vs -0.4% prior

ECB’s Knot: Comfortable with gradual easing

• Remarks by ECB policymaker, Klaas Knot

• As long as disinflation path converges to 2% before end of 2025, then I’m comfortable with gradual policy easing.

Asia-Pacific-World News

China’s January – July industrial profits rise 3.6% YoY

• Industrial profits for China

• China’s January – July industrial profits +3.6% year on year
• China’s July industrial profits +4.1%.

Japan service PPI for July 2.8% versus 2.9% expected

• Previous month revised to 3.10%

• Prior month 3.0% revised to 3.1%
• Japan services PMI July 2.8% versus 2.9% expected

Japan’s FM Suzuki: FX rates determined by various factors, not just monetary policies

• Japan’s finance minister Suzuki speaking

Japan’s finance minister Suzuki is speaking and says:

• FX rate determined by various factors
• Not just monetary policies and interest-rate differentials
• Also by geopolitical risks, market sentiment and others.
• Hard to tell how those factors would impact FX rates
• Will monitor how changes in US monetary policies would affect through various channel

Cryptocurrency News

Ethereum Drops 4% likely due to profit taking

Selling Pressure Intensifies Amid Prolonged Outflow Streak

Ethereum (ETH) experienced a sharp decline of nearly 4% on Tuesday, driven by sustained selling pressure from both institutional ETF investors and large crypto whales. This negative sentiment has also sparked debate within the crypto community regarding Ethereum’s role as a store of value.

Daily Market Movers:

• ETH ETFs: Continued outflows extended their streak to eight consecutive days, with net outflows totaling $13.2 million on Monday. Key ETFs like Grayscale’s ETHE and Fidelity’s FETH contributed significantly to this trend, reflecting ongoing investor reluctance.
• Whale Activity: Large holders of Ethereum are actively selling off their positions. Notable transactions include:
  • A whale withdrew 5,088 ETH from Binance and sold it at a significant loss.
  • Two whales liquidated a combined 8,208 ETH to avoid potential liquidation on Aave.
  • A substantial unstaking of 30,000 ETH was reported, with 19,000 ETH deposited on Binance for potential sale.

Community Reactions:

• Vitalik Buterin’s Position: Ethereum co-founder Vitalik Buterin has faced scrutiny and accusations from some community members, questioning his confidence in Ethereum as a store of value. Despite these claims, Buterin has defended his position, asserting that 90% of his net worth is invested in ETH.

Technical Outlook:

• Trendline Support: Ethereum is testing a critical trendline that suggests further potential declines if the current bearish momentum persists. Mixed signals from technical indicators are adding to the uncertainty surrounding ETH’s price action.

Summary:

• Continued ETF Outflows: Prolonged negative flows from ETH ETFs signal waning institutional interest.
• Increased Whale Selling: Significant sales by whales highlight broader market concerns.
• Community and Technical Concerns: Ongoing debates about Ethereum’s store of value status and technical indicators point to potential further declines.

Ripple Whales Scoop Up 50 Million XRP in 24 Hours

Whale Accumulation Signals Potential Upswing Amidsideways Trading

Ripple (XRP) has seen a significant uptick in whale activity, with large wallet investors purchasing over 50 million XRP tokens in a 24-hour period between August 26 and 27. This accumulation comes after a period of distribution, which had increased selling pressure on the asset.

Daily Market Movers:

• Whale Activity: Ripple whales, who previously sold off nearly 140 million XRP tokens between August 19 and 26, have resumed buying. This shift in behavior is often viewed as a bullish sign, suggesting a potential for price appreciation.
• Price Movement: XRP has rallied by 1.12% on Tuesday, trading near the $0.60 support level. The altcoin had lost key support at $0.65 earlier in August and has been trading sideways since then.
• Social Dominance: XRP’s social dominance, a measure of its prominence in social media discussions, rose to 2% on August 27, its highest level in two weeks. This indicates increased interest and engagement from traders and crypto market participants.

Technical and Market Insights:

• Whale Influence: Whale accumulation typically precedes price increases, as large investors often buy during low periods to sell at higher prices later.
• Supply Distribution: The recent shift from distribution to accumulation by whales may suggest a bullish outlook for XRP.
• Sideways Trading: XRP’s price has been consolidating since August, influenced by whale activity, supply distribution, and on-chain metrics.

Summary:

• Increased Whale Activity: A significant purchase of XRP by whales could indicate a bullish trend.
• Price and Social Sentiment: XRP’s price remains near support, with rising social dominance reflecting increased market attention.
• Outlook: Continued whale accumulation and positive social metrics could support a potential price upturn for XRP.

Follow our recently launched pages. Join our community and never miss a beat in the dynamic world of trading.

https://www.facebook.com/BilalsTechLtd

https://www.linkedin.com/company/bilals-tech/

https://t.me/Market_Moving_News