Round up of today’s market news

North American News

US Stocks Close On A Low Note: Nasdaq Retreats

The major US stock indices ended the day on a weak note, closing near their session lows after a turbulent trading day. The Nasdaq, which had seen a significant rally earlier, fell sharply, while other indices also finished in negative territory.

Market Close Summary

• Dow Industrial Average: Down 234.17 points (-0.60%) at 38,763.52
• S&P 500: Down 40.54 points (-0.77%) at 5,199.51
• NASDAQ Composite: Down 171.05 points (-1.05%) at 16,195.81
• Russell 2000: Down 29.19 points (-1.41%) at 2,035.10

Sector Performance

The S&P 500 sectors displayed a mixed performance, with seven sectors closing lower and four remaining in positive territory:

• Consumer Discretionary: -1.45%
• Materials: -1.39%
• Information Technology: -1.36%
• Health Care: -1.08%
• Industrials: -0.54%
• Real Estate: -0.80%
• Telecommunication Services: -0.37%
• Energy: +0.05%
• Financials: +0.07%
• Consumer Staples: +0.46%
• Utilities: +0.55%

Daily Market Movers

The Nasdaq was particularly volatile, initially rising by 342 points but ending the day down by 171 points. This dramatic shift underscores the day’s erratic market behavior. Overall, the broad market saw selling pressure, with significant declines in key sectors such as Consumer Discretionary and Information Technology.

Investors will be watching closely for any new developments or economic indicators that could influence market direction in the coming days.

US June consumer credit outstanding +$8.93 billion vs +$10.0 billion expected

• US consumer credit rises

• Prior was +11.35B (revised to +13.95B)
• Revolving -1.5%
• Non-revolving +3.4%

U.S. Treasury sells 10-year notes at a high yield of 3.960%

• WI level at the time of the auction was 3.929%

• High yield at 3.960%
• WI level at the time of the auction 3.929%
• Tail +3.1 basis points versus six month average of 0.1 basis points
• Bid to Cover 2.32X vs six month average of 2.52X
• Dealers 17.88% vs six month average of 15.5%
• Directs 15.9% vs six month average of 17.1%
• Indirects 66.2% versus six month average of 67.5%

US MBA mortgage applications w.e. 2 August +6.9% vs -3.9% prior

• Latest data from the Mortgage Bankers Association for the week ending 2 August 2024

• Market index 215.1 vs 201.2 prior
• Purchase index 133.9 vs 132.8 prior
• Refinance index 661.4 vs 570.7 prior
• 30-year mortgage rate 6.55% vs 6.82% prior

Goldman Sachs Chief Executive Officer David Solomon says it was a healthy stock correction

• Via interview

• Goldman Sachs Group Inc. Chief Executive Officer David Solomon in an interview:
• confident the US economy will avoid a recession
• Federal Reserve is unlikely to implement an emergency rate cut
• does not anticipate any significant economic developments before September
• current economic data and signals from the Federal Reserve suggest stability
• may be one or two rate cuts this fall

On the NFP:

“It wasn’t a horrible job report, it was just softer than people were expecting”

On equities:

• correction … might be healthy
• we’re going to see more volatility in the short-term
• was a pretty big, pretty meaningful correction

HSBC on tech stocks – “the froth has been removed from valuation”

• HSBC on the opportunities presenting in tech

Comments from chief investment officer of HSBC’s private bank conveyed via a Reuters report:

• In technology, the froth has been removed from the valuations
• We do believe that AI and technological innovation more broadly will endure, will continue to create productivity gains… We don’t flee from it
• There are opportunities in technology, and technology is not just the Magnificent 7.
• expected positive economic growth
• favoured broadening out into medium-sized companies

Goldman Sachs has introduced a new Financial Stress Index (FSI)

• Up over the past two days

Inbfo comes via Reuters on the introduction of Goldman Sachs’ new Financial Stress Index (FSI):

• tightened over the last two days
• remains at relatively normal levels by historical standards
• most of the tightening has come from surprisingly high levels of expected volatility in the equity and bond markets, Goldman economists said in a client note
• conditions in short-term funding markets remain broadly stable
• FSI suggests that there have been no serious market disruptions to date that would force policymakers to intervene

Here is the link to the Reuters report

BOC Minutes: Members saw risk consumers could be significantly weaker in 2025 and 2026

• Some dovish comments in the Minutes of the July 24 BOC

• Spending in 2025 and 2026 could be hit by the number of households likely to be renewing their mortgages at higher rates
• Spending per person is expected to recover as rates declined but many households will still face significant debt-servicing costs
• Agreed to communicate that they would be weighing two-way inflation forecasts
• Saw less of a chance that pent-up demand would lead to a sudden rise in house prices as rates were cut
• Governing Council increasingly confident “ingredients for price stability are in place”
• Downside risks to inflation now as prominent as upside risks
• Economy in excess supply, slack emerging in labor market
• GDP growth subdued, consumption weak on per-capita basis
• Core and headline inflation within 1-3% range for several months
• Wage growth still elevated at ~4%, but expected to moderate
• Housing market imbalances persist, putting upward pressure on rents
• Future rate cuts likely if inflation continues easing as projected
• No predetermined path for policy rate – decisions to be made meeting-by-meeting
• BOC to continue balance sheet normalization by allowing maturing bonds to roll off
• Some expressed concerns that further weakness in jobs market could delay rebound in consumption

Commodities

Gold Dips Below $2,400 Amidst Geopolitical Tensions

Gold prices have fallen below $2,400, slipping to $2,385 by late North American trading on Wednesday. The retreat comes despite ongoing geopolitical tensions in the Middle East and expectations for a more dovish Federal Reserve (Fed) policy.

Market Dynamics and Geopolitical Tensions

Gold’s recent decline is attributed to rising US bond yields, which have exerted pressure on the yellow metal. Geopolitical tensions remain high as Israel prepares for potential retaliation from Hamas following the assassination of its leader, Ismail Haniyeh. US intelligence reports suggest that Hamas’ response might be delayed until late Thursday or Friday. Additionally, Egypt has instructed airlines to avoid Iranian airspace for a three-hour period on Thursday due to the escalating situation between Israel and Iran.

Economic Indicators and Central Bank Actions

Despite these tensions, major Asian central banks, including the People’s Bank of China, have not increased their physical gold purchases. According to reports from the World Gold Council, China has refrained from buying gold for the third consecutive month.

In the US, market attention is shifting to upcoming Initial Jobless Claims data, expected to be released on Thursday. Analysts from TD Securities are watching for signs of slowing economic indicators, particularly in employment. The Initial Jobless Claims are forecasted to drop slightly from 249K to 240K.

Fed Policy Expectations

The Federal Reserve’s stance remains a key focus for investors. The Fed held rates steady in its recent meeting but hinted that future rate cuts could be possible based on inflation data and labor market conditions. The FedWatch Tool currently estimates a 63.5% chance of a 50-basis-point rate cut at the September meeting, down from 68% the previous day.

Daily Market Movers: Risk-On Sentiment

Despite fading recession fears and a positive ISM Services PMI report, which indicates continued economic expansion, gold remains on the defensive. Market participants are closely watching for any further developments that might influence both economic data and Fed policy, impacting gold’s performance in the near term.

EIA weekly US crude oil inventories -3728K vs -700K expected

• Weekly oil inventory data from the EIA

• Prior was -3436K
• Gasoline +1340K vs -986K expected
• Distillates +949K vs +241K expected
• Refinery utilization +0.4% vs +0.8% expected
• Production 13.4mbpd vs 13.3mbpd prior
• Cushing: 0.579M

ICYMI – US buying 3.5 million barrels for the Strategic Petroleum Reserve

• The US Department of Energy plans to buy 3.5 million barrels of crude for the Strategic Petroleum Reserve

• seeks up to 1.5 million barrels of sour crude for delivery in January 2025
• a second solicitation will be issued on August 12 for the purchase of about 2 million barrels, also for January 2025 delivery
• announcement comes a week after the DOE finalized a purchase of 4.65 million barrels of sour crude that marked the completion of the administration’s promise to return the 180 million barrels released from the emergency crude stockpile in 2022
• “DOE continues to aim for $79/b or less, significantly lower than the average of about $95/b DOE received for 2022 emergency SPR sales”

API inventories shows small headline crude build vs. small draw expected

• The inventory data from the private survey is out, official data follows Thursday morning

• API Inventory
• Crude +180,000 (exp. +850,000)
• Gasoline +3.31 million d
• Distillates +1.22 million
• Cushing +1.07 million
• SPR +700,000

EU News

European equities closes strong

• Closing changes in Europe

• Stoxx 600 +1.6%
• German DAX +1.5%
• Francis CAC +1.9%
• UK’s FTSE 100 +1.8%
• Spain’s IBEX +2.2%
• Italy’s FTSE MIB +2.4%

Germany June industrial production +1.4% vs +1.0% m/m expected

• Latest data released by Destatis – 7 August 2024
• Prior -2.5%

Slight delay in the release by the source. Looking at the breakdown, there were increases in the production of capital goods (+2.5%), intermediate goods (+2.1%), construction (+0.3%), and energy (+2.9%). This was offset by a decline in the production of consumer goods (-2.4%).

Germany June trade balance €20.4 billion vs €23.5 billion expected

• Latest data released by Destatis – 7 August 2024
• Prior €24.9 billion

The German trade surplus narrowed in June as exports were marked down by 3.4% on the month. That is more than the 1.5% decline estimated. Meanwhile, imports were seen up 0.3% in June.

France June trade balance -€6.09 billion vs -€7.99 billion prior

• Latest data released by the French MOF – 7 August 2024
• Prior -€7.99 billion; revised to -€7.72 billion

The French trade deficit narrowed in June as exports were seen up 3.2% on the month while imports were flat. Ever since recovering from the energy price shock amid the Russia-Ukraine conflict, the trade balance has been trending at more normal levels now. Here is the trend:

UK July Halifax house prices +0.8% vs +0.3% m/m expected

• Latest data release by Halifax – 7 August 2024

• Prior -0.2%

The annual growth rate of house prices also increased further to 2.3%, which is the highest since January. The typical UK property is now seen costing £291,268. Halifax notes that they “anticipate house prices to continue a modest upward trend throughout the remainder of this year”.

ECB’s Rehn: Recent market turmoil is an overreaction to uncertainty and thin liquidity

• Remarks by ECB policymaker, Olli Rehn

• It is not a reaction to fundamental issues with the economy
• If confidence in slowing trend of inflation strengthens, rate cuts can continue
• The path to inflation target is still bumpy

Asia-Pacific-World News

PBOC sets USD/ CNY mid-point today at 7.1386 (vs. estimate at 7.1481)

• PBOC CNY reference rate setting for the trading session ahead

In open market operations:

• PBOC injects zero bn via 7-day RR, sets rate at 1.7%
• 252n yuan mature today
• net 252bn yuan drain today

China July exports +6.5% y/y & imports +6.5% also (in CNY terms)

• China trade data for July 2024

China trade data for July 2024

Yuan terms:

Exports +6.5% y/y

• prior +10.7%

Imports +6.5% y/y

• prior -0.6%

Trade Balance +600bn yuan

• prior +703.7bn

—

In terms of US dollars:

Trade Balance USD 84.65bn

• expected 99.0bn, prior 99.05bn

Imports +7.2% y/y

• expected +3.5%, prior -2.3%

Exports +7.0 y/y

• expected +9.7%, prior +8.6%

Tesla recalls 1.7 million cars

• TSLA

Chinese state media (China Central Television ) with the info:

• Tesla China recalls 1.68 million cars
• Tesla to fix software in 1.7 mln imported model S, model X, China-made model 3, model Y vehicles under this China product recall

The response to the RBA meeting yesterday is a 25bp rate cut priced for December 2024

• RBA meeting was seen as slightly hawkish

Westpac Financial Markets Strategy team on the Reserve Bank of Australia yesterday. This in brief:

• The RBA meeting was seen as slightly hawkish, a slower return to the inflation target, as it remains more persistent and ‘approaches’ rather than ‘hits’ the target.
• OIS markets, which have completely changed their risk profile in the last few weeks, shifted 2-3bp higher but have a cut priced for December 2024.
• Further out the curve, bill futures moved by 20-25bp from high to low, though only a small amount came after the RBA meeting.
• In the RBA press conference, Governor Bullock reiterated the board did consider a rate hike for the August meeting as well as the result being a hold. She said a rate cut is not on the agenda in the near term.

Australia AIG Construction Index (Jul)

• Actual: -20.7
• Previous: -23.2

Australia AIG Manufacturing Index (Jul)

• Actual: -19.5
• Previous: -26.5

RBA Assistant Governor Hunter says economy running a little hotter than thought

• Economy running a little hotter than the Reserve Bank of Australia thought previously

Sarah Hunter, Assistant Governor (Economic), and Natasha Cassidy, Deputy Head of Economic Analysis are appearing before the Australian parliament.

New Zealand Employment Change (QoQ) (Q2)

• Actual: 0.4%
• Expected: -0.2%
• Previous: -0.2%

New Zealand Labor Cost Index (YoY) (Q2)

• Actual: 3.6%
• Expected: 3.5%
• Previous: 3.8%

New Zealand Labor Cost Index (QoQ) (Q2)

• Actual: 0.9%
• Expected: 0.8%
• Previous: 0.8%

New Zealand Participation Rate (Q2)

• Actual: 71.70%
• Expected: 71.30%
• Previous: 71.50%

New Zealand Q2 unemployment rate 4.6% (vs. 4.7% expected)

• New Zealand jobs report not as bad as expected

New Zealand jobs report for Q2 2024, better than expected pretty much all round.

There had been some expectations of an RBNZ rate cut at their meeting next week, August 14. At the margin this takes that expectation down a notch.

ANZ forecast the RBNZ to remain on hold next week, signal a rate cut later in the year

• ANZ expect a November Reserve Bank of New Zealand rate cut, with a risk of October

A brief summary of the Reserve Bank of New Zealand preview from ANZ, Anz expect the RBNZ to hold rates at the August 14 meeting, but signal potential cut later this year

• ANZ expects RBNZ to keep OCR at 5.50% next week
• Bank sees potential for RBNZ to signal OCR cut later in 2024
• Recent data points to slowing economy and solid disinflation progress
• ANZ puts 10-15% odds on RBNZ switching to easing bias at this meeting
• Non-tradable inflation still high at 5.4% y/y vs RBNZ’s 4.1% expectation
• Q2 labor market data stronger than RBNZ expected overall
• Markets pricing in 89bp of cuts by November 2024 and 222bp by November 2025
• ANZ warns of potential market disappointment if RBNZ holds steady
• Bank sees upside risks for NZD on any repricing of rate cut expectations

Japan top currency diplomat says focus is on volatility when it comes to FX

• Mimura reiterates that they do not have specific levels in mind when looking at the FX market

• It is desirable for currencies to move in a stable manner reflecting fundamentals
• Excessive volatility increases uncertainties, reduces predictability for businesses
• No change to Japan’s economic outlook despite recent market volatility
• Closely monitoring financial markets with a sense of urgency, and also calmness

Japan Coincident Indicator (MoM) (Jun)

• Actual: -3.4%
• Previous: 1.9%

Japan Leading Index (MoM) (Jun)

• Actual: -2.6%
• Previous: 0.3%

Japan Leading Index

• Actual: 108.6
• Expected: 109.0
• Previous: 111.2

Japan chief cabinet secretary Hayashi says no comment on daily stock market moves

• Japan chief cabinet secretary Hayashi:

• no comment on daily stock market moves
• will do utmost in managing economic, fiscal policy while working with Bank of Japan
• No change in government policy to promote shift to investment to savings

BOJ deputy governor Uchida says the Bank’s interest rate can change if needed

• Bank of Japan

Bank of Japan deputy governor Uchida:

• Our interest rate path will obviously change if, as a result of market volatility, our economic forecasts, view on risks and likelihood of achieving our projection change
• Japan is not in an environment where we would be behind the curve unless we hike rates at set pace
• We won’t hike rates when markets are unstable
• Personally believe the US economy can achieve soft landing
• See no big change to Japan, US economic fundamentals so market reaction to single US data appears too big
• Recent market moves are extremely volatile so watching impact of their moves on economy, prices with extreme vigilance, will respond appropriately in guiding policy
• Japan’s real interest rate very low, monetary conditions very accommodative
• If economy, prices move in line with projections, it is appropriate to adjust degree of monetary easing
  degree, speed of fx moves’ impact on prices bigger than in past
  weak yen and subsequent rise in import costs pose upside risks to inflation
• Short-term interest rate, at 0.25%, is still very low on real basis, so we continue to support economy with very loose policy
• Given rapid market volatility, we need to maintain current level of monetary easing
• Stock market volatility affects corporate activity, consumption so is important factor in guiding monetary policy
• Reversal of weak yen means risk of inflation overshoot has diminished, which would affect our policy
• Expect Japan’s consumption to stay solid
• Changes seen in Japan’s labour market are structural and irreversable
• Over 10 years of massive monetary easing has caused various side-effects
• There are now more factors that require being cautious, when thinking of next rate hike timing
• Market volatility is very large
• Will keep a close eye out on the moves and their impact on the economy, prices
• Thinks that stock markets will calm down at some point to reflect earnings, Japanese economy
• There is no gap in views between Ueda and myself
• If market volatility changes our view on prospects for achieving price goal, then that will influence our decision on rate hike path
• Hard to say how long it will take to gauge impact of market rout on economy, prices
• But BOJ has the advantage of being able to choose when to hike in a moderate rate hike environment

Japan ruling Liberal Democratic Party (LDP) big gun supports Bank of Japan rate hikes

• Says “higher interest rates can lower costs of imports and make industry more competitive”

Ruling Liberal Democratic Party (LDP) big gun Shigeru Ishiba is viewed as a prime potential candidate for Japan’s next prime minister. He has publicly endorsed the Bank of Japan’s policy of gradually raising interest rates:

• Bank of Japan is on the right policy track to gradually align with a world with positive interest rates
• “The negative aspects of rate hikes, such as a stock market rout, have been the focus right now, but we must recognise their merits, as higher interest rates can lower costs of imports and make industry more competitive”

Cryptocurrency News

Ethereum’s 5% Drop Could Be a Precursor to a Rally After $2 Billion ETH Transfer FUD

Ethereum (ETH) experienced a 5% drop on Wednesday following confusion surrounding a $2 billion ETH transfer, which initially sparked fears of a massive supply flood. However, this sell-off might act as a slingshot effect, potentially leading to new highs as market dynamics evolve.

Daily Market Movers: ETF Investors Continue to Drive Demand Despite the recent bearish sentiment, Ethereum ETFs showed robust buying activity with net inflows totaling $98.4 million on Tuesday. Notable inflows were seen in BlackRock’s ETHA and Fidelity’s FETH, which received $109.9 million and $22.5 million respectively. Conversely, Grayscale Ethereum Trust (ETHE) experienced its lowest outflow since its launch, with $39.7 million leaving the fund. The total net asset value for Ethereum ETFs now stands at $7.06 billion, placing ETHA among the top six ETFs launched in 2024, trailing only behind five Bitcoin ETFs.

FUD Clarification and Market Reactions The initial decline in ETH’s value was partly triggered by a now-retracted Lookonchain report suggesting that 789,534 ETH, valued at around $2 billion, was moving. This led to concerns that a significant amount of ETH might soon flood the market. However, EmberCN later clarified that the majority of this ETH had entered the defunct Bidesk exchange in 2021 and was likely sold by then. “There’s not such a huge amount of ETH waiting to be sold […] Most of them should have been sold in 2021, and what is currently being transferred is a small part that wasn’t sold in 2021,” EmberCN stated.

Additionally, Jump Trading’s recent activities have added to market uncertainty. The firm redeemed and transferred 11,501 ETH worth $29.11 million from Lido and applied to redeem another 19,049 ETH, reducing its balance to 21,394 wstETH. This follows Jump Trading’s ongoing sale of 120,695 ETH since July 24 amid the Commodity & Futures Trading Commission’s (CFTC) investigation into its crypto operations.

Looking Forward As ETF inflows continue to rise and the FUD surrounding the $2 billion ETH transfer dissipates, Ethereum could see a recovery and potentially rally to new highs. The current bearish trend might just be a temporary phase before a stronger upward move, supported by sustained institutional interest and positive technical indicators.

Grayscale Launches New Decentralized AI Token Funds for TAO and SUI

Grayscale has announced the launch of two new investment funds focusing on decentralized AI tokens: the Grayscale Bittensor Trust for Bittensor (TAO) and the Grayscale Sui Trust for Sui (SUI). This expansion underscores Grayscale’s commitment to broadening its range of decentralized investment offerings.

Grayscale Introduces Bittensor and Sui Trust Funds

The Grayscale Bittensor Trust and Grayscale Sui Trust are newly established funds designed to provide investors with exclusive exposure to the price movements of TAO and SUI tokens, respectively. These single-asset funds are tailored to capture the potential growth associated with the Bittensor and Sui ecosystems. Eligible investors, including both individuals and institutions, can now subscribe to these funds on a daily basis.

Strategic Expansion into Decentralized AI

The launch of these trusts aligns with Grayscale’s strategy to enhance its portfolio of decentralized and AI-focused investment products. According to Rayhaneh Sharif-Askary, Grayscale’s Head of Product & Research, “With the launch of Grayscale Bittensor Trust and Grayscale Sui Trust, we continue to provide investors with familiar products that enable access to tokens at the cutting edge of the crypto ecosystem’s continued evolution.”

Market Impact and Token Performance

The introduction of these funds could have notable effects on the market performance of TAO and SUI. Following the announcement, SUI has seen a 3.3% increase, while TAO has experienced a 3.1% decline, extending its weekly loss to 18%.

Grayscale’s move follows its previous launches of trust funds for other AI-centric tokens, such as NEAR, RNDR, and FIL, offering investors opportunities to tap into the potential growth of these innovative technologies.

Some selling pressure creeps into bitcoin

• Sentiment is delicate at the moment

It’s an emotion-driven market right now and bitcoin has been a good forerunner of market sentiment. It’s down about $1000. Ethereum is also down 3% and has given up all of yesterday’s gains and has been a disaster since the ETF launch.

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