North American News

Major US Indices Close Lower as Salesforce and CrowdStrike Report Earnings

Market Overview:

• Dow Industrial Average: -159.08 points, or -0.39%, at 41,091.41.
• S&P 500: -33.60 points, or -0.60%, at 5,592.19.
• NASDAQ Composite: -198.79 points, or -1.12%, at 17,556.03.
• Russell 2000: -14.36 points, or -0.65%, at 2,188.65.

The major US stock indices closed lower today, with the NASDAQ suffering the steepest decline of -1.12%. The Dow snapped a two-day record closing streak.

Earnings Reports:

• Salesforce (CRM):
  • EPS: $0.56, missing the $2.36 estimate.
  • Revenue: $9.33 billion, slightly beating the $9.23 billion estimate.
  • Forward Guidance: Softness noted.
  • Shares: Trading up 1.85% at $264, exhibiting volatility.
• CrowdStrike (CRWD):
  • EPS: $1.04 (adjusted), exceeding the $0.97 estimate.
  • Revenue: $963.9 million, surpassing the $960 million estimate.
  • Shares: Trading up 1.4% at $268.

The day’s trading was marked by a downward trend in the major indices, with Salesforce’s earnings missing estimates impacting its stock performance, while CrowdStrike’s results exceeded expectations, boosting its share price.

Nvidia Surpasses Q2 Estimates, Announces Strong Forecast and Share Buyback

Key Financial Metrics:

• EPS: $0.68, exceeding the $0.64 estimate and up from $0.27 last year.
• Revenue: $30.04 billion, surpassing the $28.5 billion estimate and significantly higher than last year’s $13.51 billion.
• Data Center Revenue: $26.3 billion, compared to the $25.08 billion estimate.
• Adjusted Gross Margin: 75.7%, slightly above the expected 75.5%.
• R&D Expenses: $3.09 billion, slightly exceeding the $3.08 billion estimate.
• Adjusted Operating Expenses: $2.79 billion, lower than the expected $2.81 billion.
• Adjusted Operating Income: $19.94 billion, beating the $18.85 billion estimate.

October-Quarter Forecast:

• EPS Estimate: $0.71, with guidance expected to exceed this.
• Revenue Forecast: $32.5 billion, higher than the pre-release estimate of $31.7 billion, reflecting about 77% annual growth.
• Gross Margin Guidance: Expected to remain in the mid-70% range.
• Operating Expenses: Projected to grow in the mid to upper 40% range for the fiscal year.

Additional Announcements:

• Share Repurchase: Nvidia announced a $50 billion share repurchase program.
• Product Updates: Blackwell samples are shipping to partners and customers, with strong demand for Hopper. Blackwell is scheduled to launch in Q4 and continue into fiscal year 2026.

Market Reaction:

• Shares: Nvidia’s shares are experiencing volatility and are currently down 7% despite the strong earnings performance.

Nvidia’s strong financial results and optimistic guidance highlight its robust growth trajectory, though the market reaction reflects ongoing volatility and investor sentiment.

US sells 5-year notes at 3.645% vs 3.642% WI

• Results of the $70 billion sale of 5-year notes

• Bid-to-cover ratio 2.41
• High yield 3.645% vs 3.642% pre-sale WI
• Awards 21.29% of bids at high
• Primary dealers take 13.17%
• Direct 16.29%
• Indirect 70.54%

US MBA mortgage applications w.e. 23 August 0.5% vs -10.1% prior

• Latest data from the Mortgage Bankers Association for the week ending 23 August 2024

• US MBA mortgage applications: 0.5% vs -10.1% prior

• US MBA mortgage market index: 226.9 vs 225.8 prior
• US MBA purchase index: 131.8 vs 130.6 prior
• US MBA refinancing index: 753.8 vs 754.4 prior
• US MBA 30-year mortgage rate: 6.44% vs 6.50% prior

Nick Timiraos: You know that -818K revision to NFP? Goldman says it should’ve been -300K

• Goldman argues that Business avoided reporting unauthorized immigrants

Less than a week after the BLS revised the 2023 job gains by -818K, Goldman is now arguing that the number was probably closer to -300K instead.

The reason?

Goldman says businesses avoided reporting unauthorized immigrants to the unemployment insurance system, which pushed and reported employment in last week’s benchmark revisions.

Commodities

Gold Retreats as US Dollar Rebounds Ahead of Key Data

Gold Drops Amid Stronger Dollar

Gold prices fell by 0.70% to $2,504 on Wednesday, as the US Dollar regained strength following dovish comments from Federal Reserve Chair Jerome Powell. The increase in the Dollar Index (DXY), up 0.60% to 101.15 putting pressure on the yellow metal.

Market Movements:

• US Dollar Strength: Powell’s remarks, suggesting a potential easing of policy due to concerns over a weak labor market, initially bolstered gold. However, the subsequent strengthening of the Dollar and rising yields led to a drop in gold prices from an intraday high of $2,529.
• Upcoming Data: Traders are bracing for critical US economic data this week, including GDP estimates, Initial Jobless Claims, and the core Personal Consumption Expenditures (PCE) inflation gauge. These reports are expected to influence market expectations for future Fed rate cuts.
• Chinese Demand: Despite the drop, gold continues to see inflows and demand from China, which could support prices in the longer term.

Daily Market Movers:

• GDP and Job Data: Q2 GDP estimates are expected to rise from 1.4% to 2.8%. Initial Jobless Claims are anticipated to hold steady at 232K. Weakness in the labor market could boost the likelihood of a larger Fed rate cut.
• Core PCE Inflation: The core PCE Price Index is forecasted to increase from 2.6% to 2.7% YoY.

Outlook: If the upcoming US economic data points to continued weakness, gold prices may find support and potentially resume their uptrend. The August Nonfarm Payrolls report next week will be crucial for assessing the Fed’s potential rate cut in September and could impact gold’s trajectory.

EIA weekly crude oil inventories -846K vs -2265K expected

• US EIA weekly oil inventories

• Prior was -4649K

Details:

• Gasoline -2203K vs -2265K expected
• Distillates +275K vs -1083K expected
• Refinery utilization +1.0% vs +0.2% expected
• Production mbpd 13.3mbpd vs 13.4mbpd prior
• Cushing: -0.668M

Citi predicts zinc to reach $3100/t by 4Q with aluminium also set for gains

• Sees renewed upside for aluminium by 4Q or early 2025

• Citi Research: Zinc could touch $3,100/t by 4Q or early 2025 as manufacturing sentiment recovers amid supply-side constraints.
• Citi Research: “We see renewed upside for aluminium by 4Q or early 2025.”

Libya’s Sarir oil field nears shutdown as production is halted

• More news from Libya

Libya’s Sarir oil field reduces production to near total shutdown – engineers to Reuters.

EU News

European equity close: Broad but modest gains

• Closing changes in Europe

• Stoxx 600 +0.3%
• German DAX +0.6%
• Francis CAC +0.2%
• UK’s FTSE 100 +0.3%
• Spain’s IBEX +0.1%
• Italy’s FTSE MIB +0.3%

Eurozone Money M3 annual growth 2.3 vs 2.7% expected

• Data for July 2024

• Eurozone Money M3 annual growth: 2.3% vs 2.7% expected
• Eurozone loans to households: % vs 0.3% prior
• Eurozone loans to non-finance institutions: % vs 0.7% prior

French consumer confidence 92 vs 92 expected

• Confidence data for August 2024

French consumer confidence: 92 vs 92 expected

Swedish trade balance 6.5B vs 8.7B prior

• Trade balance data for July 2024

• Swedish trade balance: 6.5 vs 8.7B prior
• Swedish exports: 156.0 vs 170.6B prior
• Swedish imports: 149.5 vs 161.9B prior

Swiss investor sentiment -3.4 vs 9.4 prior

• Sentiment data for August 2024

Swiss investor sentiment: -3.vs 9.4 prior

Italy plans to confirm it will bring deficit-to-GDP below 3% in 2026

• Italy aims to bring down deficit

According to Reuters sources, Italy will confirm its commitment to get its deficit to GDP ratio below 3% in 2026 in the upcoming medium-term structural budget plan.

Asia-Pacific-World News

Wang Yi urges US to treat China as equal and halt suppression in trade and tech

• China foreign minister comments in meeting with US Security Advisor Sullivan

• China’s Foreign Minister Wang Yi, in a meeting with U.S. National Security Adviser Sullivan, emphasized the importance of treating each other as equals for the smooth development of China-US interactions – Chinese state media.
• Wang Yi advised the U.S. not to judge China based on the path it has traveled nor to view China through the lens of a hegemonic strong country – state media.
• Wang Yi called for the U.S. to cease suppressing China in areas such as trade, commerce, science, and technology, and to stop jeopardizing China’s legitimate interests – state media.
• He criticized protectionism under the guise of ‘overcapacity’, stating it would jeopardize global green development and impact world economic growth – state media.
• Wang Yi urged the U.S. to adhere to its commitment not to support ‘Taiwan independence’, to stop arming Taiwan, and to support the peaceful ‘reunification’ of China – state media.
• He asserted that Taiwan ‘belongs to’ China and that ‘Taiwan independence’ poses the greatest risk to peace and stability in the Taiwan Strait – state media.
• Wang Yi warned the U.S. against undermining China’s sovereignty and territorial integrity under any pretext, and not to support or condone what he termed the Philippines’ ‘infringing acts’.
• He criticized the U.S. for not taking responsibility regarding the Ukraine crisis and for imposing ‘illegal’ unilateral sanctions indiscriminately.
• Both sides agreed to hold video calls between the two militaries’ theater leaders at an appropriate time – state media.
• China’s Foreign Minister Wang Yi, in a meeting with U.S. National Security Adviser Sullivan: Two sides discussed a new round of interaction between the two heads of state in the near future – state media.

PBOC sets USDCNY midpoint at 7.1216 vs exp 7.1210

• Previous 7.1249

The PBOC sets the USDCNY central rate at 7.1216 not far from the estimate of 7.1219. That is down from previous setting at 7.1249.

The PBOC injects CNY 277.3B 

• the seven day reverse repo at maintained rate of 1.70%

Australia’s treasurer Chalmers: Inflation data a promising result

• Australia’s treasurer Chalmers speaking on the CPI data

Australia/s treasurer Chalmers is speaking after the CPI data and says:

• Inflation data a promising result
• However we are not complacent because we know that people are still under pressure

Australia weighted CPI YoY 3.5% versus 3.4% expected

• CPI data for July 2024

• Prior month 3.8%
• Weighted CPI year on year 3.5% vs 3.4% estimate
• CPI SA YoY 3.6 % vs 3.8% prior revised from 3.9%
• CPI SA MoM 0.0% versus 0.3% last month (revised from 0.4%)

Australia construction work done for Q2 0.1% versus 0.7% expected

• Australia construction work done for Q2 2024

• Prior month -2.9%
• Construction work done for Q2 0.1% versus 0.7% expected

Australia’s S&P/ASX 200 index trades down -0.12% and 8061.50

• Modest decline to start the trading day

Australia’s S&P/ASX 200 index is trading down -0.12% at 8061.50 in early trading. The index has been building since it’s a tumble back on August 5 of -3.7%. The high close level comes in at 8114.7. The close yesterday reached up to 8084.50.

Japan’s Trade Ministry eyes 2.3596 trillion yen for FY2025/26 budget

• According to Jiji

Japan’s Trade Ministry is set to ask for 2.3596 trillion yen in its preliminary budget request for FY2025/26, according to Jiji.

BOJ Deputy Gov. Himino: The financial and capital markets remain unstable

• BOJ Himono is speaking:

• The financial and capital markets remain unstable
• THe BOJ needs to monitor these developments with utmost vigilance
• BOJ also intends to carefully examine the impact these market developments at home and abroad have on the outlet for economic activity and prices, the risks surrounding the outlook, and the degree of confidence in the outlook
• BOJ will adjust the degree of monetary accommodation if it has growing confidence that its outlook for economic activity and prices will be realized.
• Will conduct monetary policy as appropriate to achieve the 2% inflation target in sustainable and stable manner while closely communicating with market participants and other stakeholders
• Needs to closely monitor developments in recent market volatilities including weaker stocks and stronger yen.
• BOJ should continue its efforts to refine its approaches to estimate the neutral rate for Japan, and use the results as a useful point of reference.
• But BOJ has no other choice but to chart a way forward examining how the economy and prices respond as it conducts monetary policy.
• Estimation of the neutral interest rate would not automatically show the right policy path for Japan, at least at the moment.
• Our baseline scenario for fiscal year 2025, 2026 envisions a reasonably balanced state where the inflation rate is consistent with the price stability target, and the economic growth is slightly above cruising speed.
• The Yen recent appreciation may alleviate the import cost hike and profit squeeze many small and medium-size firms currently face.
• But stronger yen may lower the yen denominated profits of export industries and Japan multinationals.

Japan’s Nikkei average futures down -0.4% in early trading

• Negative start for trading

Japan’s Nikkei futures are trading down -0.4% yearly trading.

Looking at the daily chart, the price of the Nikkei 225 remains between its 100-day moving average at 38622.25, and its lower 200-day moving average at 37266.66.

The low price reached in early August extended down to 31,156.12 before snapping back to the upside. The closing price at the end of July was 39,101. 

The Nikkei 225 is opening down -0.2%.

Cryptocurrency News

Bitcoin Faces a 5% Decline, Marking Third Consecutive Day of Selling Pressure

Market Sentiment Shifts as Bitcoin and Tech Stocks Show Divergence

Bitcoin has experienced a sharp 5% drop today, marking its third consecutive day of losses. This decline follows a period of relative stability and growth, raising concerns about a potential shift in market dynamics.

Key Points:

• Recent Performance: Bitcoin’s recent rally, which had broken out of a consolidation pattern, appears to have stalled as the cryptocurrency faces a downturn.
• Market Correlation: Historically, Bitcoin has shown a tight correlation with tech stocks, particularly the Nasdaq. However, this correlation has weakened recently, potentially influenced by ongoing concerns about the sale of Mt. Gox bitcoin.
• Altcoin Struggles: The broader cryptocurrency market is also under pressure, with Ethereum down 3.4% today and struggling to recover from earlier losses.

Implications: The current trend in Bitcoin’s price and the broader altcoin market could signal increased volatility and potential challenges for tech stocks, especially as Nvidia prepares to announce its earnings. This divergence may reflect broader shifts in investor sentiment and market dynamics.

XRP Rallies as SEC Appeal Seems Unlikely, Attorney Bill Morgan Weighs In

Ripple’s Recovery Amid Legal Uncertainty

Ripple’s XRP is showing signs of recovery, gaining nearly 2% on Wednesday to trade back above $0.57, following a steep correction earlier in the month. This rebound comes amid optimistic legal forecasts regarding the SEC’s potential appeal of the recent ruling in the Ripple lawsuit.

Key Points:

• Legal Insight: Attorney Bill Morgan, a pro-crypto legal expert, suggests that the SEC is unlikely to appeal the favorable ruling for Ripple. He argues that the final decision, handed down by Judge Analisa Torres, can be seen as a win for the SEC due to its legal reasoning.
• Market Impact: Ripple traders are closely monitoring any developments regarding the SEC’s stance on an appeal, as it could significantly impact XRP’s market performance.
• Case Comparisons: Morgan notes that the decision aligns with judicial approaches in other significant SEC cases, such as those involving Kraken and Binance, where distinctions between primary and secondary market sales of assets were emphasized.

Outlook: The potential lack of an appeal could provide greater legal clarity for XRP, which might bolster investor confidence and support its price recovery. Traders are advised to stay tuned for further updates on the regulatory front, which could influence XRP’s future movements.

SEC Issues Wells Notice to OpenSea: Potential Securities Law Violations

NFT Marketplace Faces Legal Threat as Regulatory Scrutiny Intensifies

The Securities and Exchange Commission (SEC) has issued a Wells notice to OpenSea, indicating a likely lawsuit for alleged securities law violations. This development marks a significant regulatory move into the uncharted territory of NFTs.

Key Points:

• SEC Action: The notice signals that the SEC is preparing to sue OpenSea, the leading NFT marketplace, for potential breaches of securities laws.
• CEO Response: OpenSea CEO Devin Finzer has expressed concerns that the SEC’s actions could have adverse effects on consumers, creators, and entrepreneurs in the NFT space.
• Context: The NFT market, which saw explosive growth during the post-pandemic period, is now experiencing regulatory pushback. This event underscores the broader challenges facing the industry, reminiscent of historical financial manias like the tulip bulb craze and the dot-com bubble.

Market Impact: The potential lawsuit against OpenSea highlights increasing regulatory scrutiny in the NFT sector, adding uncertainty and potential volatility to the digital asset market.

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