Markets remain concerned about the possibility of a recession. The volatile reaction was triggered by an ‘inverted yield curve’ development in the bond markets, which many investors consider a forecasting tool for recessions. This occurrence is an indication that market participants are concerned about the state of the economy and has preceded every recession in the past.
Link: CNBC Report
US equity markets were supported yesterday by the strong reading on retail sales which bolstered confidence in the American consumer. US Treasuries also erased some gains. US retail trade jumped 0.7 percent from the previous month, following a revised 0.3 percent increase in June and easily beating market expectations of 0.3 percent, boosted by purchases of a variety of goods.
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The Day Ahead
This afternoon (13.30 BST) the US July housing starts (number of privately owned new houses) and building permits data is due. Then at 15.00 BST, we have the preliminary August University of Michigan consumer sentiment survey which is expected to come in at 97.2 from previously published 98.4 figure. Additionally, Baker Hughes’ US oil rig count is due at 18.00 BST and OPEC is scheduled to release its monthly oil market report.
Traditional Markets
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Walmart – the retail giant reported an adjusted quarterly profit of $1.27 per share, 5 cents a share above estimates. Revenue also beat forecasts. U.S. comparable-store sales rose 2.8%, better than the 2.4% consensus estimate of analysts surveyed by Refinitiv. Walmart also raised its full-year sales and earnings forecast.
Nvidia - The graphics chip maker posted Q2 results after the bell, which came in ahead of expectations. Earnings per share came in at $1.24 ahead of estimates of $1.15. Strength in the company's gaming division buoyed numbers after a difficult year, which had seen revenues fall.
Forex
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Retail sales data for the UK released by the National Statistics yesterday came in much better than expected at 3.3% year on year (July) against the 2.6% expectations. UK retail sales jumped unexpectedly in July, mainly helped by the growth in online spending. Consumer activity is continuously offering support to the British economy. The GBPUSD currency pair reacted positively to the data, rallying higher towards the psychologically important 1.2100 level. Any additional breakouts to the upside are initially capped by resistances at 1.2180 and 1.2200 levels. Support to the downside is at the multi year low of 1.2000.
Crypto
Bitcoin dropped back below $10,000 for the first time since July. The broad-based selling has created the worst three days for Bitcoin since Nov 2018, and while immediate catalysts are unclear, a Chinese Ponzi scheme could be to blame according to zerohedge.com.
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Bitcoin is retesting the psychologically important 10,000 level. Current price action appears supported by 9,400 and capped by 10,800 levels.Confirmed loss of the initial downside support at 9,400 and an end of day close lower could target additional downside supports at 9,030 followed by 8,745 levels. Alternatively, oversold bounce backs above the 10,800 resistance could change the outlook to bullish targeting additional upside resistances at 11,400 and 11,900.
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