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The Dow Jones Index (US30) fell by 1.29% yesterday, while the S&P 500 Index (US500) went down 0.78%. The Nasdaq Technology Index (US100) closed negative 0.70%. Stocks initially opened higher on Thursday, with the Dow Jones Industrials Index (US30) setting a new record high amid a rebound in chip maker stocks after Taiwan Semiconductor Manufacturing Co, a supplier of chips to Apple (AAPL) and Nvidia (NVDA), reported better-than-expected second-quarter results and raised revenue growth estimates for 2024. But by the end of the trading day, stock indices gave up their early gains and retreated, with the S&P 500 (US500) posting a two-week low and the Nasdaq 100 (US100) falling to a three-week low. Falling shares of technology companies and large-cap banks weighed on the overall market.

Dovish comments from Chicago Fed President Goolsbee supported stocks yesterday when he said the Fed may have to cut interest rates soon to avoid a sharp deterioration in a labor market that has been cooling in recent months. Weekly US initial jobless claims rose by 20,000 to 243,000, indicating a weaker labor market than expectations of 229,000.

Equity markets in Europe traded mixed on Thursday. Germany's DAX (DE40) decreased by 0.45%, France's CAC 40 (FR40) closed up 0.21%, Spain's IBEX 35 (ES35) was up 0.38%, and the UK's FTSE 100 (UK100) closed positive 0.21%.

German producer prices fell by 1.6% y/y in June 2024, softer than the 2.2% decline in the previous month and in line with market estimates. This is the 12th consecutive month of producer price deflation, but the softest on record, amid falling energy prices (-5.9%), particularly natural gas (-14.8%) and electricity (-11.0%). UK retail sales in June 2024 declined 1.2% on the previous month, following a 2.9% rise in May, worse than market prognoses expecting a 0.4% drop.

On Friday, WTI crude oil prices fell to $82 per barrel, extending losses from the previous session, driven by a broad sell-off in risk assets and a stronger US dollar. On Thursday, US stocks and commodities declined and the dollar recovered as investors took a more cautious stance in assessing the global economic outlook.

The US natural gas prices (XNGUSD) rose more than 3.5% to above $2.1 per mmbbl, rebounding from a 10-week low after the EIA reported a smaller-than-expected injection into storage. The US utilities added 10 billion cubic feet (Bcf) of gas to storage last week, below the expected 28 Bcf increase, bringing total inventories to 3,209 Bcf, 16.9% above the 5-year average.

Asian markets traded mixed yesterday. Japan's Nikkei 225 (JP225) was down 2.36%, China's FTSE China A50 (CHA50) was up 0.46%, Hong Kong's Hang Seng (HK50) was up 0.22% and Australia's ASX 200 (AU200) was negative 0.27%.

A growing number of economists are pushing back the timing of interest rate cuts to the RBNZ's August meeting. Earlier in the week, data emerged that the country's annual inflation rate fell to a three-year low of 3.3% in the second quarter, down from 4% in the previous period. This spurred expectations of three rate cuts by the Reserve Bank of New Zealand, with markets estimating an overall rate easing of 70 basis points before the end of the year.

The increase in Australian jobs in June points to a tight labor market, adding to concerns about a possible interest rate hike by the Reserve Bank of Australia (RBA). However, the unemployment rate rose to 4.1% from 4%. The probability of a rate hike by the Central Bank in August now stands at 20%, up from 12% earlier this week. The RBA is also expected to ease policy much later than other major central banks. Against the kiwi, the Australian dollar is set to rise for a fifth consecutive week amid growing divergence in the monetary policy outlook between New Zealand and Australia.

According to preliminary data, Malaysia's economy grew to an annualized rate of 5.8% in Q2 2024, significantly higher than the growth of 4.2% in Q1. This was the highest GDP growth since Q4 2022, helped by expansion in all sectors. The services sector accelerated (5.6% vs. 4.7% in Q1), aided by wholesale and retail trade.

• S&P 500 (US500) 5,544.59 −43.68 (−0.78%)
• Dow Jones (US30) 40,665.02 −533.06 (−1.29%)
• DAX (DE40) 18,354.76 −82.54 (−0.45%)
• FTSE 100 (UK100) 8,204.89 +17.43 (+0.21%)
• USD Index 104.19 +0.45 (+0.43%)
   

Important events today:

• Japan National Core Consumer Price Index at 02:30 (GMT+3);
• UK Retail Sales (m/m) at 09:00 (GMT+3);
• German Producer Price Index (m/m) at 09:00 (GMT+3);
• Canada Retail Sales  (m/m) at 15:30 (GMT+3);
• US FOMC Willaams Speaks at 17:40 (GMT+3);
• US FOMC Bostic Speaks at 19:45 (GMT+3).

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