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At Monday's close, the Dow Jones Industrial Average (US30) was up 0.32%, while the S&P 500 Index (US500) added 1.08%. The Nasdaq Technology Index (US100) closed positive at 1.58%.

NVIDIA Corporation (NVDA) closed nearly 5% higher after Reuters reported that the chipmaker is developing a B20 version of its Blackwell GPU specifically for the Chinese market that will comply with US export control requirements. Ahead of Alphabet's (GOOG) results release, Wedbush said it sees the tech giant's sentiment as "positive ahead of second-quarter results" as advertising reviews and agency commentary point to the "continued strength of Google search." Ahead of Tesla's (TSLA) results release, CEO Elon Musk said humanoid robots will be used internally next year.

Equity markets in Europe were mostly up on Monday. Germany's DAX (DE40) rose by 1.29%, France's CAC 40 (FR40) closed positive 1.16%, Spain's IBEX 35 (ES35) added 0.51%, and the UK's FTSE 100 (UK100) closed positive 0.53%.

The Bank of England (BoE) urges market participants to prepare for a new cash management regime as excess liquidity is withdrawn from the financial system. Victoria Saporta, BoE executive director of markets, said the Central Bank wants to move from buying assets in exchange for cash reserves to a system of lending cash against those assets. The market has switched to repos as the BoE shrinks its balance sheet by selling bonds and not reinvesting in its maturing bond portfolio. However, the Central Bank now wants banks to use longer-term operations rather than short-term repo (STR) more often.

Morgan Stanley said the oil market deficit is likely to persist through most of the third quarter. However, by the fourth quarter, the market is expected to stabilize. This change is due to the decline in demand that typically occurs after summer and the projected increase in oil production by both OPEC and non-OPEC countries. That said, Morgan Stanley predicts that supply is likely to outstrip demand next year. The investment bank expects the oil price to fall to $75–79 by 2025.

WTI crude oil prices settled at $78.5 a barrel on Tuesday after falling for three consecutive sessions as investors' attention shifted to US oil inventory data. On Monday, the People's Bank of China unexpectedly lowered its interest rate to support economic growth, easing fears of a weakening Chinese economy and easing concerns about demand from the main oil consumer.

Asian markets were predominantly down yesterday. Japan's Nikkei 225 (JP225) was down 1.16%, China's FTSE China A50 (CHA50) lost 1.08%, Hong Kong's Hang Seng (HK50) added 1.25%, and Australia's ASX 200 (AU200) was negative 0.50%.

Hang Seng (HK50) shares fell by 0.4% in Tuesday morning session, bouncing back from an active session the previous day after fresh data showed Hong Kong's annual inflation rate rose to a 3-month high of 1.5% in June, rising for a second month on the back of lower electricity subsidies. Meanwhile, business sentiment in the city turned negative in Q3 for the first time in 2 years due to concerns over a new security law.

Singapore's annual inflation rate fell to 2.4% in June 2024 from 3.1% in May, below market estimates of 2.7% and pointing to the lowest rate since August 2021. Annualized core inflation fell to 2.9% from 3.1% in the previous 3 months, falling short of the 3.0% prognosis and indicating the lowest level since March 2022. On a month-on-month basis, CPI fell by 0.2%, the first decline in three months.

The Australian dollar held below $0.665, near its lowest level in three weeks, as China's surprise move to cut key interest rates pressured the currency. The Australian dollar is widely seen as a liquid proxy for the Chinese yuan, as Australia's economy relies heavily on exports to China. The local currency has also been pressured recently by weakening commodity prices as Australia is a net exporter of energy and metals.

In Japan, Toshimitsu Motegi, a senior ruling party official, called on the Bank of Japan to more clearly outline its plan to normalize monetary policy through successive rate hikes, adding that excessive yen depreciation was hurting the economy.

• S&P 500 (US500) 5,564.41 +59.41 (+1.08%)
• Dow Jones (US30) 40,415.44 +127.91 (+0.32%)
• DAX (DE40) 18,407.07 +235.14 (+1.29%)
• FTSE 100 (UK100) 8,198.78 +43.06 (+0.53%)
• USD Index 104.30 -0.10 (-0.09%)
   

Important events today:

• Singapore Consumer Price Index (q/q) at 08:00 (GMT+3);
• US Existing Home Sales (m/m) at 17:00 (GMT+3).

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