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On Wednesday, US stocks traded mixed: the Dow Jones Index (US30) gained 0.24%, while the S&P 500 Index (US500) rose 1.28%. The Nasdaq Technology Index (US100) closed positive 2.64%. Stocks soared to highs when Fed Chair Powell said that upside risks to inflation have diminished due to a cooling labor market and a Fed rate cut "could be" at the September FOMC meeting. The FOMC, as expected, left the target federal funds rate unchanged at 5.25%–5.50% and said it was not going to cut interest rates "until it has more confidence that inflation is moving steadily toward 2%." However, the FOMC changed its statement after the meeting, saying it was "closely monitoring the risks to both sides of its dual mandate" instead of emphasizing only inflation risks.

Wednesday's flurry of bullish news also contributed to a surge in shares of chip companies. Shares of Nvidia (NVDA) rose more than 12% after Morgan Stanley called it the best-performing stock in the US and said the recent selloff has opened up a good entry point. Also, shares of ASML Holding NV rose more than 8% after Reuters reported that the Biden administration plans to exempt chip equipment makers in Japan, the Netherlands, and South Korea from upcoming export restrictions. Additionally, Advanced Micro Devices (AMD) rose more than 7% after unveiling an optimistic revenue outlook. This week, companies such as Meta (META) will report after the close on Wednesday, while Apple (AAPL) and Amazon (AMZN) will report on Thursday. Nvidia (NVDA) is expected to report earnings on August 28.

Equity markets in Europe were mostly up yesterday. Germany's DAX (DE40) rose by 0.53%, France's CAC 40 (FR40) closed higher by 0.73%, Spain's IBEX 35 (ES35) fell by 1.23%, and the UK's FTSE 100 (UK100) closed positive 1.13%.

According to economists, the Bank of England is set to begin its easing cycle today, cutting its key benchmark rate by 25 bps to 5% from a 16-year high of 5.25%. However, the decision will not be a clear-cut one, as many investors believe the Central Bank may prefer to keep rates unchanged due to concerns over inflation. Core inflation was unchanged at 2% in June, remaining at its lowest level since 2021. Services inflation, however, was strong at 5.7%, beating the Bank of England's estimate of 5.1%. Meanwhile, unemployment remained at 2021 levels, and wage growth, although slowing, was still strong. The Bank of England will also unveil new growth and inflation prognoses.

WTI crude oil prices rose to $78.7 a barrel on Thursday, extending gains after a more than 4% jump in the previous session, amid continued concerns over possible supply disruptions due to the growing threat of wider conflict in the Middle East. Hamas leader Ismail Haniyeh was killed in Tehran early Wednesday after Israel said an airstrike on Beirut on Tuesday killed Hezbollah's top commander. Iran vowed revenge, saying Israel would "pay a heavy price." Meanwhile, EIA data showed a larger-than-expected 3.43 million barrel decline in US crude oil inventories, well above market expectations for a 1.6 million barrel decline and extending a similarly large drop in inventories the previous week, marking the fifth consecutive decline in inventories.

Asian markets were predominantly up yesterday. Japan's Nikkei 225 (JP225) rose by 1.49%, China's FTSE China A50 (CHA50) climbed 1.64%, Hong Kong's Hang Seng (HK50) gained 2.01%, and Australia's ASX 200 (AU200) was positive 1.75%. The Nikkei 225 Index (JP225) was down 2.49% at the market open today, and the broader Topix Index was down 3.24%, wiping out gains from the previous session as the Bank of Japan raised its discount rate to 0.25% and said it is willing to raise it further if the economy demands it. Markets are betting on two more rate hikes this fiscal year, which ends in March 2025, with the next rate hike coming in December.

The S&P Global Vietnam Manufacturing PMI for July 2024 stood at 54.7, remaining at its highest level since May 2022. New orders rose for the fourth consecutive month, but the pace of growth is slightly slower than the near-record pace in June. New export orders also increased, albeit at a much lower rate compared to total new orders. As a consequence, manufacturers increased output at the second-highest rate on record. On the price side, input cost inflation was only slightly weaker than the two-year high last month, pushing up input costs for the third consecutive time.

• S&P 500 (US500) 5,522.30 +85.86 (+1.58%)
• Dow Jones (US30) 40,842.79 +99.46 (+0.24%)
• DAX (DE40) 8,508.65 +97.47 (+0.53%)
• FTSE 100 (UK100) 8,367.98 +93.57 (+1.13%)
• USD Index 104.02 −0.54 (−0.51%)
   

Important events today:

• Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• Australia Trade Balance (m/m) at 04:30 (GMT+3);
• German Manufacturing PMI (m/m) at 10:55 (GMT+3);
• Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
• UK BoE Interest Rate Decision (m/m) at 14:00 (GMT+3);
• UK BoE Monetary Policy Statement (m/m) at 14:00 (GMT+3);
• UK BoE Gov Bailey Speaks at 14:30 (GMT+3);
• US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• Canada Manufacturing PMI (m/m) at 16:30 (GMT+3);
• US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3);
• US Natural Gas Storage (w/w) at 17:30 (GMT+3).

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