Report by Renta 4
The markets opened without any major movements in Europe (Euro Stoxx futures virtually flat) and slightly up in the United States (S&P futures up 0.1% and Nasdaq flat), following another calm session yesterday on the main stock exchanges, with a better tone in Europe (up 0.24% Euro Stoxx 50) than in the US (down 0.32% for the S&P 500 and down 0.60% for the Nasdaq), given the absence of any major macroeconomic data and ahead of the week’s key macroeconomic release due today: the US CPI for July.
Meanwhile, it is worth noting the rise in the Kospi (approx. 5%) driven by gains recorded by the leading memory chip manufacturers (Samsung and SK Hynix) amid optimism over remuneration policies.
All this against a backdrop of the Strait of Hormuz being blocked and no significant progress in the negotiations, where Iran’s hardline stance, coupled with Trump’s new demands (war reparations), seem to be pushing the possibility of a short-term agreement further and further away. Similarly, even if an agreement were to be reached, its longevity would remain a source of uncertainty. Furthermore, the Houthis claimed to have attacked a Saudi vessel in the Bab el-Mandeb Strait.
Consequently, following Monday’s sharp rally in the crude oil market, yesterday saw a continuation of theprice surge, with Brent crude exceeding $88 per barrel (> 1.3 per cent up yesterday; this morning, up 0.5 per cent to >$89 per barrel).
Despite this, according to statements by Pakistan’s Defence Minister (Khawaja Asif), the United States and Iran are reportedly close to reaching an agreement.
On the macro front, yesterday’s session saw the NFIB Small Business Optimism Index for July exceed expectations (99.8 versus 97.3 expected and 97.4 previously), reaching its highest level since August last year. Meanwhile, the ADP weekly employment change showed an average of 8,250 jobs (compared to 15,000 previously), marking its sixth consecutive slowdown and the lowest figure since January.
As mentioned, the focus this week will be on the US inflation data due to be published today, which is expected to show a slight fall of one tenth of a percentage point compared with the previous reading on a year-on-year basis (3.4%e overall and 2.5% expected for core inflation). This figure will serve to gauge the Federal Reserve’s next steps.
At present, the market is pricing in a 50% probability of a rate hike of 375–400 basis points at the next meeting on 16 September. In this regard, yesterday we heard comments from Goolsbee of the Chicago Fed (a voting member) stating that inflation is the biggest problem currently facing the US economy, ahead of the labour market, which remains stable (despite some slightly weaker recent data).
Finally, at the micro level, Core Weave’s results (up 15% in after-hours trading), which met consensus estimates but included a positive message in its guidance regarding the ‘boom’ in demand for AI, offer grounds for optimism regarding a slowdown in further massive sell-offs in the technology sector. Today, E.ON (Germany) and Vestas (Denmark) will publish their results.
