- Yesterday’s successful session on Wall Street boosted sentiment on Asian exchanges, and today’s futures market trading indicates that the rebound is continuing. The US100 is gaining more than 1.5%, with the US500 up 1.1%, despite disappointing results from Super Micro Computer, the manufacturer of server racks used in data centres and AI; shares are trading down 13% after the quarterly earnings. The VIX index loses -5% and remains near 23 zone
- Futures on the Nikkei, JAP225 are trading up more than 6%, continuing the rebound after a record series of declines since 1987. At the same time, the yen is weakening, and the USDJPY pair gains more than 2% today, rising above 147.5 as the yen weakened;; Japanese leading indicator change came in -2.6 vs 0.3 previously
- BoJ Uchida commented divishly that Japanese central bank will not raise rates when market is unstable. According to his remarks, US soft landing is likely but not 100% certain, but as for now Uchida sees no big changes in both Japan and US economies. Benefits of a potentially cheaper currency supported export-orientated Japanese stocks
- The Nikkei was followed by the KOSPI, which gained nearly 2.5% today. The Australian index fared relatively less well and rose 0.5% against a more than 1.6% rise in China’s Hang Seng Index. Chinese index futures gain more than 2%; Chinese trade balance came in 84 bn USD vs 99 bn USD exp. and 99 bn USD previously; imports came in higher 7.2% YoY vs -2.3% exp. and 3.3% previously, signalling stronger demand across the country while exports came in 7% YoY vs 8.6% exp. and 9.6% in June
- EURUSD is trading above 1.091 and is down -0.16% today. German industrial data scheduled for 8:00 a.m. could raise volatility on the Eurodollar. Yields on 10-year U.S. bonds are rising above 3.91%, and a number of analysts have commented that the panic reaction to weaker U.S. data was exaggerated, while the chances of a recession are still limited
- Super Micro Computer (SMCI.US) reported weaker quarterly results than forecasts ($6.12 vs. $8.12 forecasts), also revenues of $5.31 billion missed expectations of $5.32 billion. The company’s profit expectations for the current quarter ($7.48 vs. $7.58 forecasts and $6.5 billion in revenue vs. $5.52 billion forecasts) missed projections. Super Micro announced a 10:1 split (effective October 1, 2024). Gross margins were unexpectedly the lowest since 2007 falling to 11.2% vs. 15.5% in the previous quarter and 17% a year ago. By some investors, the Super Micro report was said to ‘give guidance’ on AI trend, as Nvidia Q2 won’t be known until August 28; after SMCI report, Nvidia shares lose 2.5% after US session
- Oil is gaining more than 0.6%, and similarly, a small rebound is seen in natural gas (NATGAS) contracts. Yesterday’s API data indicated a lower-than-expected inventory change of 180,000 barrels vs. 850,000 barrels forecast and a -4.49 million barrel drop previously
- The rebound continues in the cryptocurrency market, where Bitcoin is already approaching $57,000 and gaining more than 1%. On Monday, the price of the largest cryptocurrency fell to $47k. Ethereum gains 1.5% and rises above $2,500
- Pimco’s Ivascyn expects two-three Fed rate cuts this year, the first 25 bps cut in September and told that ‘The US recession risk has increased, but a soft landing is still more likely.’ Also, Goldman Sachs CEO Solomon thinks that the Fed will forgo an emergency cut, and see no US recession.
- Today’s macro calendar is relatively sparse; the change in US gas and oil inventories according to the EIA is scheduled for 3:30 PM GMT. At 6:30 PM GMT we’ll learn the Bank of Canada’s minutes from its last meeting, and at 8 PM GMT US consumer credit data for July (expected $10 billion vs. $11.35 billion previously). The most important report is probably German industrial production (July report) scheduled at 7 AM GMT; markets expect stronger MoM (exp. 1% vs -2.5% previously) but still weak data (-4.2% YoY vs -6.67% previously)
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