📈 Market Report
📊 Powell’s remarks on Friday were in line with the market’s optimistic expectations. Proof of this is that the market trend did not change at all, with no surprises, we are pretty much where we were before the speech.
🗣️ However, it is interesting to note that Powell’s words show that last month’s employment data made clear some fears of a possible recession: ‘The time has come to tighten policy. We will do all we can to support a strong labour market while continuing to move towards price stability. We do not seek or welcome further cooling of labour market conditions, including further unwelcome weakening. The balance of risks to our mandates has shifted. The upside risks to inflation have diminished, the downside risks to employment have increased’.
💰 Earnings Presentation: NVIDIA is once again expected to beat earnings expectations tomorrow. We will publish a special report on the company in the coming hours. In summary, we can highlight the innovative process introduced by the company, such as the new Blackwell GPU architecture, which aims to increase the power of its microprocessors.
📉 At the moment, the company is trading at approximately $126.50, with the challenge of breaking the $140 barrier, reached last June, ahead of it.
🔻 PDD, owner of online retail giant Temu, plunged 29%, wiping out $55B in value, on the unexpectedly gloomy outlook and revenue miss, dragging rivals lower. PDD CEO warned revenue/profits must “inevitably” decline as economic growth slows, stunning investors given its popularity among cost-conscious Chinese consumers. Consumption has weakened this year after a post-Covid rebound, as job/salary cuts and property woes curb spending amid 3% retail sales growth, down from 8% previously. Residents’ confidence in future income plunged to the worst level since late 2022, and nearly two-thirds prefer saving more given economic uncertainty.
⛏️ Mining giant BHP reported full-year profit in line with estimates, however, faces near-term headwinds from China’s economic slowdown cooling steel demand and iron ore prices, which make up two-thirds of BHP’s revenue. China’s property downturn and surplus steel are damping metals demand, as the top steelmaker warned of a crisis worse than 2008/2015.
🛢️ The price of crude oil has rebounded in a surprise move. Libya’s eastern government said it will shut down all crude output and exports amid a struggle with Tripoli over central bank control and oil revenues. The east said Tripoli’s government is “illegitimate” and stripped it of army command, challenging UN transition efforts. The east controls most reserves and export terminals. A drop in exports could push Brent briefly above $85/bbl. Brent crude jumped over 3% above $81/bbl on the news, as Libya sits on Africa’s largest known crude reserves but production suffers from political instability.
📊 Market View:
🔄 The market remains largely unchanged from last week. The statements made during the Jackson Hole symposium did not have the impact we expected.
📉 The SP500 remains in the 5630 point zone, close to the highs of 5700 points, but without reaching them for more than a week. Nasdaq 100 even slips back and loses 19500 points awaiting the results of the giant NVIDIA. Once again, the Russell 2000 diverges from the majors and is particularly strong above 2200 points.
💵 The dollar index DXY remains above the 100 point support. The EURUSD is above 1.1150. and the US 2-year bond is little changed at around 3.95% yield.
🇪🇺 In the European market, the Dax 40 is surprisingly advancing, surpassing resistance at 18600 points and coming within 300 points of its all-time high near 19000 points.
🌍 Geopolitics:
🚀 Russia attacked Ukraine with over 200 missiles and drones, striking energy facilities nationwide and killing at least 7 people. Possibly in response to the ‘Ukrainian’ attack on Russian oil facilities in the Kransnodar region. The air force said it downed 102 out of 127 incoming missiles and 99 out of 109 drones, describing it as Russia’s largest attack of the war so far. 15 regions sustained damage to power and critical infrastructure, with outages reported in many areas including Kyiv. Tensions rose after an apparent drone incident in neighboring Poland.
⚔️ Hezbollah launched hundreds of rockets and drones at Israel early Sunday, as Israel struck Lebanon with around 100 jets in response to thwart a larger attack. Both sides have messaged they don’t want escalation for now but warned of potential further strikes. A major flare-up of cross-border attacks took place but both sides indicated for now they want to avoid a wider conflict, even as tensions remain high.
