Market News:
📰 In the aftermath of Trump’s assassination attempt over the weekend, there remains an epic photo of the politician raising his fist, his face bloodied, as he is surrounded by his bodyguards. For many, if there was any debt on his victory, this event has taken it away, as most of the media polls are giving Trump as the next US president.
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🪙 The only market open at the time of the incident was the crypto market. The bitcoin #BTC experienced a considerable rise from around $60,000 to $63,000.
📈 The expectations are that tax cuts, higher tariffs, and less regulations would follow the Republican Party’s return to the White House. If Donald Trump were to win the election, several significant economic changes are anticipated. The end of climate policies would boost the energy sector, especially oil companies. Lower regulations would benefit banks, while support for the pharmaceutical industry would boost their stocks. A resumption of the trade war with China could cause Chinese stock markets to fall. Explicit support for Bitcoin would strengthen cryptocurrencies and the dollar is expected to become stronger.
📰 Today investors will be paying close attention to Fed Chair Jerome Powell, who is being questioned at the Economic Club of Washington by David Rubinstein.
📉 China’s GDP growth slowed to the weakest pace in five quarters in Q2 2024, missing estimates. Retail sales were also softer, indicating weaker domestic demand which could raise concerns about the outlook if not addressed. Industrial production was the only data that came out slightly better than expected, at 5.3% versus 4.9%, up from the previous period’s 5.6%. Today marks the beginning of China’s Third Plenum, one of the Chinese Communist Party’s most significant political gatherings. The twice-decade conference to determine the main political and economic agendas for the upcoming years.
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📈 Despite China’s poor GDP data, China’s stock market indices have recovered some of their lost value. Especially strong has been the recovery of the Hang Seng Index HSI, which has risen more than 5% from last week’s support at around 17,500 points.
📉 Among the most important events of the week will be the European Central Bank’s rate decision and Christine Lagarde’s speech. According to a Bloomberg article, when analysing the European Central Bank’s monetary policy stance, economists pay most attention to Isabel Schnabel and Philip Lane from the Executive Board, rather than ECB President Christine Lagarde. Lagarde takes more of a consensus-building chair role compared to previous ECB presidents who determined policy. She relies on others to communicate policy signals. Schnabel and Lane offer detailed analyses, but their forecasts have been wrong at times, like underestimating eurozone inflation. Villeroy de Galhau has surprised with dovish views, while Schnabel and Lane take contrasting analytical approaches.
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📈 European markets, surprisingly, are once again taking a bullish tone despite the bad situation of the European economy. The Dax 40 has approached 18,800 points, breaking the bearish structure it had been keeping, and could now be approaching its all-time high of 18,900 points.
📈 EURSUD has managed to climb to the 1.09 level and will remain in these areas during the European session.
Euro Bond yields have declined, taking away risks, and assuming further rate cuts from the ECB. The German two-year bond stands at a yield of 2.80%.
📉 On the other hand, this week will be important for the UK. We will see data on inflation, PPI producer prices, average earnings, unemployment rate and retail sales. All these data will have a bearing in one way or another on the BoE’s interest rate decision. The UK real estate sector remains concerned, firstly because of mortgage costs at current interest rates, and secondly because of the business disruption caused by the elections a few days ago.
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📉 The dollar weakness produced by the macro data and Powell’s comments last week, is letting the pound reach levels that exceeded our expectations, currently the GBPUSD is trading at 1.2970. UK macro data this week could produce corrections. If not, the next targets will be around 1.32.
Calendar of the week:
Monday:
📅 China: GDP, Industrial production, NBS Press conference.
Europe: Industrial production.
Tuesday:
📅 Europe: ZEW indicator.
Germany: Zew indicator.
US: Retail Sales.
New Zealand: CPI.
Wednesday:
📅 UK: Inflation CPI & PPI.
Europe: Inflation CPI.
US: Industrial production, Crude oil inventories.
Thursday:
📅 UK: Average Earnings, Unemployment rate.
Europe: Eurogroup meeting, deposit facility Rate, Interest Rate decision, Lagarde Speaks.
US: Initial Jobless claims, Philadelphia Fed Manufacturing index.
Friday:
📅 UK: Retail Sales.
