📈 Market Report:
After a week off, we return to your favourite financial reports.
📊 Let’s start by reviewing last week’s most important economic data. UK reported a lower than expected inflation rate at 2.2% annualised, which is positive for the Bank of England to ease the pressure on interest rates. On the other hand, we also had the growth rate of this economy, which was in line with expectations, projecting an annualised growth of 0.9%. However, July retail sales came out weaker than expected although recovered if in positive territory. The UK economy grew at the quickest rate among the G-7 during the first half of the year.
🇺🇸 In the US, the annualised inflation rate was also lower than expected, at an annualised 2.9%. Retail sales, however, were paradoxically higher than expected, coming in at 0.4% in July. Initial jobless claims, at 227k versus 236k expected, were another positive for the US economy.
🎤 This week’s event will be the central bankers Jackson Hole Symposium, which will start on Thursday and run until Saturday. For the first time in years, there has been a divergence among central bankers. While the ECB has cut rates, the Fed has yet to move but faces mixed US economic data. Rate futures show growing uncertainty around the size of the Fed’s next move. We are beginning to see some contradictory measures. The RBNZ shocked by cutting rates after signaling hikes, undermining its credibility and highlighting forecasting challenges. The BOJ had to swiftly change its message after surprising markets with a rate hike and guidance for more, then pledging to refrain from moves during instability. Fears of inflation are dissipating as concerns about an economic slowdown or possible recession increase. Core inflation remains above 3% in the US and the UK. In the case of the Euro zone, it falls today to 2.9%, however, in April it managed to reach 3% to rebound in May to 3.2%, so there is no guarantee that it will not rebound again with the rate cuts.
🔍 Market View:
Once again we are witnessing a miracle.
🇩🇪 The German economy, without growth since 2022, mysteriously recovers its stock market with an unknown verticality, in spite of the global situation, bearish pattern and loss of average of 200. We live in an intervened market.
🇺🇸 The US market is also quickly recovering from the previous days’ declines, with the SP500 heading full throttle towards its highs at 5700 points. The Nasdaq100 is about 1000 points from its all-time highs. The Russell 2000, much more modestly, is also in positive territory and is approaching 2200 points.
💲 The dollar index has lost 103 points and is currently trading at 101.80. Consequently, the EURUSD rises and is approaching 1.11. The US 2-year bond, however, back at 3.65% yield, is back above 4%.
💰 Bitcoin trades above $60,000 and is approaching $61,000.
🥇 Gold breaks new all-time highs, rising above 2500 $ per ounce. Crude oil also continues to fall, probably due to the announcement of a possible peace agreement proposed by Israel, with Brent crude currently at 77 dollars a barrel.
🌍 Geopolitics:
🇨🇭 Switzerland’s 2013 free trade agreement with China significantly boosted bilateral trade, but rising geopolitical tensions now pose challenges. Swiss companies face increasing US restrictions on technology transfers to China and scrutiny of partnerships with Chinese state firms. Proposed US legislation could further limit Swiss-Chinese collaboration in sensitive sectors like biotech and pharmaceuticals, while deeper US-China conflicts pressure Switzerland’s neutral and independent economic stance.
🇺🇸 Vice President Kamala Harris unveiled an economic agenda including price controls, reminiscent of socialist policies. Blaming higher grocery prices solely on corporate greed ignores market complexities. This proposed policy threatens to push the US economy down the path of socialism with potentially catastrophic results. It would also be fair to mention that the price hikes that Kamala Harris promises to fight have happened precisely during her administration, where she is the vice-president.
🇺🇦 Ukraine claims control of over 1,250 sq km of Russian territory in Kursk and 92 settlements, wearing down Russian forces. Ukraine has not confirmed but Russia says a third bridge was struck in Kursk complicating its defense. More than 121,000 people evacuated from border areas in Kursk as Ukraine unleashes counteroffensive.
🕊️ Blinken says Netanyahu accepted a US bridging proposal to resolve disagreements blocking a Gaza ceasefire deal, urging Hamas to do the same. Pressure is mounting on Biden amid pro-Palestinian protests as his party holds its national convention. Both Israel and Hamas have signaled any deal will be difficult due to months of failed talks over key issues.
