📉 Market Report.
S&P 500 futures were little changed after Nvidia shares plunged more than 8% in post-market trading following its earnings report. The Nasdaq 100 is also recovered, it dropped below 19,300 points after the market closed and the Nvidia data, but at this moment it is recovering the lost levels and appears stable.
🗣️ Yesterday, at an event hosted by the Stanford Club of Georgia and the Stanford Black Alumni Association-Atlanta, the Atlanta Fed’s Bostic said, ‘I don’t want us to get into a situation where we cut and then we have to raise rates again: that would be a very bad outcome’. Bostic said it may be ‘time to move’ on lowering rates, given that inflation has fallen more than expected and unemployment has risen more than expected. However, he wants the upcoming monthly employment report and two inflation reports to confirm, ahead of the Fed’s 17-18 September meeting, that economic trends remain in the same direction. This reaffirms the importance of next week’s Friday employment data.
🏦 The Fed agreed to lower Goldman Sachs’ required “stress capital buffer” to 6.2% from the initial 6.4% suggested, after the bank asked for reconsideration. The Fed said it adjusted the treatment of some nonrecurring historical expenses in Goldman’s exam, making the change appropriate. Its CFO welcomed the reconsideration.
🇺🇦 Ukraine secured widespread support from private creditors to restructure over $20 billion in overseas bonds, allowing critical debt relief. Investors holding over 97% of bonds agreed to swap them for new notes with nominal losses of 37% and later due dates at lower interest rates. The deal is estimated to save Ukraine $11.4 billion in debt service over the next three years to finance its defense and social services. The IMF will meet with Ukraine next week to review budgets and potentially disburse more aid. Ukraine also needs to renegotiate $2.6 billion in GDP-linked warrants and has temporarily suspended some other debt payments.
🚗 New car sales in the EU rose 0.2% in July but growth slowed as sales fell in major markets France and Germany. Battery electric vehicle sales declined 10.8% while plug-in hybrids fell 14.1%, though their combined market share rose to 50.9% of new registrations. Traditional hybrid sales increased 25.7% but the top automakers Volkswagen, Stellantis and Renault all saw sales declines of around 2-5% year-on-year. Tesla sales dropped 14.7% in the EU while Chinese automaker SAIC saw a 24.2% jump, reflecting growing competition. The European Commission recently cut proposed tariffs on imports of Tesla cars made in China to 9% while maintaining plans for tariffs up to 36.3% on other Chinese EVs.
🔍 Market View:
Bloomberg claims that the European market is more attractive than the US because the Eurostoxx has lower P/Es than the SP500. How long will European companies be able to pay such dividends in a dead economy since 2022? Today Dax40 is at record highs.
⚠️ On the other hand, the fear of bad results from Nvidia came true; however, the market has hardly been affected for the moment. It must be said that we will have to see the reaction in the stock once the market opens.
📈 The SP500, although positive, is trading below the 5650 levels reached this week. The Nasdaq 100, which is also rising this session, is more than 500 points off the high it almost managed to consolidate last week at 20,000 points.
💵 The dollar index, after making a base at 100 points, rebounds and stands at 101.15 points, pushing down the EURUSD which loses 1.11, after having reached the 1.12 level in the previous sessions. The US 2-year bond continues to fall in yield, standing at 3.85%, which fits in with dubious equities and more attractive bonds.
🇨🇳 In Chinese equities, we have seen an interesting divergence between the Hong Kong and Shanghai Stock Exchanges for the past few days. The HSI continues to show strength and has strongly recovered its prices over the last two weeks, however, the SSE although slower over the last few days, the index has only fallen since the loss of 3,000 points.
🌍 Geopolitics:
EU imports from Russia fell 16% in Q2 2024 to a new record low in June of €2.47 billion, the lowest monthly level since 2002. However, Exports also declined sharply by 9.5% in Q2, reaching the third-lowest monthly level of €2.43 billion in June since 2003. Trade has stabilized since mid-2023 as newer EU sanctions targeted circumvention more than specific goods bans. In contrast, Russia’s economy is growing much faster than the EU’s this year. As a reminder, European Commission President Ursula von der Leyen told us in 2022 that the Russian economy faced imminent financial collapse.
