News Market Report:
📈 This week we will have the BoE rate decision on Thursday. Bloomberg publishes interesting information on the domestic repo market. The Bank of England is trying to normalise its balance sheet by selling bonds, but without altering rates, as the new government continues to issue new bonds to finance public spending.
📉 The Bank of England’s potential interest rate drop might give prospective properties purchasers more confidence. Sales in 2023 and the years before to the pandemic were lower in the first half of 2024, according to the Zoopla index of weekly sales.
🇪🇺 In Europe, demand weakens and large firms cut their profit forecasts. According to Bank of America, profit forecast cuts in Europe are the largest in the last four quarters. The growth slowdown in Europe, which we have been warning about for months, is finally starting to be reflected in the balance sheets of major companies.
📊 This week we will also see both inflation and growth data in the euro zone. These data will be crucial to reaffirm confidence in an ECB rate cut in September. The European market is soft, its stock markets have not fallen recently and its bond yields have risen, so it is important to watch these weekly data closely.
🤔 According to a Reuters poll, 56% of respondents still fear that core inflation is a problem, and believe the year will end with central banks missing their targets. Of particular concern is the pick-up in transport inflation, which could neutralise the easing of falling inflation in other sectors. Nevertheless, expectations currently call for rate cuts this year from the Bank of England and the Federal Reserve. In the case of the European Central Bank, even three rate cuts are expected.
📉 Market Review:
The Mini Sp500 futures have not been able to regain the 5,525 points, which act as resistance, since last week. The gas that fed the rest of the sectors seems to have run out, the Russell 2000 has also failed to advance beyond 2,280 points. The Nasdaq also seems to have failed to recover from last week’s declines, with its main price barrier at 19,200 points.
📈 The dollar, DXY index, seems to be reviving. It is back above 104.50 points, and could be headed for 105 points.
The EURUSD is also starting to show weakness and what appears to be a bearish pattern, which if fulfilled, could set price targets towards 1.07.
📉 The European market is also in trouble. The Dax 40 fails to recover its uptrend, its main barrier is in the range of 18,500 to 18,600. It is currently trading at around 18,400. A loss of the 18,000 level could trigger heavy selling and bearish figures.
📈 Gold has risen with a weekly opening in futures that leaves a gap to the upside. 2450 $ remain resistance and $ 2,500 target new high that could rise if global instabilities increase, see geopolitics section.
📉 Crude oil, on the other hand, continues to cool, and the brent barrel has fallen to 78.95. Venezuela’s rebellions do not seem to be causing concern.
Geopolitics:
🇭🇺 Hungarian officials and its prime minister accuse Poland of lying. The new pro-EU government is no longer a close ally of Hungary as they traditionally were. The new Polish Prime Minister, Radoslaw Sikorski, claimed that the Hungarian foreign minister supported a meeting of foreign ministers in Ukraine, which he said was a lie. For his part, Hungary’s PM Orban said that Poland continues to buy Russian oil through intermediaries, while criticising Russia.
🇺🇦 Slovakia and Hungary have stepped up pressure on Ukraine since it placed Lukoil on its sanctions list, cutting off the flow of crude oil to its refineries. Slovak Prime Minister Robert Fico has announced that his country will stop diesel supplies to Ukraine if Kiev does not restore the transit of Russian oil through its territory.
🇻🇪 The outcome of Venezuela’ s presidential election remains disputed between the government and opposition-aligned candidates and observers. The electoral authority declared Maduro the winner, with 51% of the vote to Gonzalez’s 44%, although polls predicted an opposition victory. The opposition claimed that independent exit polls gave it between 65% and 70% of the vote. The EU called for transparency and a detailed recount of the votes, while the US expressed concern that the results might not reflect the will of the people.
🗓️ Important events this week:
Tuesday:
French GDP, Consumer Spending.
Germany: GDP & CPI.
EU: GDP.
Spain GDP, CPI.
Mexico: GDP.
US: Consumer Confidence & JOLTs.
Wednesday:
Japan: Industrial production & Interest Rate Decision.
Australia: CPI, Retail Sales.
China: PMI.
Germany: Retail sales report & Unemployment Rate.
French: CPI.
EU: Inflation CPI.
US: ADP NFP change, Oil inventories, Fed Rates decision.
Canada: GDP.
Thursday:
European Countries: PMI Manufacturing, Unemployment Rate.
UK: Manufacturing PMI. BoE interest Rate Decision. Bailey Speaks.
US: Manufacturing PMI.
Friday:
US: NFP, Unemployment Rate, Factory orders.
