Daily Game Plan

by Contributor
on August 9, 2024

TODAY’S GAME PLAN:  from the trading
desk, this is not research

TODAY’S ECONOMIC DATA:  8:30ET Canada July Net Change in Employment, 1:00ET Baker Hughes US Rig Count

HIGHLIGHTS and News:  

  • July storm set record with 32 tornadoes in Chicago area, weather service confirms
  • Trump and Harris agree to Sept. 10 debate on ABC, with two more dates in the works
  • Woman Found Dead in Baggage Area at Chicago O’Hare Airport After Getting Trapped in Machinery: Reports

 

Global shares were broadly higher, with US futures stabilizing and benchmarks in Europe gaining. The rebound was supported by data showing fewer Americans filing
for jobless benefits, which helped alleviate recession fears. However, mixed signals from Federal Reserve officials and ongoing concerns about unwinding carry trades may prompt caution among investors. The Fed is expected to reject calls for a jumbo cut in
September, with most economists forecasting a 25-bp reduction. Earlier, Kansas City’s Jeffrey Schmid said the central bank is “still not quite there” on rate cuts. Meanwhile, BNY stated the unwinding of yen-funded carry trades has further room to run, with
the Japanese currency potentially strengthening to 100 per dollar over time.

 

EQUITIES:  

U.S. stock futures were slightly lower on Friday, paring earlier gains. In premarket trading, Doximity shares surged 27% after the healthcare software company raised its full-year revenue
forecast, while Expedia jumped 11% following strong second-quarter results despite concerns over softening demand. Paramount Global rose 6.2% after beating adjusted EPS estimates, even as it announced a significant impairment charge and workforce reduction.
Conversely, Five9 shares fell 16% after the call-center software provider lowered its full-year revenue guidance due to slowed bookings. Other notable movers included Pitney Bowes, which rose 23% after exceeding revenue expectations, and Trade Desk, which
gained 6.6% following a positive earnings report and optimistic outlook.

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq -0.3%, Russell 2000 +0.2%, DJI -0.05%

European shares rose on Friday, recouping the week’s losses as concerns over a potential U.S. recession eased following encouraging jobs data. The Stoxx Europe 600 Index climbed 0.7%,
led by gains in real estate, miners, travel, leisure, and banking sectors. Worries that the Federal Reserve has waited too long to ease policy have weighed on markets, particularly high-flying tech stocks. Last week’s U.S. jobs report triggered recession fears,
but an upbeat jobless claims figure on Thursday helped settle nerves. While some strategists remain sanguine about the economic outlook, the Stoxx 600’s August decline would rank as the biggest monthly drop in nearly two years. Assicurazioni Generali fell
after missing earnings expectations due to storm claims, while Lotus Bakeries hit a record high on an upbeat brand outlook. Hargreaves Lansdown gained after a consortium agreed to buy the investment manager in a £5.4 billion deal. Stoxx 600 +0.6%, DAX +0.3%,
CAC +0.4%, FTSE 100 +0.4%. 

Asian equities experienced a broad rally, primarily driven by technology stocks, although they remain on track for a fourth consecutive weekly decline. The MSCI Asia Pacific Index rose
by up to 1.9%, with significant contributions from TSMC, Recruit Holdings, and Samsung Electronics. Following a severe drop earlier in the week, investor sentiment improved after U.S. jobless claims data showed a decline. Despite this, concerns about the U.S.
economy and policy divergence between the Federal Reserve and the Bank of Japan continue to create volatility. Notably, tech stocks gained momentum due to positive earnings from firms like Tokyo Electron and SMIC, with TSMC reporting a 45% increase in July
sales. While benchmarks across the region generally rose, mainland China stocks fell amid ongoing demand concerns. China Mobile shares declined due to a disappointing profit outlook, while REA Group saw a significant rise after reporting strong revenue growth.
Japan’s Topix Construction Index surged following a powerful earthquake, reflecting varied market reactions across sectors and regions. Topix +0.9%, Nikkei +0.6%, China’s CSI 300 -0.3%; Hang Seng +1.2%; Kospi +1.2%; ASX 200 +1.2%

.

FIXED INCOME: 
 

U.S. Treasury long-end yields rose by approximately 4 basis points, reflecting a bull-flattening move that partially unwound Thursday’s selloff triggered by jobless
claims data. This trend was mirrored in core European rates, while stock futures traded higher on light volume. The flattening of the yield curve saw the 2s10s spread narrow by about 3 basis points, and the 10-year yield hovered around 3.95%, near the upper
end of its weekly range. No significant U.S. economic data or Federal Reserve speakers were scheduled for Friday, and despite a blank slate for investment-grade dollar issuance, strong demand had already led to $6.4 billion priced on Thursday, bringing the
week’s total to $45 billion against an anticipated $40 billion.

 

 

METALS: 

Gold prices were flat, buoyed by U.S. economic data that alleviated recession fears and supported a broader market rally. Following a five-day losing streak, bullion closed higher aided
by a Labor Department report indicating a notable drop in unemployment benefit applications, which raised hopes that the Federal Reserve could ease monetary policy without triggering a recession. Despite this rebound, gold has faced headwinds as holdings in
bullion-backed ETFs fell by 0.7%, marking the largest one-day decline since October. Spot gold -0.03%, silver -0.2%.

 

ENERGY:   

 

Oil prices were higher with traders monitoring developments in the Middle East and a rally in wider markets. Brent traded near $79 a barrel and West Texas Intermediate
was above $76, as signs of resilience in the U.S. labor market lifted stocks. Oil has rallied after Brent tumbled on Monday to a seven-month low, tracking a rout in global equity markets. Futures are set to end a four-week run of losses, with the halting of
Libya’s biggest field, a sixth week of U.S. stockpile draws and Ukraine’s incursions into Russia compounding the bullishness. WTI +0.5%, Brent +0.4%, US Nat Gas +1.8%, RBOB +0.1%

 

CURRENCIES:   

In currency markets, the dollar index stabilized paring a previous decline as jobless claims data eased recession fears. The sterling and kiwi dollar led gains among
Group-of-10 currencies, while the yen fluctuated, stabilizing around 147.22 after an earlier drop. Analysts noted that improving risk conditions have cleared many JPY-funded carry positions, suggesting USDJPY may stabilize between 146 and 148 in the short
term. The Norwegian krone saw a slight recovery after core inflation eased, indicating potential rate cuts by the Norges Bank. US$ Index flat, GBPUSD -0.02%, EURUSD -0.03%, USDJPY -0.1%, AUDUSD -0.2%, NZDUSD flat, USDCHF -0.2%.

 

 

 

Spot Bitcoin +1.9%, Spot Ethereum +2.4%.

 

 

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

 

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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