Daily Game Plan

by Contributor
on August 13, 2024

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

TODAY’S ECONOMIC DATA:  ET 8:30 a.m.: US July PPI, 1:15 p.m.: Fed’s Raphael Bostic speaks

HIGHLIGHTS and News:  

  • Puerto Rico activates National Guard as tropical storm warning issued for Caribbean
  • Death Valley National Park confirms second heat-related death of the summer
  • X suffers tech failures at start of Donald Trump interview with Elon Musk.
  • Starbucks names Brian Niccol as Chairman and Chief Executive Officer

World stocks were mixed as major indexes continue to recover from the recent selloff. Treasuries and the dollar remain relatively stable as investors await a series
of economic data releases this week, beginning with producer price inflation figures later today, which will set the stage for Wednesday’s closely-watched Consumer Price Index report. The market is also digesting earnings results, with Home Depot’s reduced
sales forecast due to a weak housing market marking the start of a series of updates on U.S. consumer behavior. Elsewhere in markets, oil remained near $80 while gold fell, and the pound strengthened on robust UK employment data.

 

EQUITIES:  

US equity futures edged higher as investors awaited US price data for guidance on the Federal Reserve’s policy path, while rising tension in the Middle East weighed on risk appetite .Individual
stocks showed mixed performance, Baxter rises after agreeing to sell its kidney care segment for $3.8 billion, while Home Depot falls 2% after lowering its sales forecast for the year. Starbucks shares jumped premarket;
 Starbucks has appointed current Chipotle Mexican Grill chief Brian Niccol as its next leader, an abrupt management change for the coffee chain as it works to turn around its business
and contend with activist investors.  Paysafe jumps 10% after boosting its revenue outlook, and Rumble climbs 4% on better-than-expected Q2 results. Other notable movers include Huya up 7% on a special dividend, On Holding down 5% despite topping Q2 Ebitda
estimates, and Pacira BioSciences slipping 3% after a patent ruling.

Futures ahead of the bell: E-Mini S&P +0.4%, Nasdaq +0.6%, Russell 2000 -+0.2, DJI +0.1%

European stocks declined on Tuesday, reversing earlier gains as investors adopted a cautious stance ahead of key U.S. inflation data. The Stoxx Europe 600 Index fell amid plummeting investor
confidence in Germany’s economy and concerns following Home Depot’s reduced sales forecast. The latest Bank of America fund manager survey indicated a growing pessimism, with nearly half of European investors expecting earnings declines due to slowing growth
and waning inflation. Despite recovering nearly half of their August losses last week, European markets remain down about 3.9% this month, with volatility anticipated as traders await inflation reports that could signal economic growth and influence Federal
Reserve rate decisions. Individual stock movements included a 23% surge for HelloFresh after strong earnings, while Tecan Group fell 19% due to a profit miss and lowered outlook. DAX -0.01% FTSE -0.1%, Stoxx 600 -0.1%, CAC 40 -0.2%.

Asian stocks gained on Tuesday, primarily driven by a robust tech rally in Japan, where the Nikkei 225 surged by 3.5% as investors returned from a three-day weekend. The index closed
with 198 stocks advancing against only 25 declining, bolstered by a favorable response to tech stocks influenced by positive cues from Wall Street. TSMC, Recruit Holdings, and Samsung Electronics contributed the most, helped by optimism over positive results
from chip-equipment firm Tokyo Electron and SMIC, China’s largest semiconductor maker. Shares connected to Chinese auto dealers, including Yongda Auto, fall as Morgan Stanley cuts its price targets on concerns that the new car business could hit a historical
low in the first half of the year. Most Adani Group shares climb with power and natural gas units leading after MSCI said it is resuming the update of changes in free float of Adani Group stocks. Topix +2.8%, Nikkei +3.4%, China’s CSI 300 +0.2%; Hang Seng
+0.3%; Kospi +0.1%; ASX 200 +0.1%.

FIXED INCOME: 
 

Treasury yields remained relatively stable on Tuesday as investors awaited key inflation data. The 10-year Treasury yield edged up slightly to 3.919%, while the 2-year yield inched higher
to 4.021%. Markets are anticipating a rate cut, but the magnitude remains uncertain, with traders divided on expectations. The data will provide insights into economic conditions and potentially impact the Fed’s approach to avoiding a hard landing.

 

METALS: 

Gold prices slipped on Tuesday, retreating from Monday’s 1.7% gain, as traders await the U.S. Producer Price Index report. A higher-than-expected PPI could dampen
expectations for rate reductions, potentially pressuring gold prices, as lower rates typically support the non-interest-bearing metal. Investors are closely monitoring these inflation readings for clues about the Fed’s future monetary policy direction and
its impact on gold’s appeal as a hedge against inflation. Gold -0.4%, Silver -1.1%.

 

 

 

ENERGY:   

 

Oil prices remained stable on Tuesday as supply risks from potential Middle East conflict escalation were balanced against demand concerns, following OPEC’s reduced 2024 demand
growth forecast. Despite five consecutive sessions of gains, the market faces geopolitical tensions supporting prices, and uncertain demand, particularly from China. The International Energy Agency maintained its 2024 global oil demand growth forecast but
trimmed its 2025 estimate. Investors remain vigilant about Middle East developments, with the U.S. anticipating potential attacks by Iran or its proxies, which could significantly impact global crude supplies and prices. WTI -0.3%, Brent -0.3%, Nat Gas -0.9%.

 

CURRENCIES:   

In currency markets, the dollar steadied as investors awaited U.S. producer price data to gauge Federal Reserve rate cut prospects, while the yen and Swiss franc
lagged other major currencies as global equities recovered from last week’s losses. Meanwhile, the pound rose to a one-week high following unexpected strength in UK employment data, reinforcing expectations of delayed Bank of England rate cuts. US$ Index +0.02%,
GBPUSD +0.2%, EURUSD -0.02%, USDJPY +0.1%, AUDUSD +0.1%, NZDUSD +0.4, USDCHF +0.3%.

 

 

Spot Bitcoin +0.05%, Spot Ethereum -1.2%.

 

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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