Daily Game Plan

by Contributor
on August 19, 2024

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

TODAY’S ECONOMIC DATA:  ET 9:15 a.m.: Fed’s Christopher Waller speaks, 10:00
a.m.: US July Conference Board Leading Index

HIGHLIGHTS and News:  

  • Thousands of activists expected in Chicago for Democratic convention to call for Gaza cease-fire
  • SpaceX is preparing to launch its next private mission from Florida on Aug. 26, and it will be the company’s first attempt at a spacewalk.
  • Hideki Matsuyama wins tournament without caddie, coach after trio was robbed in airport

 

 

World stocks were slightly higher following last week’s risk-on rally as investors await signals on potential interest rate cuts from the Federal
Reserve at the upcoming Jackson Hole symposium. S&P 500 futures were flat, while AMD shares rose premarket on an acquisition announcement. Goldman Sachs trimmed the probability of a US recession in the next year to 20% from 25%, citing last week’s retail sales
and jobless claims data. Meanwhile, the yen rallied against the dollar, which traded at its weakest level since March, and Treasury yields declined as the Fed’s Mary Daly told the FT she has “more confidence” that inflation is under control.

 

EQUITIES:  

 

US stock futures were little changed as investors await the Jackson Hole economic symposium for clues on Fed policy. Notable movers included AMD
rising 2% on its $4.9 billion acquisition of ZT Systems; Estee Lauder falling 6% after forecasting lower-than-expected annual revenue growth; FuboTV up 13% after competitors were blocked from launching a streaming sports service; HP slipping 2% on a Morgan
Stanley downgrade; Liquidia dropping 37% on FDA approval delays; Shake Shack and Dutch Bros falling on analyst downgrades; Xperi rising 19% after selling assets to Amazon; and ZIM Integrated Shipping gaining 14% after boosting its earnings guidance. Other
movers across market caps included gains for Palantir, Stellantis, and Maxeon Solar, while Coinbase, Super Micro Computer, and Icahn Enterprises declined.

Futures ahead of the bell: E-Mini S&P +0.05%, Nasdaq +0.05%, Russell 2000 -0.03%, DJI +0.02%

European stocks extended their rally, with the Stoxx Europe 600 Index rising 0.3%. Basic resources and retail sectors outperformed, while health care lagged. Notable
movers included Plus500 Ltd. gaining on strong first-half performance and Ericsson remaining steady after selling its US call-routing business. The benchmark index is recovering from a mid-July slide, with improving technical indicators suggesting a risk-on
mood. Investors are focused on Fed Chair Jerome Powell’s speech on Friday and upcoming European business activity data for insights on economic health, particularly in Germany and France. Strategist Joachim Klement noted improving investor sentiment but cautioned
that slowing European economies could create new macro concerns for markets. DAX +0.2%, FTSE -0.04%, Stoxx 600 +0.3%, CAC 40 +0.4%.

Asian stocks advanced for a second consecutive session, supported by gains in regional currencies and a rally in Chinese technology shares following positive earnings
reports. The MSCI Asia Pacific Index rose 0.9%, building on a 2.5% increase from Friday, with notable movers including Seven & i Holdings, which jumped 23% after receiving a buyout offer from Canada’s Alimentation Couche-Tard. Shares of JD.com extended their
post-earnings rally, while China Resources Beer rose 0.4% after reporting a slight increase in net income. PetroChina and Sinopec gained 0.7% and 0.6%, respectively, following an upgrade from Morgan Stanley. In contrast, A2 Milk shares slumped 19% after missing
full-year net income estimates, making New Zealand’s benchmark stock index the worst performer in Asia. Topix -1.4%, Nikkei -1.7%, China’s CSI 300 +0.3%; Hang Seng +0.8%; Kospi -0.8%; ASX 200 +0.2%.

FIXED INCOME: 
 

Treasuries held small gains across the long end of the curve, with 30-year yields about 1 basis point lower than Friday’s close, as bunds outperformed.
The 10-year yield was around 3.875%, slightly lower on the day, with bunds outperforming by 1 basis point in that sector. Front-end Treasuries lagged, flattening 2s10s and 5s30s spreads by about 1 basis point. The market anticipates around $20 billion in new
bond sales this week, with Treasury issuance resuming Wednesday. Key events this week include manufacturing and services PMIs, new home sales data, and the release of July 31 FOMC meeting minutes on Wednesday.

 

 

METALS: 

 

Gold prices edged lower however still near its record high; the precious metal breached $2,500 an ounce for the first time on Friday, up over 20%
this year, driven by expectations of rate cuts, central bank purchases, and haven demand amid global conflicts. Meanwhile, SPDR Gold Shares has seen seven consecutive weeks of inflows, marking the longest streak in over two years, and suggesting renewed investor
interest in gold as the Federal Reserve prepares to shift towards easier monetary policy. Gold -0.5%, Silver +0.1%

 

 

 

ENERGY:   

 

Oil prices slipped as traders weighed various factors affecting demand and geopolitical risks. Brent crude fell toward $79 per barrel while WTI
neared $76, with prices declining in four out of the last five sessions. Concerns about slowing economic growth and fuel demand in China, the world’s largest oil importer, contributed to the softness. Meanwhile, ongoing tensions in the Middle East, including
potential Iranian retaliation against Israel and stalled ceasefire talks between Israel and Hamas, added uncertainty. WTI -0.8%, Brent -0.7%, Nat Gas +1.2%.

 

 

CURRENCIES:   

In currency markets, the dollar fell against most G-10 currencies, with the yen leading gains. USDJPY fell as much as 1.7% to 145.19 amid rising
JGB yields and algorithmic trading. Sterling rose, supported by a weaker dollar but also potentially due to demand from merger and acquisition activity, according to ING. Traders are adjusting positions ahead of Jackson Hole, with recent U.S. economic data
giving Fed officials like Mary Daly more confidence that inflation is under control, though the economy is “not in an urgent place” for policy changes.US$ Index -0.2%, GBPUSD +0.1%, EURUSD +0.06%, USDJPY +0.9%, AUDUSD +0.3%, NZDUSD +0.3%, USDCHF +0.1%.

 

 

 

Spot Bitcoin -2.1%, Spot Ethereum -2.8%.

 

 

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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