Daily Game Plan

by Contributor
on August 22, 2024

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

TODAY’S ECONOMIC DATA:  ET 8:30 a.m.: US July Chicago Fed National Activity
Index, US Initial Jobless Claims, 9:45 a.m: US Aug. S&P Flash PMIs, 10:00 a.m.: US July Existing Home Sales. 10:30 a.m.: US EIA Natural Gas Storage Change, 11:30 a.m.: US to sell $95 billion 4-week bills and $90 billion 8-week bills

HIGHLIGHTS and News:  

  • Rory McIlroy, Brighton Park made a $250 million equity investment in TickPick, a ticketing marketplace that competes with StubHub, SeatGeek, Vivid Seats Inc
  • BMW has pulled ahead of Tesla in European EV Sales For First Time

 

World stocks approached record highs as traders grew increasingly confident that the Federal Reserve will soon deliver its first-interest rate
cuts in over four years. The MSCI All Country World index edged up 0.1%, nearing its all-time high from July 16. European stocks advanced, led by a rally in Deutsche Bank shares after the company predicted a boost to third-quarter results. The minutes from
the Federal Reserve’s July meeting showed the “vast majority” of officials see a rate cut in September as appropriate, while several saw a plausible case for a reduction at the last decision. That sets up Chair Jerome Powell to usher in the next phase of the
Fed’s inflation battle at Jackson Hole on Friday, when he’s expected to further underpin the view that a cut is coming.

 

 

EQUITIES:  

 

US equity futures edged higher as traders awaited Fed Chair Powell’s speech on Friday amid expectations of a September rate cut, with S&P 500 futures
little changed. Notable premarket movers include Advance Auto Parts dropping 11% on lowered projections, Canadian Solar falling 9% after missing revenue estimates, Charles Schwab declining 4% following TD Bank’s share sale, and Snowflake dropping 10% due to
concerns about AI market gains. On the positive side, Paramount Global gained 2% on a takeover offer, SentinelOne rose 3% after an upgrade, Synopsys increased 2.2% on strong results, and Zoom Video climbed 2% after beating expectations. Urban Outfitters fell
11% on disappointing sales growth, while Wolfspeed and Zuora saw gains on positive outlooks.
WSM -12%
Williams-Sonoma 2Q Net Revenue Misses Estimates, reports Q2 EPS $1.74, consensus $1.60 Overall, the market is focused on Fed Chair Powell’s upcoming speech at
Jackson Hole for further insights on rate cut timing.

Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.3%, Russell 2000 +0.03%, DJI +0.07%.

European stocks rose on optimism surrounding potential interest rate cuts ahead of a highly anticipated speech by Federal Reserve Chair Jerome Powell. Stoxx Europe
600 Index edged higher driven by gains in the retail, travel, and consumer goods sectors, with Deutsche Bank AG leading the charge, increasing by 2.7% after announcing a projected €430 million boost to earnings from Postbank AG litigation progress. Following
a volatile start to the month due to concerns over a slowing U.S. economy, the index has nearly recovered its losses as traders anticipate that central bank rate cuts will support risk assets. This sentiment was bolstered by Fed minutes indicating a plausible
case for rate cuts, while signs of a recovering euro-area economy, aided by events like the Paris Olympics, contributed to positive market sentiment. Well-received earnings reports from companies such as CTS Eventim AG and JD Sports Fashion Plc further fueled
the rally, reinforcing the view that European firms are managing to maintain their profit margins amid a gradual economic recovery. DAX +0.2%, FTSE +0.2%, Stoxx 600 +0.4%, CAC 40 +0.2%.

Asian stocks experienced modest gains as investors anticipate clearer signals from the Federal Reserve regarding the future of global interest rates. The MSCI Asia
Pacific Index was buoyed primarily by Tencent and AIA Group, the latter reporting a record rise in new business value in the first half of the year. Hong Kong stocks led the regional advance, with several companies like Xiaomi posting positive earnings. Notably,
South Korean EV battery stocks surged due to a rebound in lithium prices, while shares in Taiwanese banking and property sectors fell following central bank directives. Overall, the MSCI Asia Pacific Index rose by 0.3%, with varied performances across major
Asian markets, reflecting cautious optimism ahead of key economic indicators and central bank meetings Topix +0.25%, Nikkei +0.7%, China’s CSI 300 -0.2%; Hang Seng +1.4%; Kospi +0.2%; ASX 200 +0.2%.

FIXED INCOME: 
 

Treasuries came under pressure in early US trading, with the yield curve flattening as front-end yields rose about 3 basis points. US rates tracked
a larger selloff in core European bond markets sparked by weaker-than-expected August preliminary PMIs for France, Germany, and the eurozone. The upcoming US data slate, including PMIs, weekly jobless claims, and July existing home sales, also weighed on Treasuries.
The 10-year yield hovered around 3.82%, while comparable German bunds and UK gilts were cheaper by an additional 1.7 and 1.5 basis points. The US economic calendar featured the July Chicago Fed national activity index, initial jobless claims, August preliminary
S&P Global US manufacturing and services PMIs, July existing home sales, and the August Kansas City Fed manufacturing activity index.

 

 

METALS: 

 

Gold prices inched lower however remained steady near record highs as traders anticipated Federal Reserve Chair Jerome Powell’s speech on Friday,
particularly following a downward revision of US payrolls that heightened expectations for interest rate cuts in September. The recent US job growth figures indicated a weaker labor market than previously reported, which could pressure the Fed to lower rates,
potentially benefiting gold as lower borrowing costs enhance its appeal. Gold -0.3%, Silver -0.2%

 

 

ENERGY:   

 

Oil prices were slightly higher on Thursday after expectations of a rate cut by the Federal Reserve offset a bunch of weak economic data from the
United States and China. Brent crude traded around $76 a barrel following a four-day decline, with recent data indicating that US job growth was weaker than previously estimated, suggesting that the largest crude consumer is losing economic momentum. This
decline in prices is compounded by worries about both supply and demand, as the OPEC+ alliance plans to increase supplies next quarter, while the International Energy Agency forecasts rising inventories in 2025. Additionally, ongoing economic weakness in China,
the world’s largest oil importer, and disappointing manufacturing data from Europe have heightened concerns. Despite a recent drop in US crude inventories to their lowest since January, analysts suggest that geopolitical risks and potential weather disruptions
could present buying opportunities around the $75 per barrel mark. WTI +0.5%, Brent +0.6%, Nat Gas -0.5%.

 

 

 

CURRENCIES:   

 

In currency markets, the US dollar index was slightly higher and remained steady against major currencies as traders awaited Federal Reserve Chair
Jerome Powell’s upcoming speech at Jackson Hole, while the pound led gains in the G10 following stronger-than-expected UK PMI data. The GBPUSD pair increased by 0.3% to 1.3129, marking its highest level since July 14, as the UK’s private sector reported its
strongest growth in four months. Market expectations indicate 41 basis points of interest rate cuts from the Bank of England this year, compared to 100 basis points anticipated from the Fed. Meanwhile, the euro fluctuated around 1.1143, supported by unexpected
growth from the Paris Olympics, although it slipped 0.1% amid slowing wage growth in the eurozone.US$ Index +0.2%, GBPUSD +0.1%, EURUSD -0.1%, USDJPY +0.5%, AUDUSD -0.1%, NZDUSD -0.1%, USDCHF -0.01%.

 

Spot Bitcoin +0.2%, Spot Ethereum +0.4%.

 

 

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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