Market Commentary: Friday 26th July
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Chinese tech stocks have made slight gains on this morning, despite a technology sell-off on Wall Street. JD.com gained 3.6% and internet giant Tencent rose more than 1%. In general, equities in the region are fairly flat, Hong Kong’s Hang Seng index and the CSI 300 index are unmoved, Japan’s Topix has dropped 0.4%, while South Korea’s Kospi rose 0.7%. Taipei’s stock exchange reopened after a two-day typhoon shutdown for typhoon Gaemi, and the tech sell-off caught up with chipmaker Taiwan Semiconductor Manufacturing Company, which fell as much as 6.5%.
Ford shares closed 18% lower yesterday, the largest drop for the carmaker since 2008, after the company released earning results that missed analyst expectations. More broadly, US stocks ended Thursday slightly lower as the sell-off in the technology sector continued, despite the Bureau of Economic Analysis reporting that the US economy grew at a 2.8% annualised rate in the second quarter, indicating continued resilience. The S&P 500 ended the day down 0.5%, while the Nasdaq Composite fell 0.9%, losses in both indices were driven by tech stocks. The US 10Y yield slipped 4bps yesterday as Treasuries gained, this came as traders weighed signs of a buoyant US economy against calls for quicker rate cuts from the Fed.
The Yen traded below 154 per dollar yesterday, heading for it's fourth days of gains in five sessions, Japanese inflation accelerated for a third month, reinforcing bets of a possible rate hike next week. Many see the Yen's rally as fragile with on 30% of BOJ watchers forecasting a hike and more than 90% seeing it as a risk, according to a Bloomberg poll.
Cryptocurrencies were up again yesterday with Bitcoin rising 2.6% and Ether up 3.1%. Commodities markets were fairly muted with WTI crude rising 0.2% and Gold up 0.3%.Data wise today, we have the monthly US PCE data at 1:30pm, this will be the last big data point before next week's Fed meeting, the core figure expected to slow to near the 2% target on a three-month annualised basis.
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