Market Commentary: Thursday 18th July
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A bad night for AI stocks, Bloomberg News reported that the US government is preparing to impose its tightest curbs yet on semiconductor making equipment to China, if firms like ASML and Tokyo Electron continue to give the country access to their advanced chip technology. Tokyo Electron Ltd. faced the brunt of the selling, dropping almost 11%, and Taiwan Semiconductor Manufacturing Co. shed as much as 4.3%. The S&P 500 fell 1.4%, and the Nasdaq dropped 2.9% to record its worst day since 2022.
In other news, President Biden tested positive for Covid-19 forcing him to cancel a speaking appearance in Las Vegas. Biden has “mild symptoms” and plans to return to Delaware “where he will self-isolate and will continue to carry out all of his duties fully during that time,” the White House said. Whilst the Federal Reserve’s Beige Book showed slight economic growth and cooling inflation, Fed Governor Christopher Waller said the Fed is getting “closer” to cutting rates but is not there yet.
Market wise, the yield on 10-year Treasuries advanced one basis point to 4.17%, West Texas Intermediate crude rose 0.7% to $83.44 a barrel, Spot gold rose 0.4% to $2,467.51 an ounce, and Cable opens with a 1.30 handle. The other hot topic is Yen Intervention, are they/ aren't they? Well BOJ Accounts suggests MOF did indeed intervene last week; Accounts suggest they bought ~JPY 3.5trn (around USD 22bn) but we won’t see official MOF data on FX Intervention operations until the end of the month.
As for the day ahead, we have ECB rate decision, US initial jobless claims, Philadelphia Fed manufacturing and speeches from the Fed’s Mary Daly, Lorie Logan, and Michelle Bowman.
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