Daily Market Outlook, July 23, 2024

Munnelly’s Macro Minute…

“Market Focus Shifts To MegaTech Earnings”

On Tuesday, Asian stock markets are mostly trading higher, taking cues from positive global markets. Traders are taking advantage of the recent market slump to buy stocks at a discount, especially in the technology sector. However, they are cautious about making big moves before the release of key US inflation data later in the week. The upcoming inflation data could have a significant impact on interest rate expectations, with the US Fed widely anticipated to lower rates by a quarter point in September. In a surprise move, China's central bank also reduced its one-year benchmark loan prime rate in an effort to support its slowing economy.Asian currencies also strengthened against a weakening dollar. Following a significant tech selloff due to high valuations and sectoral rotation, markets are now pausing for breath. While the US election remains a major focus, Kamala Harris has secured enough pledged delegates to win the Democratic presidential nomination, bringing clarity to that aspect of the political landscape.

The U.S. is expected to see a rate cut in September, while a 25 basis-point cut is anticipated in October for Europe. Despite upcoming Eurozone consumer confidence figures and U.S. existing home sales, the market outlook is unlikely to change.

Traders are expected to focus on earnings reports after the market closes for Tesla and Alphabet, the first of the "Magnificent Seven" stocks to report. Tesla's profit margins are predicted to decrease, while Alphabet is expected to report a fourth consecutive quarter of double-digit revenue growth due to an increase in the advertising market. Google reversed its decision to remove user-tracking cookies from its Chrome browser, yielding to pressure from advertisers who rely on cookie data for targeted advertisements. In Europe, Louis Vuitton's earnings after the market close will provide insight into Chinese demand. Luxury stocks saw gains after surprise rate cuts in China on Monday, but the sector has been impacted by reduced spending in the world's second-largest economy. Profit warnings from Burberry and Hugo Boss, along with a 27% decline in quarterly sales in greater China at Richemont last week, have dampened hopes for a stronger second half.

Overnight Newswire Updates of Note

Citi Warns Of Euro-Yen Intervention Risk If Pair ‘Threatens’ 180
Large Deficits To Keep U.S. Debt Burden Rising After November’s Elections
Harris Campaign Secures Enough Delegates To Clinch Presidential Nomination
Biden and Harris Meeting With Israeli PM Netanyahu At White House This Week
Biden’s Withdrawal From US Presidential Race Spells New Uncertainty For Ukraine
Aussie, Kiwi Dollars Struggle On China's Rate Cuts; Dollar Adrift
Oil Steadies, Weighed Down By Predicted Surplus Amid Weak Demand
Google Abandons Plan To Remove Cookies From Chrome Browser
WIZ Walks Away From $23 Billion Deal With Google, Will Pursue IPO
Buffett's Berkshire Hathaway Drops BYD Stake To Less Than 5%
China Misses Plenum Chance To Steady Economy Before US Election
China Human Resources Ministry: China Added 6.98 Mln Urban New Jobs In H1
Japan And China Resume Strategic Dialogue After 4 Years
Japan's Liberal Democratic Party Leader: BoJ Policies Should Be Made Clearer
Japan To Impose First Sanctions On Israeli Settlers In West Bank
SEC Approves Ether ETFs As Crypto Moves Closer To The Mainstream

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

EUR/USD:1.0825-30(530M), 1.0875-85 (1.1BLN), 1.0900 (331M), 1.0955-60 (406M)
USD/CHF: 0.8900 (285M), 0.8955-60 (219M). EUR/CHF: 0.9650 (320M)
GBP/USD: 1.2950 (290M)
AUD/USD: 0.6750-60 (752M) . AUD/NZD: 10.75 (659M)
USD/CAD: 1.3695-1.3700 (385M), 1.3720-25 (356M), 1.3750 (219M)
USD/JPY: 155.85 (787M), 156.00 (236M), 157.00 (244M), 157.20-35 (1.6BLN)

CFTC Data As Of 16/7/24

Equity fund managers raise S&P 500 CME net long position by 19,908 contracts to 997,340
Equity fund speculators increase S&P 500 CME net short position by 28,517 contracts to 370,142
Japanese yen net short position is 151,072 contracts
British pound net long position is 132,902 contracts
Euro net long position is 24,749 contracts
Swiss franc posts net short position of -49,793 contracts
Bitcoin net short position is -579 contracts