General Market Analysis 25/07/2024

Wall Street Smashed – Nasdaq Down Over 3.5%

US stock indices were smashed in trading yesterday as investors pulled out of the tech and AI stocks that have sustained them over the past year. Disappointing earnings numbers from Telsa and Alphabet started the rout yesterday but momentum took over and the Nasdaq lost over $1 trillion in market capitalization, closing down 3.64% on the day, followed by the S&P which lost 2.31% and the Dow which closed, off 1.24%. US treasuries had an interesting day as the 2-year/10-year gap came into levels not seen since October 2023, the 2-year dropping 3.5 basis points to 4.410% whilst the 10-year gained 3.9 basis points to trade up to 4.278%. Oil prices had a bit of a reprieve as US stocks again dipped, Brent up 0.9% to $81.71 and WTI up 0.8% to $77.59 a barrel and Gold ultimately closed close to flat at $2,411 after earlier rallying to as high as $2,431 an ounce.

Yen Flying Again – Targeting 150 against the Dollar

The Yen had another stellar day in trading yesterday as it pushed higher again across the board. Traders are abandoning carry trades at an alarming rate which could signify that there are some people in the market that have a deeper insight into next week’s Bank of Japan meeting. Risk sentiment has taken a significant dent overnight as well and this tends to favour Yen buying. There is no doubt that large stop loss orders are being triggered on the way down against the dollar and other currencies, UsdJpy is now trading just above 153 and has already broken through a number of significant support levels. The next key support if the 200 Day Moving Average on the Daily chart which comes in around 151.50 and a break there opens the way to the key psychological level at 150 which is also close to a long term trendline support. Once again traders will be looking to sell into any rallies in the next few sessions until we get a change in the underlying sentiment.

Volatility High for Traders Today

Traders are bracing for yet more volatility in the sessions ahead as risk sentiment continues to decline at an alarming rate after a very poor day on Wall Street. Asian markets have little on the economic event calendar to interrupt that momentum and the same can be said for the European session with just the German IFO Business Climate data due out once London opens. There is a raft of data due out in the US today, which should grab investors’ attention, at least over the releases, with the usual weekly unemployment claims data being released alongside the quarterly Advance GDP and Durable Goods numbers. We are also due to hear from ECB President Christine LaGarde later in the day.

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