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• Crude oil draw of -4.870M vs expected draw of -0.033M
• Gasoline inventories build of 3.328M vs expected draw of -1.600M
• DIstillates build of 3.454M vs expected draw of -0.833M
• Cushing drawdown of -0.875M vs last week -0.702M draw
• Refining utilization -1.7% versus expected -0.1%. Previous +1.9%

Crude oil is trading at $82.04 up $1.31 after the data.

The private data foreshadowed the sharp fall in inventories for crude, and to some extent the build in distilates. Gasoline build was greater than the private data:

This article was written by Greg Michalowski at www.forexlive.com.

The weekly oil inventory data will be released at the bottom of the hour. The private data released late yesterday showed a surprise draw down to -4.44M barrels

The expectations were for a small change of -0.033M in oil inventories.

• Gasoline is expected to show a drawdown of -1.600M
• Distilates are expected to show a draw of -0.833M

Both of those showed builds in the private inventory release.

This article was written by Greg Michalowski at www.forexlive.com.

The NASDAQ index continues to fall with the index now down 435 points or -2.37% at 18068.83. The NASDAQ is on pace for its worst day of 2024. Back on October 25, the index fell -2.43%.

Technically, the NASDAQ gap lower and is trading below its 100 hour moving average. Recall that on July 1, the price tested at moving average and bounced. On June 24 it approached it and found early buyers (see blue line on the chart below).

The next major target comes near the 38.2% retracement of the move up from the May 31 low. That is joint by the rising 200 hour moving average. Both those levels come near 17826.

Meanwhile, the Dow Industrial Average average is the beneficiary of the selling with a gain of 90 points or 0.22% at 41043. The index is on pace for another record close.

The S&P index is lower as well with a decline of -66.72 points or -1.17% at 5601.

Finally, the small-cap Russell 2000 is lower by -7.70 points or -0.34% at 2256.39.

This article was written by Greg Michalowski at www.forexlive.com.

Details:

• prior month 0.9% Unrevised
• industrial production 0.6% versus 0.3% expected
• capacity utilization 78.8% versus 78.4% estimate
• prior month revised to 78.3 from 78.7 last month
• manufacturing output 0.4% versus 0.2% estimate. Prior month revised to 1.0% from 0.9%

This article was written by Greg Michalowski at www.forexlive.com.

US chip stocks are helping to send the major indices lower with the NASDAQ index down over 1.6%.

The snapshot of the market currently shows:

• Dow Industrial Average average minus 47.66.2 or -0.12% at 40,906.83.
• S&P index -55.50 points or -0.98% at 5611.71
• NASDAQ index -301.56 points or -1.63% at 18207.78.

The RUSSELL 2000 is trading -21.38 points or -0.94% at 2242.28

Looking at the US debt market, yields are higher by 1 – 2 basis points:

• 2 year yield 4.467%, +2.2 basis points
• 5-year yield 4.110%, +2.0 basis points
• 10 year yield 4.182%, +1.6 basis points
• 30-year yield 4.390%, +1.6 basis points

looking at other markets:

• Crude oil is trading at $1.10 or 1.36% at $81.86
• Spot gold is up $5.60 or 0.23% at 2473.78. The high price reached $2482.35 a new all-time intraday high.
• Silver is trading down $0.36 or -1.16% at $30.89
• Bitcoin is trading steady at $64,669

Feds Waller is scheduled to speak at 9:35 AM ET. The book will be released at 2 PM ET. At 10:30 ET, the weekly oil inventory will be released

This article was written by Greg Michalowski at www.forexlive.com.

This is one of the most-unusual periods in markets I can remember. It’s hard to pin down what’s going on but consider this:

The Russell 2000 is up 12% in five days. According to John Authers, in the last 30 years that move has only been exceeded by snap-back rallies following major crises: LTCM, Dot Coms, GFC, 2011 US debt downgrade and the pandemic. For a pure rotation, it’s unprecedented.

Bespoke notes that the Russell 2000 yesterday closed 4.4 standard deviations above its 50-day moving average. No other US index has ever closed at that much of an extreme.

When you layer in that the Nasdaq is flat over the same period and the S&P 500 only moderately higher, it’s even more strange. The 5-day gain relative to the S&P 500 is the largest ever.

Some thoughts:

1) There is a rate-cut narrative at work. The softer CPI may have confirmed to the holdouts that rate cuts are coming. Still, it can’t be explained by macro as yesterday’s strong retail sales report didn’t prevent a 3.5% rally.

2) Politics is another explanation and the hope that Republican sweep will lead to corporate tax cuts and less regulation. I get the sentiment but the House is still very much up for grabs and it’s tough to justify this kind of move on politics alone.

3) Call buying. It’s been heavy. There is so much of the tail wagging the dog in many stocks right now and call buyers rotating out of tech to less-liquid stocks.

4) Chip makers are struggling. Nvidia has stalled out after an insane rally. Investors could be looking to redeploy or diversify following the end of Q2. Trump also talked about Taiwan paying for defense yesterday and Biden threatened more sanctions because chips continue to find their way to China.

5) Fund flows. There may be a pure rotation trade but there could also be a combination of a squeeze and funds blowing up on highly levered trades.

6) Broadening. The breadth of the rally has been remarkably narrow, limited to a few megacap tech and chip names. Aside from how aggressive they are, the moves are an endorsement of a healthy move and a soft landing scenario with a Fed put.

I’m sure there are other explanations but that’s the state of things. Whatever it is, the move has market worried to day with S&P 500 futures down 1% and Nasdaq futures down 1.5%. It’s not just tech either as the Russell 2000 is down 1% per-market follwing yesterday’s 3.5% gain.

This article was written by Adam Button at www.forexlive.com.

• Prior was +0.9%
• Manufacturing output +0.4% vs +0.2% expected
• Capacity utilization 78.8% vs 78.4% prior

This should lead to some further bumps in US Q2 GDP forecasts.

This article was written by Adam Button at www.forexlive.com.

There are unconfirmed rumours on Chinese social media that Chinese leader Xi Jinping suffered a stroke during Third Plenum meetings.

These rumors have gotten some traction so keep an eye on them. That said, these kinds of rumours always seem to perk up, including persistent rumours that Vlad Putin has died.

These reports, evidently originated from a YouTube blog from dissident Jennifer Zeng, who has floated rumours about a coup and Xi’s arrest before. Despite that, they have been doing the rounds in Chinese and Russian social media for a few hours. I’m reluctant to even report on them but there is a chance that Chinese markets move on them.

Back in the world of real news, we’re waiting on news from the Third Plenum and how China can dig its way out of deepening pessimism about economic prospects, especially among young people.

The meetings will end on Thursday with a plan to lay out China’s policy direction for the next five years and beyond.

Yesterday, the IMF upgraded its China forecasts for this year and next year to 5.0% and 4.5% respectively but at the same time, this week’s Q2 GDP data disappointed.

This article was written by Adam Button at www.forexlive.com.

• Prior was +0.2%
• Prices up 3.6% y/y vs +5.7% prior led by Alberta
• Prices in Toronto +0.8% y/y
• Full report

There are some real creaks appearing in the Canadian housing market and that’s a big reason the Bank of Canada will likely ride to the rescue next week with a second consecutive rate cut.

This article was written by Adam Button at www.forexlive.com.

• Prior was 1.277m (revised to 1.314m)
• Single family -2.2%
• Multifamily +19.6%
• Permits 1.446m vs 1.395m prior

Yesterday’s NAHB number was a bit better and long end yields fell yesterday near a three-month low. Home builder stocks absolutely shot higher as the market senses a bottom in the cycle.

This article was written by Adam Button at www.forexlive.com.

Headlines:

• Japanese yen surge continues in European morning trade
• Japan top currency diplomat Kanda says no choice but to respond to speculators
• US futures fall further as tech shares feel skittish
• Traders trim BOE rate cut bets for August after inflation data
• UK June CPI +2.0% vs +1.9% y/y expected
• Eurozone June final CPI +2.5% vs +2.5% y/y prelim
• Fed’s Williams says rate cut could be warranted in the coming months

Markets:

• JPY leads, USD lags on the day
• European equities lower; S&P 500 futures down 1.0%
• US 10-year yields up 0.8 bps to 4.175%
• Gold up 0.1% to $2,470.15
• WTI crude up 0.4% to $81.05
• Bitcoin up 0.3% to $64,850

It was an eventful session with some big market moves this time around in European morning trade.

The Japanese yen came to life with USD/JPY falling from 158.30 in Asia all the way to a low of 156.10, before a light bounce after.

The move was a strong one-sided pull lower but spread across three hours. It wasn’t quite the sharp minute moves that we saw during the intervention last week. But still, there could be the possibility of Japan giving things a slight nudge to help with the move lower.

I mean, they have been changing up their strategy as of late to intervene when market conditions favour their directional view.

There were also other factors in play during the session, most notably a selloff in equities. That alongside a weaker dollar is arguably exacerbating the drop in USD/JPY, coupled with a technical break here.

After the gains yesterday, US stocks look set for an off day with futures pushed lower. S&P 500 futures are down 1% with tech shares slumping hard. Nasdaq futures are down 1.6% while Dow futures are “only” down 0.3%. Russell 2000 futures are down 0.8% but briefly erased losses early on in European trading.

The softer risk environment is seeing USD/CHF also down 0.8% to 0.8865 while EUR/USD is up 0.4% to 1.0940 on the day. At the same time, GBP/USD is also pushing above 1.3000 for the first time in a year as UK inflation remains stubborn in June. That saw traders scale back on bets for an August rate cut.

This article was written by Justin Low at www.forexlive.com.

Stocks and Gold Hit New Records – Dow up 1.85%

US Stock markets jumped yesterday as a combination of strong Retail Sales and stellar earnings from the big banks pushed both the Dow and the S&P to record closes. The Dow powered 1.85% to record an all-time high close of 40,954 closely followed by the S&P which added 0.64% and lagged by the Nasdaq which only managed at 0.20% gain as investors continued to diversify their portfolios. US Treasury yields slipped to levels not seen since mid-March, the 2-year losing 0.5 basis points to 4.447% while the 10-year lost a more significant 6 basis points to drop to 4.167%. Currencies remained largely rangebound and Oil took another dip as concerns on dropping demand out of China continued to weigh on markets, Brent off 1.3% to $83.73 a barrel and WTI losing 1.4% to close around $80.76 a barrel. Gold, however, had another standout day hitting a fresh all-time high again, adding over 2% on the day to close the New York session at $2,468 an ounce.

Gold Powers Higher as Stars Align

Gold bulls celebrated another record high in trading yesterday as the stars aligned to drive the precious metal through the previous record set in May. A combination of geo-political uncertainty across the globe and anticipated rate cuts in the US helped the move higher with the attempted assassination of Donald Trump on the weekend increasing investors urgency to load up on the haven asset. Recent US data is pointing to pending rate cuts from the Fed with the market now pricing in three cuts before the end of the year and the odds for another Trump presidency have increased after this weekends shooting incident. Traders will continue to look for levels to buy in the current market conditions with any pullbacks likely to attract investors in the coming sessions.

More Volatility Ahead for Traders Today

Global markets traders are preparing for more volatility in ahead in trading sessions today with equities and Gold looking to push further in buoyant conditions. We have already seen key inflation data out early in the Asian session in New Zealand with the headline quarterly CPI number coming in slightly under market expectation – the kiwi has since rallied as other components in the data have indicated that underlying inflation is falling less than expected. There is little else due out in the Asian session, however the focus will be firmly on the UK economy on the London open when the latest UK CPI data is released – expectation is for the headline year-on-year number to drop 0.1% to 1.9%. There are Building Permits and Industrial Production numbers due out of the US once the New York session commences and traders will be paying close attention to what the FOMC’s Christopher Waller has to say later in the day.

The post General Market Analysis 17/07/2024 first appeared on IC Markets | Official Blog.