US Shares Higher Ahead of Nvidia – Dow up 0.3%
US shares pushed higher in trading yesterday, with the S&P notably notching up another record close as investors awaited key Nvidia earnings after the bell. Nvidia came in close to expectations, but the share price dropped on China business concerns moving forward. The Dow gained 0.32% to 45,565, the S&P added 0.24% to 6,481, and the Nasdaq added 0.21% to 21,590. Treasury yields dipped further, with the 2-year down 3.7 basis points on the day to 3.609% and the 10-year down 2.7 basis points to 4.234%, while the dollar traded in relatively tight ranges, with the DXY down just 0.03% to 98.20. Oil prices pushed higher after US inventories dipped again, with Brent up 0.82% to $67.77 and WTI up to $63.83 a barrel. Gold held near recent multi-week highs, up 0.11% to $3,397.37 on the close.
Inflation Numbers Come into Focus for Markets
We are fast approaching another New York Friday trading session that will see a key update from the US, which could be instrumental in influencing Fed rate cut expectations. In the last few weeks, we have had key Non-Farms numbers, a key speech from Jerome Powell, and now we have the Fed’s favoured inflation indicator—the Core PCE Price Index data—in the last session of the week. Markets are particularly vulnerable in the final session of the week, with liquidity tending to decrease rapidly in the last few hours, and moves off key updates can be exacerbated. This week’s update is key to locking in a heavily expected rate cut in September. Market expectation is for another 0.3% increase in the month-on-month data and a 2.9% year-on-year figure, and the latter could cause some issues with current bets, especially if we get a higher print. The market is currently pricing in an 88% chance of a rate cut next month, but expect that to change dramatically if we see a stronger inflation reading, which could lead to some sharp moves in the market on Friday afternoon.
US Data in Focus Later Today
Asian markets look set to fall on the open today after Nvidia posted a good earnings report but advised that the forward outlook is slowing. There is little on the event calendar in the Asian session today, and traders are predicting more range-bound markets with a downside skew. The European session will see the early focus on Swiss markets with the latest Quarterly GDP data due out. Expectation is for just a 0.1% increase, and traders are expecting volatility in the franc around the event. The main fundamental updates for the day fall in the New York session, with some key US numbers due out. The Quarterly Preliminary GDP numbers are due (exp. 3.1%) alongside the usual Weekly Unemployment Claims data (exp. 231k), and anything off expectations could see some big moves across financial products. Pending Home Sales numbers (exp. -0.4%) are out later in the session, and then we are set to hear from the FOMC’s Christopher Waller later in the day, with any Fed updates closely watched given recent news.
