The UK was closed yesterday for a public holiday. However, European and US markets were open for their first full session since Jerome Powell's comments at Jackson Hole on Friday, which hinted at potential interest rate cuts. However, Monday’s session was largely uneventful at an index level.
The Nasdaq 100 fell by 1% and the S&P 500 was down by 0.3%, as was the Euro Stoxx 50. Canada’s TSX composite index jumped by 1.3%; the country appears to be taking a hard line on Chinese imports, announcing plans for a 100% tariff on Chinese EVs.
EM indices also fared well yesterday. Brazil’s Bovespa rose by 0.9% and the Indian Sensex was higher by 0.8%. Oddly for such an uneventful day, the VIX index put in the best performance, adding 2% to close at 16.10, bringing its weekly gains to 9.9% and its year-to-date gains to 29.3%.
Gainers in European markets included pan-European real estate group Vonovia, which added 3.7%. The stock has risen by more than 25% over the last six months and 60% over 52 weeks. Yesterday’s moves took the stock to new two-year highs.
Lower interest rates are considered bullish for real estate and property-related stocks, and in the US real estate has been the best-performing S&P 500 sector over the last week.
Monday’s biggest mover was the Chinese e-commerce group PDD Group. The owner of discount retailer and online marketplace Temu plunged 29% on disappointing Q2 revenues. The steep drop in the stock's price knocked around $14bn off the net worth of PDD founder and CEO Colin Huang, though he remains the fourth-richest man in China. PDD reported below-forecast earnings per share and revenues, and a sharp rise in operating profits compared to 2023 wasn't enough to offset the disappointment caused by the slowdown in quarterly revenue growth rates.
The S&P 500 energy sector rallied by 1.1% yesterday, led by ExxonMobil which added 2.14%. The company warned of an “oil shock” if suppliers assume that oil demand will fall below current levels in 2050. However, crude oil has traded modestly lower in Europe this morning amid speculation that the Organisation of the Petroleum Exporting Countries (OPEC) might be considering a price war to knock out higher cost producers.
Gold is back above $2,500 an ounce, though lower on the day. Silver is trading above $30 per ounce, having added 1.93% last week and almost 7.9% in the last month. Copper is up by 0.28%, back to five-week highs above $4.20 per pound.
US 10-year treasury bond yields are largely unchanged at 3.825% though still in the downtrend that has described their price action since late July.
The FTSE 100 has opened higher, up by 0.42%. European equity indices have also posted modest gains in early trade, whilst CFDs on US stock indices are mixed in Europe, with the Dow Jones weakening slightly and the S&P 500 and Nasdaq 100 making small gains.
The US dollar index is trading below 101 points, with the potential to test 100 at some stage this week.
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