Markets Dawn Europe: Mon 22 Jul
Script 📄 & Charts 📉
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Good morning,
Risk assets ended on a negative tone on Friday as technology stocks continued to sell off driven by the Microsoft Windows crash and the Nasdaq Composite closed its second worst week this year, down 3.65%.
Notable losers include Nvidia which plunged 9% WTD as chip makers underperformed the overall market and Crowdstrike Holdings (cybersecurity, mcap $74bn), at the heart of the technical outage, declined 11% on Friday and 18% WTD.
Also, Travelers Companies (insurance, mcap $46bn) dropped 8%, its weakest day in four years after disappointing analysts with its lower-than-expected growth in net written premiums for the next quarter. Starbucks (mcap $171bn) rallied 7% after activist hedge fund Elliot Investment Mgt disclosed a sizable position.
European indices fell every day of the week with the broad Stoxx 600 losing 2.7%, its steepest weekly drop since October with mining and travel stocks as the biggest losers.
Today, China´s central bank surprised markets by cutting its short-term (7D repo rate) by 10bp to 1.70% to support the real economy. It also reduced its benchmark lending rates taking the 1-yr LPR (loan prime rate) to 3.35% and the 5-yr to 3.85%. Chinese bond prices rose.
Stocks are falling across Asia today with Taiwan down 2.4% (TSMC -3%, Moody´s affirmed the credit rating at Aa3), Japan and Korean losing 1.2% (semiconductors leading the decline) and Hong Kong as the only market in green (+0.8%). European and US stock futures are showing a modest recovery. Brent oil is now at $83.10 after dropping 2.8% last week. Bitcoin is a touch firmer at $68k. Gold is at $2,406 following a steep drop on Friday.
Finally, Biden ended his re-election effort, stepped down from his nomination and endorsed his VP Kamala Harris. The party needs to decide on a final candidate only four months before the election.
There are no significant economic releases scheduled for today. Companies reporting results include: SAP, Verizon, Ryanair and NXP.
Last Friday, Turkey´s sovereign rating was upgraded two notches to B1 by Moody´s. Walgreens Boots Alliance´s (pharmacies, mcap $9.5bn) credit rating was d/g one notch by S&P to BB. Enagas (Spain, gas transport, mcap €3.6bn) was u/p one notch to BBB+,
On monetary policy meetings this week, Turkey´s central bank meets tomorrow, Canada on Wednesday and Russia on Friday. On the Fed front, the latest implied probability for the July 31 meeting shows a 96% chance for no rate move while the same chances apply for a cut at the following meeting on Sep 18.
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