Thursday's Market Update (July 25, 2024)

25 Jul 2024 by rate3

On Thursday, stocks rebounded slightly, attempting to recover technically from yesterday's sharp decline, but then mostly went red. Investors continue to shift focus from tech to traditional sectors as doubts about the AI-fueled rally grow. Industrials and banks led the gains. Meanwhile, despite robust economic growth in Q2, recent data showed slowing manufacturing and growing unemployment. Internationally, gold prices tumbled to a two-week low on strong GDP, while French unemployment rose to a two-year high. Overall, all major markets through the Americas, EU, Africa, and Asia traded at their monthly lows after Wall Street initiated major tech sell-offs over the past two days. BTC and ETH continued to decline, reaching 63K and 3.0K, wiping out two weeks of profits.

Details

Factory orders plummeted in June, defying expectations. Transportation equipment led the decline, with aircraft orders taking a massive hit. While some sectors saw growth, overall manufacturing activity weakened significantly, raising concerns about economic slowdown. 1Y trend: "Down" (Census)
Economy grew faster than expected in Q2 (+2.8%, above forecasts of 2%), driven by consumer spending and business investment. However, underlying trends are mixed. While consumer spending on goods rebounded, services slowed. Business investment was uneven, with equipment spending up, but intellectual property and structures declining. Housing and trade also weakened. 1Y trend: "Side" (Bea)
Jobless claims fell slightly to 235K previous week but remain above the 2024 average. While the labor market is still tight, it's showing signs of cooling from post-pandemic highs. This suggests a potential slowdown in economic growth. 1Y trend: "Up" (DOL)
Core inflation cooled slightly in Q2 but remained stubbornly high at 2.9%, exceeding forecasts. This key metric, closely watched by the Fed, signals persistent price pressures. 1Y trend: "Down" (Bea)
Economic conditions in Kansas worsened in July. The Kansas Fed Composite Index dropped further into negative territory, indicating a deepening economic contraction. This decline follows a period of volatility with the index reaching both record highs and lows in recent years. 1Y trend: "Down" (KFed)

Crypto

Tyler Winklevoss, Gemini co-founder, criticized the Biden-Harris administration for its hostility towards cryptocurrency. His outburst came after Kamala Harris declined an invitation to speak at The Bitcoin Conference in Nashville. Winklevoss accused the administration of waging a "war on the crypto industry" and said that her refusal to engage with the industry will not be forgotten, implying that the industry will seek retribution in November elections. (source)

World Markets

French unemployment rose for the second straight month in June to 2.835M, reaching its highest point since October 2022. This contradicts recent positive job market trends. All age groups saw increases, with the biggest jumps in the core-age and younger populations. 1Y trend: "Down" (Dares)
Germany's business climate worsened for the third straight month in July. Confidence among businesses across sectors has plummeted. Current conditions and future outlook are both bleak. Ifo president warns of a German economy stuck in crisis. 1Y trend: "Down" (Ifo)
Ukraine's central bank held its key interest rate steady at 13%, aiming to curb inflation despite rising energy costs. While the economy is growing, the ongoing war and its aftermath pose significant risks. Inflation is expected to peak in the coming months before gradually declining, but the overall economic outlook remains uncertain due to the conflict's duration and intensity. 1Y trend: "Down" (UA)

Commodities

Gold prices tumbled to a two-week low (2370) on technicals and as stronger-than-expected economic data dampened hopes for swift interest rate cuts. Despite this, market expectations for rate reductions persist, potentially supporting gold later. India's reduced gold import tax could boost physical demand for the precious metal. 1Y trend: "Up"