EXECUTIVE SUMMARY
- HARRIS HAS ENOUGH DELEGATES TO CLINCH NOMINATION FOR PRESIDENT
- BIDEN PLEDGES END TO GAZA WAR BEFORE TERM ENDS AS NETANYAHU MEET DELAYED
- ECB’S DE GUINDOS SAYS SEPTEMBER ‘MORE CONVENIENT’ FOR DECISION MAKING
- CHINESE STOCKS SLUMP AMID SIGNS NATIONAL TEAM IS PULLING BACK
MNI (LONDON) - Figure 1: DCE iron ore future contracts dip to multi-month lows
Source: MNI/Bloomberg
NEWS
US (BBG): Harris Has Enough Delegates to Clinch Nomination for President
Kamala Harris has more than enough pledged delegates to clinch the Democratic presidential nomination, following an extraordinary two-day blitz that saw the vice president consolidate her party’s backing to challenge Donald Trump in November. Harris sealed her status as the presumptive nominee Monday night after crossing the magic number of 1,976 pledged delegates, according to an unofficial Associated Press tally. While delegates who indicated their support are not required to back her nomination, the achievement - and lack of credible opposition - underscores the vice president’s hold on the Democratic ticket.
US (BBG): Harris Campaign Says It Raised More Than $100m Since Sunday
Vice President Kamala Harris’s presidential campaign says it raised more than $100 million between Sunday afternoon and Monday evening, according to an emailed statement. More than 1.1 million unique donors over that time span, 62% of whom were first-time contributors.
ISRAEL (MNI): Biden Pledges End to Gaza War Before Term Ends as Netanyahu Meet Delayed
Axios reported earlier today that US President Joe Biden has "pledged to spend his remaining six months in office trying to end the Israel-Hamas war and bringing home the hostages being held by Hamas in Gaza." Following his withdrawal from the presidential race on 21 July, Biden now no longer faces the massive distraction of having to run for re-election in November and can dedicate his time to seeking resolution of the conflict. Israeli PM Benjamin Netanyahu's meeting with Biden, originally set to take place today, has been pushed back to Thursday 25 July as the president continues his recovery from a bout of COVID-19.
ECB (BBG): Guindos Says September ‘More Convenient’ for ECB Decision Making
The European Central Bank will be in a better position to decide on interest rates at its next Governing Council meeting in the autumn, Vice President Luis de Guindos said. “We will have more information in September, and especially new macroeconomic projections, so we will be able to better reassess the monetary policy stance,” he told Europa Press. “Data-wise, September is a much more convenient month for taking decisions than July was.”
CHINA (BBG): Chinese Stocks Slump Amid Signs National Team Is Pulling Back
Chinese stocks suffered their biggest decline in six months as a lack of major policy support following the Third Plenum reinforced bearish sentiment. The onshore benchmark CSI 300 Index closed 2.1% lower, following a 0.7% drop in the previous session. The declines have now erased gains seen last week, when signs of purchases by the national team amid the twice-a-decade political gathering propped up equity gauges. The steep losses are likely to be a taste of what may come without state fund support in a market that has lost momentum amid China’s economic troubles and geopolitical risks.
CHINA (Yicai): PBOC Could Phase Out MLF
The PBOC could eventually phase out its medium term lending facility and use the DR series of overnight rates as the main policy tool, according to Wen Bin, chief economist at China Minsheng Bank. The real economy would benefit from improved interest-rate marketisation and transmission mechanism under the new system, Wen added. Looking ahead, the PBOC will continue easing given the need to further boost demand, but banks will require deposit interest-rate cuts to support their net interest margin.
CHINA (BBG): China’s Deadly Rains to Intensify as Tropical Storms Arrive
Heavy rains lashing China have left at least 26 people dead in the past week, flooding city streets and threatening farming and industrial activity, as two more tropical storms barrel toward the nation. Tropical storm Prapiroon is expected to make landfall near the border of China and Vietnam on Tuesday. Another system, Gaemi, has already caused heavy rainfall and flight cancellations in the northern Philippines, while authorities in Taiwan issued a warning it could affect people on the island in the coming days, before moving toward China.
INDIA (BBG): Modi Pledges $24 Billion for Jobs, Financial Aid for Allies
Prime Minister Narendra Modi pledged 2 trillion rupees ($23.9 billion) to boost jobs and improve education in India, increased spending to his new allies, while also targeting a smaller fiscal deficit for this year. The government will focus on employment, skilling, small businesses and the middle class in the fiscal year through March 2025, Finance Minister Nirmala Sitharaman said in her budget speech Tuesday. She announced a number of employment-linked incentives for businesses to help spur jobs. The budget is the first under a new coalition government led by Modi after his party lost its majority in elections.
INDIA (BBG): India Cuts Gold Import Tax in Boost to Local Jewelry Makers
India cut its import tax on gold to support jewelry manufacturing in the world’s second-biggest consumer of the precious metal. The government slashed the duty on the yellow metal to 6% from 15%, Finance Minister Nirmala Sitharaman said in her annual budget speech in New Delhi on Tuesday. The aim is to “enhance domestic value addition in gold and precious metal jewelry in the country,” she said. The move will provide some relief to consumers after a surge in local gold prices, which have tracked a global rally. India buys almost all of its bullion from overseas, and the metal is often smuggled into the country to avoid the levy.
COMMODITIES (BBG): Iron Ore Buckles Below $100 as China’s Plenum Fails to Inspire
Iron ore crumbled below $100 a ton as a policy meeting in China failed to deliver major stimulus, while supplies stayed strong. The steelmaking material slid as much as 3.5% to touch $99.85 in Singapore, with futures on track for a third day of losses. The outcome of the Third Plenum, a twice-a-decade conclave of Communist Party officials held last week, underwhelmed investors, with few steps to boost metals demand or fix the property crisis. On the supply side, data from Brazil - the largest iron ore exporter after Australia - showed daily average shipments reached 1.62 million tons in the first 15 business days of July, a faster pace than in the full month a year ago. Last week, major miners reported record levels of production.
COMMODITIES (BBG): Copper Falls to Lowest Since Early April on China Pessimism
Copper fell to lowest level in almost four months on concern that Chinese demand for industrial metals is weakening. A twice-a-decade conclave of China’s top leadership held last week has so far failed to deliver any meaningful stimulus that might support metals demand. The red metal has retreated almost a fifth from a high in late May, partially due to disappointing growth in Asia’s largest economy. Copper dropped 0.7% to $9,150 a ton on the London Metal Exchange as of 3:11 p.m. in Shanghai after touching the lowest level since early April.
CORPORATE (BBG): Apple and Micron Leaders Visit China as US Ramps Up Chip Curbs
Apple Inc. Chief Operating Officer Jeff Williams and Micron Technology Inc. President Sanjay Mehrotra made a low-profile trip to Beijing to meet with senior Chinese officials as the US is again mulling stricter tech curbs against China. The executives on Monday joined a US business delegation meeting Vice-Premier He Lifeng and Foreign Minister Wang Yi. He urged American firms to “participate aggressively in China’s further reform and modernization process,” according to state-owned media.
FOREX: Soft Iron Ore Undermines AUD/JPY as Sell-Off Accelerates
- The USD Index is rangebound, with early strength through the European open wholly reversed to keep most major pairs flat headed into the NY crossover. JPY remains the currency in focus, and a poor showing from Chinese equities in Tuesday trade helped JPY print a new recovery high, pressuring USD/JPY back below Y156.00.
- AUD/JPY remains the cross in focus on the break of the uptrendline last week, and now the close below the 50-dma. Clustered support at the Y102.65 100-dma and the early June low at 102.61 will be closely watched - particularly on any extension of the weakness in iron ore prices after Dalian-listed contracts fell close to 1.7% in Asia-Pac.
- NOK remains weaker after a poor start to the week. USD/NOK is narrowing the gap with 11.1385, the early May high. It's EUR/NOK that could trigger a further break here, as the cross tests 12.0062 - the cycle high posted in November last year.
- Richmond Fed and existing home sales data are top of the schedule for the US today, but markets are likely to be more sensitive to the prelim PMI print tomorrow. There are no central bank speakers of note, with both the BoE and Federal Reserve inside their pre-meeting media blackout periods.
BONDS: Gilts Underperform Bunds Again, Schatz Supply Eyed
Gilts underperform Bunds across the curve this morning, as markets continue to assess the chances of the BoE holding rates at next Thursday’s meeting.
- Gilt futures are -7 at 97.87, after finding support around 97.63 (July 11 low) at the open.
- Bunds meanwhile have rallied ~35 ticks from the intraday low (131.71) to retrace yesterday’s post-settlement selloff, currently +12 at 132.05.
- The German and UK cash curves have bull steepened today, with the UK 2s10s operating just off last Friday’s YtD steeps.
- The 0.125% Mar-39 index-linked Gilt auction was mixed, though had little impact on non-linker Gilt pricing. Meanwhile Germany sold E5bln of the new 2.70% Sep-26 Schatz.
- ECB VP de Guindos hinted at September as a more “convenient” meeting to make decisions compared to July, but did not shift market pricing.
- The remainder of today’s calendar is light, with markets focused on tomorrow’s flash PMI releases and the BoC decision.
EQUITIES: E-Mini S&P Continues to Trade Above Last Week's Lows
A bull cycle in Eurostoxx 50 futures remains intact, despite the pullback in prices into the Friday close. The move lower last week undermines the bullish theme somewhat, with price having traded through the 50-day EMA, and the bear trigger has been tested at 4860.00, the Jun 14 low. Clearance of this level would expose 4846.00, the Apr 19 low and a key reversal point. For bulls, a move higher and a break of 5087.00, the Jul 12 high, would again highlight a bullish theme. The broader trend condition in S&P E-Minis is bullish and the slip lower into last week’s close appears to be a correction. The recent rally to cycle highs confirms a resumption of the uptrend and maintains the bullish sequence of higher highs and higher lows. MA studies are in a clear bull-mode set-up too, highlighting positive market sentiment. Sights are on 5741.34, a Fibonacci projection. Firm support is at 5486.11 the 50-day EMA.
- Japan's NIKKEI closed lower by 4.61 pts or -0.01% at 39594.39 and the TOPIX ended 5.86 pts higher or +0.21% at 2833.39.
- Elsewhere, in China the SHANGHAI closed lower by 48.848 pts or -1.65% at 2915.368 and the HANG SENG ended 166.52 pts lower or -0.94% at 17469.36.
- Across Europe, Germany's DAX trades higher by 121.94 pts or +0.66% at 18529.82, FTSE 100 lower by 20.85 pts or -0.25% at 8177.8, CAC 40 down 4.65 pts or -0.06% at 7616.97 and Euro Stoxx 50 up 21.46 pts or +0.44% at 4918.32.
- Dow Jones mini down 28 pts or -0.07% at 40667, S&P 500 mini down 12.75 pts or -0.23% at 5597.75, NASDAQ mini down 86 pts or -0.43% at 19914.25.
Time: 09:50 BST
COMMODITIES: WTI Futures Remain Below 50-Day EMA, Potential for Further Weakness
Weakness into the Friday close keeps the focus pointed lower for WTI futures. The 50-day EMA gave way during the sell-off late last week, opening the potential for further losses toward 76.95 - the Jun 13th low on the continuation contract. Initial key resistance to watch is $83.58, the Jul 5 high, and a break and close above this level is needed ahead of any test on the 84.36 bull trigger. Gold prices faded across the second half of last week, resulting in new pullback lows of $2383.99 on Monday. Nonetheless, the broader gains last week reinforce current conditions, and keep the M/T trend pointed higher. The yellow metal has breached key resistance and the bull trigger at $2450.1, the May 20 high. This confirms a resumption of the medium-term uptrend and opens the $2500.00 handle next. Moving average studies are in a clear bull-mode set-up, highlighting a rising trend. Initial support is at $2390.6, the 20-day EMA.
- WTI Crude up $0.14 or +0.18% at $78.56
- Natural Gas down $0 or -0.09% at $2.249
- Gold spot up $8.14 or +0.34% at $2404.57
- Copper down $2.5 or -0.6% at $417
- Silver down $0.16 or -0.56% at $28.9575
- Platinum down $0.92 or -0.1% at $950.19
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 23/07/2024 | 1100/0700 | *** |  TR | Turkey Benchmark Rate |
| 23/07/2024 | 1230/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 23/07/2024 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 23/07/2024 | 1400/1600 | ** |  EU | Consumer Confidence Indicator (p) |
| 23/07/2024 | 1400/1000 | *** | US | NAR existing home sales |
| 23/07/2024 | 1400/1000 | ** | US | Richmond Fed Survey |
| 23/07/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 23/07/2024 | 1700/1300 | * | US | US Treasury Auction Result for 2 Year Note |
| 24/07/2024 | 2300/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 24/07/2024 | 2301/0001 | * |  GB | Brightmine pay deals for whole economy |
| 24/07/2024 | 0030/0930 | ** |  JP | Jibun Bank Flash Japan PMI |
| 24/07/2024 | 0600/0800 | * |  DE | GFK Consumer Climate |
| 24/07/2024 | 0645/0845 | EU | ECB's de Guindos at ECB/IMF conference | |
| 24/07/2024 | 0700/0900 | ** |  ES | PPI |
| 24/07/2024 | 0715/0915 | ** |  FR | S&P Global Services PMI (p) |
| 24/07/2024 | 0715/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 24/07/2024 | 0730/0930 | ** | DE | S&P Global Services PMI (p) |
| 24/07/2024 | 0730/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 24/07/2024 | 0800/1000 | ** | EU | S&P Global Services PMI (p) |
| 24/07/2024 | 0800/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 24/07/2024 | 0800/1000 | ** | EU | S&P Global Composite PMI (p) |
| 24/07/2024 | 0830/0930 | *** | GB | S&P Global Manufacturing PMI flash |
| 24/07/2024 | 0830/0930 | *** | GB | S&P Global Services PMI flash |
| 24/07/2024 | 0830/0930 | *** | GB | S&P Global Composite PMI flash |
| 24/07/2024 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 24/07/2024 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 24/07/2024 | 1200/1400 | EU | ECB's Lane at ECB/IMF conference | |
| 24/07/2024 | 1345/0945 |  CA | BOC Monetary Policy Report | |
| 24/07/2024 | 1345/0945 | *** | CA | Bank of Canada Policy Decision |
| 24/07/2024 | 1345/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 24/07/2024 | 1345/0945 | *** | US | S&P Global Services Index (flash) |
| 24/07/2024 | 1400/1000 | *** | US | New Home Sales |
| 24/07/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 24/07/2024 | 1430/1030 | CA | BOC Governor Press Conference | |
| 24/07/2024 | 1530/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 24/07/2024 | 1700/1300 | * | US | US Treasury Auction Result for 5 Year Note |