Economic Indicators & Central Banks:
- President Biden announced he is withdrawing from the re-election campaign. In a subsequent comment, he stated his support for Kamala Harris. He will address the nation later this week. This throws the Democrat party into more disarray as it heads into its convention from August 19-22.
- These uncertainties will further shake up the markets when trading opens.
- For weeks, investors have speculated about an increased likelihood of Donald Trump winning the November election, especially after Biden’s underwhelming debate performance. Now, with Biden exiting the race, investors are reconsidering their strategies regarding a potential Trump victory.
- China’s PBoC cut its 7-day reverse repo rate by -10 bps to 1.70% from 1.80% in a surprise move coming out of the Third Plenum.
- Earnings: Tesla Inc. and Alphabet Inc. will kick off earnings reports for the “Magnificent Seven” on Tuesday, while major European banks are set to report their earnings this week as well. Analysts will be watching to see if the benefits from higher interest rates are diminishing and how recent political developments are impacting market sentiment.
Asian & European Open:
- It is a cautious, choppy start to trading in the wake of the news. This negative start to the week mirrored the losses seen on Wall Street on Friday, as businesses globally dealt with a major technology outage.
- Asian stock markets mostly fell after President Joe Biden’s announcement. Hong Kong’s Hang Seng has rallied 0.82% but the Nikkei is down -1.3% amid the fallout from Friday’s slump on Wall Street.
- US futures remained relatively stable while European stock futures are higher.
Financial Markets Performance:
- The USDIndex has traded narrowly, but initially dropped to 103.90 versus Friday’s close at 104.396. It is mixed against its G10 peers.
- USDCNY has been jumpy, impacted both by the PBoC’s news as well as the Biden news earlier. The buck rose to 7.2737 in early action before sliding to 7.2706. It has edged back to 7.2730.
- Metals showed mixed results following their worst weekly decline in nearly two years, with a rate cut in China helping to stabilize the market.
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Andria Pichidi
Market Analyst
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