Dow Jones Slips, Q2 GDP Grows and ECB Boosts Stocks

Dow Jones 13 and out

The winning streak came to a halt yesterday with the Dow Jones closing down 67bp. The run looked to continue with the market up around 35bp in middle of the day trading before erasing gains and selling off into the close. Q2 GDP released pre-market surprised to the upside, printing at 2.4% vs 1.8% with personal consumption +1.6%. Treasuries reversed post FOMC gains yesterday with 10yr yields bouncing 18bps off the overnight lows. Today’s data centres around inflation with US PCE deflator figures released at 13:30BST.

ECB Policy boosts regional stocks

The ECB outlook was largely as expected as another 25bp hike was delivered taking the rate to 4.25%. Lagarde did show a subtle change in the statement that would leave the door open to a pause at the September meeting. The ECB have now raised at each of the last nine meetings since and including July 2022. Markets are slightly lower on the open today after inflation data showed North Rhine CPI come in lower at 5.8% vs 6.2% while French July preliminary CPI was +4.3% as expected. Spain July preliminary y/y CPI was +2.3% vs +1.6% expected.

Bond market concerns after BOJ adjustment overnight

The BoJ policy announcement didn’t officially raise the upper threshold but said it will tolerate 0.50% points movement around the 0.50% target. They also announced they would make an unlimited fixed rate offer for JGB purchases at 1% every day. Japanese yields trade higher dragging up European 10yr yields just over 10bp.

Relief for UK homeowners

After HSBC became the first bank to cut mortgage rates Nationwide, Barclays and TSB have followed suit after a better-than-expected drop in June inflation and growing competition as demand for home loans fall. Some negative sentiment came from Foxtons chief executive who told the Telegraph that London’s property market is being supported by landlords who are being forced to sell up due to higher rates and government red tape.

Intel beats on revenue forecast

Intel traded higher by 7% after-hours after the chipmaker reported second-quarter results that beat expectations as its PC business started to normalise.

Today pre-market we have earnings from Exxon, Chevron and Proctor & Gamble.