Market Wrap: European equities at 3-week highs! Apple dips in US premarket!

📈 Stocks & Indices

• Europe remains in positive territory: Gains continue to dominate European markets. Stoxx 50 futures are up 0.5%, reaching their highest level in three weeks. The leaders are Italy (ITA40: +0.6%), Spain (SPA35: +0.5%), and France (FRA40: +0.55%). German DAX (DE40) futures are rising 0.3%.

• Strong Amazon vs. weaker Apple: In US pre-market trading, Amazon shares are up 12% following very strong financial results. Apple, meanwhile, is down 7% amid investor concerns over its elevated valuation (P/E ratio of 41x) and supply-chain disruptions, particularly in the memory-chip segment.

• Asian semiconductor rally: Following an earlier wave of selling, shares of SK Hynix and Samsung Electronics jumped more than 20% in South Korea, driven by improving sentiment around the US AI sector. Japan’s JP225 gained 0.40%.

• Mergers, acquisitions and corporate events: UK retailer Sainsbury’s is selling the Argos brand for GBP 120 million. HSBC shares in Hong Kong reached record highs following the sale of its Australian assets.

📊 Macroeconomics

• Bank of Japan (BoJ) decision: Japan’s interest rates remained unchanged at 1.00%, while the bond-buying plan for August was also left unchanged. However, Governor Kazuo Ueda adopted a hawkish tone, noting that core inflation is approaching the 2% target and that the BoJ could accelerate rate hikes if financial conditions remain excessively accommodative.

• Euro Area CPI inflation: The preliminary July CPI reading for the euro area showed inflation rising to 2.9% YoY, in line with expectations and up from 2.8% previously. Core inflation came in at 2.5% YoY, versus the 2.4% expected. Higher inflation in France (+2.4% YoY vs. +2.1% expected), together with comments from ECB policymakers Robert Holzmann and Robert Kocher, confirms that autumn interest-rate decisions will be entirely data-dependent.

• Inflation breakdown: Energy prices were the main source of price pressure in Europe, with their annual rate of increase accelerating to 10%, up from 8.5% the previous month. Inflation in food, alcohol and tobacco slowed from 1.5% to 1.2%. Services inflation remains sticky, rising to 3.3% from 3.2%.

• German labour market: Germany’s unemployment rate rose slightly more than expected in July, reaching 6.4% versus 6.3% previously, pointing to a mild cooling of the German economy.

• Yen commentary: Japanese Finance Minister Katayama refrained from commenting on speculation about possible FX intervention following the recent decline in USDJPY.

💱 FX Market

• The US dollar is strengthening after three days of declines triggered by a less hawkish Fed narrative and relative de-escalation in the Middle East conflict. The strongest rebound is visible against the Swiss franc (USDCHF: +0.5%), the yen (USDJPY: +0.3%), and the euro (EURUSD: -0.2%), which weakened following the CPI release.

• USDJPY (+0.3%): The yen has experienced sharp volatility amid speculation about a “quiet intervention” by Japanese and South Korean authorities. On a weekly basis, USDJPY is down 2.59%, while the market awaits further moves from the BoJ and additional geopolitical developments.

• USDPLN (-0.33%): The Polish zloty is strengthening against the dollar. The main development in the Polish market is the announcement that Alimentation Couche-Tard intends to acquire Żabka Group at PLN 32 per share.

🛢️ Commodities

• Crude Oil: OIL (+1.15%) and OIL.WTI (+0.95%) are erasing their morning losses following Iranian attacks on strategic US facilities in Kuwait. Meanwhile, China has announced fuel price increases effective August 1.

• Copper: COPPER (+0.1%) prices are rising due to supply disruptions in Chile caused by severe storms.

• Precious metals: Gold (GOLD: -1.2%) and silver (SILVER: -1.60%) are pulling back as the US dollar index rebounds (USDIDX: +0.25%).

🪙 Cryptocurrencies

• ETHEREUM (-1.6%) is seeing volatility fall to just 2%, as investors await a new catalyst to drive the next trend.

• Altcoin sentiment: The market remains weak, with BITCOIN down 1.2%. The steepest weekly declines are being recorded by COSMOS (-8.93% over the week) and APECOIN (-14.90% over the week).

🗺️ Geopolitics

• Middle East tensions: Iran carried out attacks on strategic US targets in Kuwait and Bahrain in response to drone strikes. China called on Kuwaiti authorities to protect its citizens and diplomatic facilities.

• Peace negotiations: A Hamas representative said the group had tentatively accepted Donald Trump’s phased peace plan (“Board of Peace”), which includes the disarmament of the organisation in exchange for the withdrawal of Israeli forces from Gaza.

• Migration crisis: Around 49,000 migrants illegally crossed the border into the Spanish enclave of Ceuta, prompting the government in Madrid to deploy troops to the region.

🔍 Key developments to watch

• COPPER: Reports of mine disruptions in Chile caused by severe storms could provide a catalyst for further gains.

• USDJPY: Reports of coordinated FX intervention by Japan and South Korea could keep volatility elevated in the currency pair.

• GOLD: The rapid escalation of events in the Middle East could support a swift return of capital to traditional safe-haven assets.