Daily Summary: EUR/USD tries to reverse the trend; Wall Street marks its third consecutive week of gains 🚨

The main factor driving market volatility: The main driver of the markets remains the US corporate earnings season, which is drawing to a close and has delivered historically strong earnings figures. Earnings growth for the broader market currently stands at nearly 50 per cent year-on-year, confirming solid fundamental support. Investors are digesting this sensational data following a series of recent gains on Wall Street and are entering a phase of stabilisation. At the same time, weaker consumer data is easing inflation concerns and reducing pressure for interest rate rises.

Geopolitics: Investors continue to closely monitor developments in the Middle East, including the passage of ships through the strategic Strait of Hormuz. There has been no breakthrough in the US-Iran talks. The  Houthi Group, meanwhile, attacked a Saudi Aramco facility in Najran using a drone. The attack was in response to what Yemen described as a violation of its sovereignty by Saudi fighter jets, which entered airspace north-east of Saada

Macroeconomic data: The US economy has shown signs of weakness, with an unexpected fall in July’s retail sales and a marked deterioration in consumer sentiment in August. In Europe, the situation appears somewhat more stable thanks to accelerating economic growth, with EU GDP rising by half a per cent quarter-on-quarter in the second quarter. Inflation in France rebounded slightly to 2.1 per cent year-on-year, driven by rising prices for services and energy. In Germany, wholesale prices rose noticeably, mainly due to higher fuel tax rates and international turmoil.

Indices: The US S&P 500, having hit an all-time high yesterday, is trading slightly lower today, but is still on course for its third consecutive week of gains. Leading valuation indicators suggest that, despite being close to its highs, the technology market is not extremely overheated and remains below the average levels observed since 2023. European stock markets are trading without a clear direction, with futures on the main indices trading flat. The German DAX is posting modest gains, supported by IT companies.

Shares: The technology sector in Europe is clearly gaining ground on the back of reports of a possible takeover of Workday, whose shares jumped by nearly 18 per cent yesterday. Today’s trading session, however, is seeing a natural profit-taking on this stock, with declines of several per cent. Across the Atlantic, shares in domestic drone manufacturers are climbing sharply, reacting enthusiastically to the imposition of tariffs on foreign competitors. Cisco Systems is performing less well following a downgrade by analysts due to concerns about a slowdown in growth.

Currencies: The US dollar is losing ground at the end of the week, giving way to a rising euro. The European currency is attempting to break through an important long-term price average, which could pave the way for further gains on the charts. The Japanese yen is behaving surprisingly, as it is once again under supply pressure despite expectations of a tightening of the central bank’s policy. 

Commodities: On the crude oil market, Brent futures have given up their initial gains and are stabilising at around $87 per barrel. Precious metals are slowly recouping their losses following yesterday’s correction. Gold is rising in price and has broken through the $4,360 per ounce mark, whilst silver is following suit, reaching almost $65 per ounce. Natural gas prices are also continuing to rise.

Cryptocurrencies: The digital assets market is seeing slight declines today, in line with a broader cooling of market sentiment. Bitcoin has slipped to around $62,900, losing a fraction of a per cent compared with yesterday’s close. The sector is still awaiting impetus from institutional investors and is laying the foundations for a possible break from its correlation with the stock markets. Upcoming central bank decisions remain a key indicator for the future direction of speculative capital in the digital space.

Market volatility observed at the end of the day across selected instruments. Source: xStation