Daily Summary - The market starts to doubt rate hikes after Warsh, but Trump destroys the rebound

🏛️ Macroeconomics and Central Banks

• The Federal Reserve decided to leave interest rates in the US unchanged in the range of 3.5% to 3.75%, which was in line with the expectations of most of the market, although some investors were betting on an unexpected hike. 
• The decision was not unanimous, as three out of twelve committee members (Logan, Hammack, and Kashkari) voted for a 25-basis point rate hike, which indicates strong concerns about the return of inflationary pressure. 
• Fed Chair Warsh initially presented hawkish rhetoric, avoiding promises, while emphasizing the resilience of the US economy and the determination to bring inflation to the target using a broader spectrum of data than just the PCE index. 
• During the Q&A, Warsh was perceived as more dovish as he suggested that the Fed is in no rush to adjust monetary policy.
• The market is currently pricing in the next possible US rate hike no earlier than October, changing previous expectations from September. 
• In response to Warsh's shift in attitude, US indices limited losses, and EURUSD tested the 1.15 level.
• Published core inflation data in Australia turned out to be lower than market forecasts, which caused an immediate weakening of the local currency. Investors sharply reduced their expectations for subsequent interest rate hikes by the Australian central bank this year, as a result of which the AUDUSD currency pair recorded a clear decline of 0.3%.
• Wage growth in the Eurozone is expected to accelerate until the beginning of 2027 year, however, forecasts indicate that these indicators will remain well below historical highs. This situation creates moderate pressure on the European Central Bank, which must balance supporting economic growth with controlling wage dynamics.
• President Donald Trump announced decisive retaliation against Iran in response to the recent attack on an American military base in Jordan, which drastically increased geopolitical tension in the Middle East. Although Trump noted that Tehran is asking to cease attacks, his tough stance pushes back the prospect of resuming peace talks and permanently threatens the security of oil transport through the Strait of Hormuz.

📈 Stock Market and Companies

• Major Wall Street indices managed to recover some of their earlier losses of over one percent after the Fed's announcement, which brought relief to investors fearing a hawkish surprise. 
• All market attention is now shifting to the publication of financial reports of technology giants such as Microsoft and Meta, which will test investor patience regarding huge capital expenditures on artificial intelligence development. 
• It is predicted that the reaction to these results will define the mood for the technology sector for the rest of the summer, especially in the face of concerns about the real monetization of AI technology. These increases occurred despite initial declines caused by concerns about the escalation of tensions in the Persian Gulf.
• The semiconductor sector came under strong selling pressure, and the SOX index recorded its fifth consecutive losing session under the influence of sell-offs of shares of giants such as Micron or Nvidia. The situation was worsened by a dramatic crash on the Seoul stock exchange, where the Kospi index plunged by 6%, triggering automatic trading fuses and increasing the monthly loss to a record of over 30%.
• The trigger for panic was the results of the SK Hynix concern, which, despite a six-fold increase in profits, announced record capital expenditures of 31 billion dollars, which increased fears of oversupply of AI production capacity. Additionally, KLA shares recorded declines after Morgan Stanley described its latest results as uninspiring.
• Shares of luxury fashion house Hermes plunged by 11% after the company reported disappointing sales results, raising serious concerns about the health of the Chinese luxury goods market. The weakness of the sector is also confirmed by the earlier results of the LVMH group, whose revenue dynamics suffered due to tensions in the Middle East discouraging wealthy tourists from shopping.
• On European trading floors, the companies Electrolux, Alten, and Hexagon stood out, which recorded double-digit stock price increases after publishing solid financial results.
• Ferrari's listings managed to completely erase daily losses thanks to sensational reports by the Financial Times regarding promising sales results of the Luce model. This publication restored investor confidence in the resilience of demand for the Italian brand's luxury cars.
• Automotive concern Ford raised its profit forecasts for this year for the second time, supported by undiminished consumer demand for high-margin SUV cars. This news sparked a positive reaction from investors and led to an increase in the company's share price.
• Procter & Gamble shares recorded declines after presenting conservative annual forecasts and weaker-than-expected organic sales data, which reflects consumers tightening their belts. Industrial giant Caterpillar also came under pressure after analysts at Baird lowered their recommendations, warning of a slowdown in investment in building data centers supporting artificial intelligence.
• As of 9:30 PM, the S&P 500 index is at 7390 and down 1%, while the Nasdaq 100 is at 27600 and down 1.3%, while the Dow Jones is at 51830 and down 2%

🛢️ Raw Materials

• Oil prices recorded a sharp increase, with WTI crude rising by over 7%, reaching around $85 per barrel after Donald Trump's strong statements regarding a potential strike on Iran. 
• Additional fuel for price growth in the fuel market was a report indicating a massive and unexpected drop in raw material inventories in the USA. This combination of geopolitical and fundamental factors led to a sudden return of Brent crude oil prices above the key barrier of $90 per barrel (September contract). Fuel markets reacted violently to these signals, especially after the earlier blockage of key trade routes.
• Gold prices experienced significant volatility, first testing support at 4000 dollars per ounce just before the US central bank meeting. After Warsh's dovish tone, gold is gaining about 1%. 
• In agricultural commodity markets, there was a wave of strong sell-offs, which hit coffee and cocoa futures contracts the hardest. Declines in the prices of these raw materials stand in clear contrast to the dynamically rising valuations of energy raw materials and precious metals.
• Natural gas prices in the USA recorded a rebound before the expiration of August futures contracts.
• As of 9:30 PM, gold is at 4,060 and gaining 1.39%, while WTI crude is at 84.64 and gaining 7.07%, while Brent crude is at 88.00 (October contract) and gaining 7.58%, and silver (XAG) is at 58.36 and gaining 2.25%. 

💵 Currencies

• The US dollar index weakened by 0.4% after the Federal Reserve's decision to maintain interest rates, which led the EURUSD pair near the 1.1450 level during Kevin Warsh's conference. Analysts, however, assess that the current weakness of the American currency may be short-term due to persistent geopolitical risks, which traditionally support demand for the safe-haven dollar.

🪙 Cryptocurrencies

• The cryptocurrency market is showing relatively low volatility after the Federal Reserve's decision, and Bitcoin and Ethereum prices are moving in narrow fluctuation ranges without a clear direction.
• As of 9:30 PM, Bitcoin is at 63,842 and gaining 0.07%. Meanwhile, Ethereum is at 1,899 and losing 1.02%. Meanwhile, SOL is at 73.29 and losing 0.77%.