- Today's declines on Wall Street and European markets stemmed from profit-taking following July's ISM report for the services sector, which showed continued inflationary pressures with falling orders and employment indices. Investors were surprised to see the price component rise to its highest level in nearly three years.
- The ISM for the service sector in July came in at 50.1, below expectations of 51.5 and down from 50.8 in June, while price pressures rose to 69.9 from 67.5. New orders and employment also fell, with exports and imports moving from expansion to recession, indicating the impact of tariff tensions on trade.
- Contracts on the US100 are losing almost 0.6 per cent, testing levels around 23,200 points, and similar declines are seen in the cryptocurrency market and shares of smaller US companies. The correction comes despite good quarterly results from major technology companies, but it is small in terms of its extent for now.
- The Fed may remain reluctant to loosen monetary policy, despite risks from a weaker labour market and weak ISM readings from manufacturing and services slowly beginning to overshadow heightened price pressures.
- The US trade deficit in June was smaller than expected and significantly lower than the month before. The US trade balance in June amounted to USD -60.2 billion against a USD -61 billion estimate and was significantly lower than the USD -71.5 billion in May.
- Despite the fall in the index, we can still find a few companies that are doing exceptionally well. One of these is Palantir, where the share price is up nearly 7% in the face of higher-than-expected quarterly results. Heico's shares are down sharply, retreating from the zone of historical highs at US$340 per share with a decline of more than 6%.
- The value of the Indian rupee against the US dollar fell after Donald Trump gave a speech in which he threatened to significantly increase tariffs on Indian exports due to continued imports of Russian oil. The tariffs are expected to come into effect within 24 hours.
- US President Trump addressed ongoing trade negotiations with China, stating that Chinese President Xi Jinping has called for a face to face meeting. Trump said he would meet with Xi before the end of the year if a trade agreement is reached, and stressed: "We are very close to an agreement".
- Trump also announced several new trade measures. He announced that the US will initially impose a small tariff on pharmaceutical products, which will increase to 150% or even 250% after one year. He added that he would announce additional measures on semiconductors and integrated circuits in the coming week.
- In the broad forex market, the British pound and the Australian dollar performed best today. Elevated downward pressure, however, was evident on the Japanese yen.
- Declines in the quotations of the main indices led the precious metals to do better. Silver prices are up nearly 1.23% today, while gold adds 0.23%.
- Coffee futures are reversing last week's declines and gaining almost 3% due to the 50% US tariffs on Brazil that will cover coffee and weaker weather in Minas Gerais.
- The capital outflow from the stock market is also feeding into cryptocurrencies. Ethereum prices are down 3% today, while Bitcoin prices are off 1.5%.
- Russia has said it will consider halting military airspace operations in its war with Ukraine, following Donald Trump's peace efforts.
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