Market wrap: Market without direction before PCE

• European equity markets are showing a bias toward modest gains. However, the scale of the moves is clearly limited, mainly due to investors waiting for US macroeconomic data and Nvidia’s results.
• France’s CAC40 is leading the gains, with futures up about 0.3%. Other indices are holding increases to around 0.2%. The exception is the Dutch index, which is down about 0.2% ahead of the US session open.
• The main positive impulse remains another decline in oil prices. Brent is sliding toward USD 85 per barrel, marking its third consecutive declining session. The sell-off in crude is also translating into lower bond yields. The yield on German 2-year bonds has fallen by more than 2 basis points.
• The drop in oil prices is driven primarily by signals of a possible partial reopening of the Strait of Hormuz. Iran has resumed talks with Oman regarding rules for managing traffic through the strait and the creation of a safe corridor for shipping.
• An additional factor pressuring oil prices is comments from the US Secretary of Energy, who said at a press conference that the actual flow of oil through the Strait of Hormuz is almost twice as high as what commercial data show.
• The market is therefore starting to reduce part of the geopolitical premium, although actual tanker traffic remains significantly lower than before the conflict began.
• At the same time, the market is waiting for Friday’s speech by Fed Chair Kevin Warsh in Jackson Hole, which could again shift expectations regarding further interest rate hikes.

Company News

• By sector, European luxury goods stocks are leading today, with their index up about 1.2%. Energy stocks are performing worse.
• Ambu (AMBU.DK): Shares of the Danish medical equipment maker are down about 13% after cutting its full-year organic revenue growth guidance to around 10% from the previous 10 to 12%.
• SAP (SAP.DE): The company received a negative recommendation from an investment bank. Additional pressure on European software came from weak guidance from US-based Intuit. The stock is down about 3.5%.
• Airbus (AIR.FR): Spanish employees at the group are returning to strike action after wage talks failed. Despite this, the shares are still up about 1.5%.
• Aeroports de Paris (ADP.FR): Shares of the Paris airport operator are up about 2.5% following a positive recommendation from an investment bank.
• OVH Groupe (OVH.FR): The company is down about 8% after the sudden departure of its CFO was made public.
• Deutsche Bank (DBK.DE): The company launched another share buyback program this week worth EUR 500 million, immediately after completing a previous EUR 1 billion buyback. The bank’s shares are up about 4%.

Macroeconomic Data

• The UK CBI retail sales balance fell in August to -48 points from -26, indicating a clear deterioration in sales volumes and continued consumer caution.
• Today’s most important release, however, is US PCE inflation. The market expects core PCE to remain around 3.3% year over year, clearly above the Fed’s 2% target.
• In addition, along with the PCE inflation data, the market will receive figures on earnings and durable goods orders. Readings are expected to be close to last month’s.

Forex

• The Australian dollar stands out the most, gaining about 0.3% after inflation data came in above expectations.

Crypto

• The cryptocurrency market remains relatively calm after strong gains last week.
  • Bitcoin is holding around USD 78,500, staying close to three-month highs.
  • Ethereum is hovering around USD 2,440.
  • Solana has pulled back toward USD 96 after previously breaking above USD 100.