Exchange events, growing Japan, German auto industry, oil, company news and the beginning of reports in the USA

Fundamental Analysis

• In Asian markets on Thursday, the yen was stuck at 161 yen per dollar, with markets in Tokyo and Taipei hitting record highs, as did New York on Wednesday. Over the month, the Nasdaq index rose more than 5%. The Bank of Korea kept interest rates as expected but removed a warning about inflation risks from its statement, echoing a similar shift in language a day earlier in New Zealand. Meanwhile, sterling hit a four-month high as Bank of England chief economist Hugh Pill did not cut interest rates in August as some had expected. Stocks rose broadly yesterday and US stock indices rose about 1%. 

• On an annualized basis, the headline U.S. consumer price index is expected to fall to 3.1% in June, while the core consumer price index is expected to remain stable from the previous month at 0.2%, according to economists polled by Reuters. Fed funds futures currently show a 73% chance the central bank will ease rates at its September meeting, according to CME FedWatch. The meeting's economists' forecasts for inflation are likely to bolster those expectations.

• Fed Chairman Powell was quite lenient in his speech in the US Congress, giving investors hope for a speedy rate cut.
We are waiting for a reaction to the US inflation data.

• All 32 NATO members will be asked to develop civil defense plans in the event of Article 5 (nuclear) activation at the alliance summit - Foreign Policy. Such actions are necessary to prepare for a possible future Russian attack, which would likely include long-range missile strikes, disinformation, port disruption and attacks on the power grid, the newspaper said.

• The Austrian government will check the possibility of terminating the contract with Gazprom. The Austrian Ministry of Climate Protection has created a commission to study the contract between the energy company OMV and Gazprom - which was extended in 2018 until 2040 - and determine whether it can be terminated early.

• Not only insufficient supplies of shells and insufficient production capabilities. NATO Secretary General Jens Stoltenberg pointed out the problems of the Alliance, which became obvious after the outbreak of a full-scale war in Ukraine.

• Republicans are testing a new campaign message: Immigration can cause inflation. This week, Republicans are testing a new argument that covers the three main issues of the 2024 campaign: immigration, inflation and high housing costs.

• US Gen Z consumers are relying on parents as inflation squeezes budgets. Reuters: Research shows U.S. Gen Z adults are facing increasing financial challenges due to inflation and rising costs of living. Moreover, 46% of them rely on financial assistance from their parents and families.

Corporate analysis 

• German automakers report falling sales and discrepancies in the share of electric vehicles - WSJ.
Mercedes-Benz, BMW and Volkswagen recorded declines in overall vehicle sales and falling demand in China in the second quarter, but were at odds over share in the hotly contested electric vehicle market.
Volkswagen lowered profitability forecast due to Audi plant closure
The German automaker lowered its forecast for operating sales margin for 2024 due to the potential closure of the Brussels plant and other unplanned expenses.

• WSJ: BP to record impairment losses of up to $2 billion. The oil major said weak oil trading and lower refining margins would hurt profits. This warning echoes a similar message from Exxon Mobil.

• Electric vehicle makers Lucid and Fisker are recalling thousands of recently manufactured electric vehicles. All because of problems that can lead to loss of electricity.

• Arabica futures hold at two-year high - Bloomberg. Main reason: supply concerns.

• OPEC does not change its forecast for oil demand, but expects economic growth to accelerate. The cartel confirmed it forecast oil demand to rise by 2.2 million barrels per day in 2024, but raised its economic growth forecast for this year, citing sustained momentum in the world's leading economies.

• Japanese Nikkei continues to break records. BoJ is still delaying monetary policy tightening and investors are focusing more on positive sentiment in the US market.

• Tesla raises Model 3 prices in Europe due to tariffs on Chinese-made electric cars - Reuters. The automaker warned in June it could raise prices from July as a result of tariffs that rose to 37.6% depending on the manufacturer. Tesla was due to receive a 20.8% tariff on its vehicles, but has filed a request to recalculate its rate.

• Microsoft and Apple refused seats on the board of directors of OpenAI - Bloomberg. The decision underscores growing scrutiny from antitrust authorities on the influence of big tech companies on AI.

• The venture fund that launched Moderna plans to create biotech companies that will use AI in drug development - FT. During its latest investment round, Flagship Pioneering raised $3.6 billion. Flagship is also working on creating chemical materials for drugs and automating the formation of scientific hypotheses using AI.

• Apple became the first company whose capitalization reached $3.5 trillion.

• AMD will acquire European artificial intelligence laboratory Silo for $665 million - Bloomberg. The company is buying a Finnish firm that calls itself Europe's largest private artificial intelligence laboratory and has clients including Allianz SE, Unilever Plc and the Bayerische Motoren Werke AG unit of Rolls-Royce.

• Elon Musk won the lawsuit filed by fired Twitter workers. Musk has won a lawsuit challenging his refusal to pay at least $500 million in severance pay to thousands of Twitter workers he fired during massive layoffs after buying the social network.

• Fed Chairman Jerome Powell said that balance sheet contraction is still ahead. The Fed has "more work to do" to reduce the size of its balance sheet as the end point of quantitative tightening is still uncertain.

• Chile wins lithium battery tax credit from US - Bloomberg. Chile has reached an agreement with the US that a key battery component will count as a tax credit under the US Inflation Relief Act. This should increase its attractiveness to US investors.

• Microsoft reaches agreement to settle CISPE antitrust complaint - Reuters. Microsoft has reached a multimillion-dollar agreement to settle a CISPE antitrust complaint over its cloud licensing practices, averting an EU antitrust investigation that could have resulted in a hefty fine.

• Sprott says new copper fund is too small to pose market risk - Bloomberg. Sprott says its new fund for buying and storing physical copper will be too small to impact global availability of the industrial metal, despite past controversy over attempts to launch similar products about a decade ago.

• Junk bonds are in vogue as growth in emerging markets attracts investors - Bloomberg. The rally in high-yield debt issued by emerging markets is recovering as investors become increasingly confident in their economic outlook, bolstered by some favorable market factors.

• Germany has reached an agreement to reduce Huawei's role in the 5G wireless network - Reuters. The German government and mobile operators have agreed in principle on steps to phase out Chinese tech companies' components from the country's 5G wireless network over the next five years.

• Morgan Stanley is positive on Tesla's energy storage segment - Reuters. Morgan Stanley upgraded its valuation of Tesla's energy storage business, anticipating a global surge in electricity demand driven by the AI ​​boom and the company's ability to increase its market share in the segment.

• Samsung is bringing the latest technology to wearables, using AI in new watches and rings. Samsung outfits its wearable devices with the latest technology - artificial intelligence. On Wednesday, the South Korean electronics giant revealed both of its first AI devices - a watch and a ring.

• Apple (AAPL) plans to release 10% more iPhones this year. Hopes for increased demand for the new AI model - 90 million iPhone 16.

• Costco (COST) shares are up 2.6% in premarket trading. After membership fees were increased for the first time in 7 years.

• Citigroup (C) shares are down 1% in premarket trading. US banking regulators fined Citi $136 million for violating a consent order.
Citi "has not made sufficient progress in addressing its data quality management issues and has not implemented compensating controls to manage ongoing risks."

Key events that could impact markets on Thursday:

- Economy: Final German CPI, UK monthly GDP, US CPI.

- Tyson Foods will host its Demo Day 2024. The event provides startups with an exclusive platform for potential partnership opportunities with Tyson. Selected startups can receive mentorship from Tyson Foods executives, access to pilot programs and testing, possible proof of concepts and potential for commercial partnerships.

- Chewy Annual Meeting and Axcelis Technologies Investor Day.

- The IEA will publish its monthly report on the oil market.

- US Consumer Price Index Report for June.

- Revenues: Delta Airlines, PepsiCo.

- Speeches: Musalem and Bostic from the Fed