Market reaction to assassination attempts on Trump, falling China, stock events and corporate news
Fundamental Analysis
• Japanese Nikkei stock index falls by 2%, Chinese by 1%. Futures for American stock indices are rising slightly - the increase in Trump's chances of winning after the assassination attempt is perceived positively by investors. The yen and the foreign exchange market in general are stable.
• Elon Musk said that they tried to kill him twice in the last 8 months. He wrote about this on the social network X amid news of the assassination attempt on Trump.
• Shock from the assassination attempt on former President Donald Trump is driving markets this Monday. Traders' initial reaction was to buy the US dollar and bitcoin and sell long-term US Treasuries - so-called Trump victory trades - as the incident boosts his chances of winning back the White House.
10-year Treasury futures fell, pointing to higher yields. Investors have typically responded to the prospect of a Trump victory by pushing Treasury yields higher, partly on the assumption that his economic policies will lead to higher inflation and debt.
The Associated Press, citing a law enforcement source, writes that despite Biden’s statements, the shooting is being investigated as an attempt on the politician’s life. The agency also notes that this is the first assassination attempt against a president or presidential candidate since the attack on Ronald Reagan in 1981.
Politico writes that because of the assassination attempt, Republicans are predicting Trump's victory in the presidential race.
Until today, Trump's rating was several points ahead of Biden's. Now, according to forecasts, many Republicans who had doubts will definitely side with Trump, and most importantly, they will become even more active.
The number of Americans registered to vote in the US has grown exponentially since the assassination attempt on Trump - Google trends.
The Republican National Convention takes place this week in Milwaukee. It will officially announce Trump as the Republican presidential candidate.
• Federal Reserve Chairman Jerome Powell will speak later Monday, an equally important event that could influence interest rate cuts in September.
• Europe is preparing for a fall: EUROSTOXX 50 futures fell 0.5%. Later in the day, eurozone industrial production data will be released, with economists expecting a 1.9% decline for April, which will factor into expectations for the European Central Bank's rate cut on Thursday.
• ECB chief Christine Lagarde will also speak on Monday, but the upcoming rate decision is unlikely to surprise markets, which see a 95% chance of a sustainable 3.75% rate. The policy statement will emphasize that inflation is under control but remains resilient, and upcoming data will be key to determining the timing of the next rate cut.
• Canada says China has set up unofficial police stations abroad that monitor and intimidate members of the Chinese diaspora. According to Bloomberg journalists, Canada, the USA, Italy, Germany and the UK are faced with this problem. Two of the publication's interlocutors said that Ottawa will share its findings with the G7 in the coming weeks.
• The Polish Parliament allowed security forces to shoot at border violators with live ammunition. The Polish Sejm adopted amendments to laws expanding the powers of the army, police and border guards. In particular, legislators allowed security forces to shoot at violators of the Polish border with live ammunition. This is due to illegal immigrants on the Belarusian-Polish border.
• “I look forward to a constructive dialogue”: the new Iranian president called on the EU and the US to reconsider their policies. Iranian President Masoud Pezeshkiyan addressed the “New World” with a proposal for “constructive dialogue.” He called on the European Union and the United States to admit their mistakes and adjust their policies towards Iran. I wonder if Iran is ready to stop supplying weapons to the Russian Federation? Or will he continue to pretend that nothing is happening?
• A large block of macroeconomic data for China showed a worsening situation.
- GDP slowed from 5.3% y/y to 4.7% (expected 5.1%)
- Retail sales slowed from +3.7% y/y to 2.0% (expected 3.3%)
- Industrial production slowed from +5.6% y/y to 5.3% (expected 4.9%)
- Unemployment remained at 5.0%.
- The ruling Communist Party of China begins a four-day meeting on Monday.
The results are expected to present a strategy for independent economic growth in an era of heightened national security concerns and restrictions on access to American technology.
Investors will also be watching to see whether the party announces any immediate measures to combat the prolonged slump in the property market.
• Spain beat England 2-1 to take their fourth European title.
And the buyout price for 17-year-old Spanish soccer prodigy Lamin Yamal is $1.08 billion (he just turned 17 last Saturday!). Yamal plays club football for Barcelona.
The highest amount of compensation ever paid for the transfer of a football player was in 2017, when the French club Paris Saint-Germain bought Neymar from Barcelona for $262 million.
But is there anyone willing to pay a billion for the redemption of Yamal? - is still unknown. After all, football and sports careers are a risk.
Market analysis
• 40% of U.S. chip equipment makers' sales are to China - asia nikkei
U.S. chip equipment makers have become more dependent on the Chinese market despite Washington's restrictions on exports of advanced products as they increase supplies of equipment used to make legacy chips.
In February-April, China accounted for 43% of sales at Applied Materials (AMAT), up 22 points from last year. China's share of Lam Research's (LRCX) sales rose 20 points to 42% in the January-March period.
• A crypto wallet that is implanted into the human body was introduced in the United States. Seattle-based VivoKey Technologies offers a tablet-sized cryptocurrency wallet, Apex, that is implanted into the body. The device is controlled via an app, and transactions are processed directly inside the implanted chip.
The Apex chip can be used to store Bitcoin, open doors, or pay for a cup of coffee. The cost of such an implanted cryptocurrency wallet is $349.
• The ECB may prepare markets for a rate cut in September - Bloomberg.
• Saudi Arabia's Crown Prince's transformation puts stress on economy and unnerves oil industry - Bloomberg. Saudi Arabia faces the most fragile moment in its economic recovery.
• Bitcoin exceeded $62,500 after the assassination attempt on Trump. Donald Trump's defiant response to the assassination attempt has sparked speculation that his chances of winning the presidency have increased.
• Amazon Prime Day is almost here. It's summer, and deals seem easy at a time when prices for many consumer goods are high. July sales become seasonal earnings driver for retail Amazon
Super Micro Computer (SMCI) will join the Nasdaq-100. This tech company has been one of the hottest stocks this year.
• OpenAI whistleblowers ask SEC to investigate potential restrictive non-disclosure agreements - Reuters. Calling for an investigation into the artificial intelligence company's likely restrictive non-disclosure agreements.
• Saturday's assassination attempt on Trump sets the stage for a surge in volatility in global financial markets on Monday - Bloomberg
The situation could be further aggravated by low liquidity as Japanese markets will be closed for a national holiday.
• Google (GOOG) is close to a $23 billion deal to acquire cybersecurity company Wiz. This could become the search giant's largest acquisition in its history.
Two years ago, Google bought another security firm, Mandiant, for $5.4 billion.
• Investors will focus on the corporate earnings calendar for the rest of the month. Netflix (NFLX) will release results after the market closes on Thursday.
• ASML Semiconductors (ASML) and Taiwan Semiconductor Manufacturing Company (TSM) will be released on Wednesday and Thursday, respectively.
Elsewhere on the earnings calendar, reports from Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC) will summarize the performance of Wall Street's biggest banks.
• Johnson & Johnson (JNJ), American Express (AXP), UnitedHealth (UNH) and Travelers (TRV) are expected to report on the Dow.
• The economic data calendar will not be too busy. The main event will be the June retail sales report, which will be released on Tuesday.
Key events that could impact markets on Monday:
- Reports of BlackRock, Goldman Sachs - BLK and GS.
- Broadcom (AVGO) shares will begin trading on a 10-to-1 split.
- Fed Chairman Jerome Powell will participate in an interview hosted by the Economic Club of Washington.
- Robinhood Markets (HOOD) CEO Vlad Tenev will speak at the Fortune Live Media conference in Park City, Utah.
- San Francisco Federal Reserve Bank President Mary Daly will participate in a session titled "The Bull, the Bear and the Banker" ahead of Fortune Brainstorm Tech 2024.
- The USDA will release a report on the status of the crop. Traders flagged the report as potentially more important than usual for corn, soybean and wheat futures. - ECB President Christine Lagarde will speak at the Eurogroup meeting in Brussels.
- Data on industrial production in the eurozone.