Morning wrap (02.08.2023)

• US indices finished yesterday's trading mostly lower - S&P 500 dropped 0.27%, Nasdaq declined 0.43% and Russell 2000 closed over 0.5% lower. Dow Jones was the outperformer with a 0.20% gain

• Big news were announced after close of the Wall Street session yesterday - Fitch Ratings lowered US credit rating from AAA to AA+

• Fitch put US credit on negative watch back in May, citing debt ceiling issues and US governance difficulties

• US officials criticized Fitch for the move, saying it was baseless and bizarre

• USD as well as US equity index futures took a hit on the news. There was also an increase in safe haven flows to the gold market and… US Treasuries market

• However, USD has recovered from those losses and is now the best performing G10 currency

• Indices from Asia-Pacific traded lower today as Fitch downgraded triggered some risk-off moves on the markets. Nikkei dropped 2.2%, S&P/ASX 200 slumped 1.3%, Kospi traded 1.8% down and Nifty 50 declined 1%

• Indices from China traded 0.4-2.2% lower

• DAX futures point to a lower opening of the European cash session

• According to Bank of Japan minutes, BoJ members agreed that current easy monetary policy must be maintained. One BoJ member said some inflation trend indicators suggest that inflation may not return to 2% target

• New Zealand employment increased 1.0% QoQ in Q2 2023 (exp. 0.6% QoQ) while the unemployment rate increased from 3.4 to 3.6% (exp. 3.5%)

• API report showed a massive 15.4 million barrel draw in US oil inventories (exp. -0.9mb), triggering an around $0.5 per barrel jump in oil prices

• Advanced Micro Devices (AMD.US) traded around 3% higher in the after market, following release of Q2 2023 earnings. Company reported revenue at $5.36 billion (exp. $5.31 billion) and adjusted EPS of $0.58 (exp. $0.57). Company expects revenue to reach $5.7 billion in Q3 2023, slightly below analysts' forecast of $5.81 billion

• Major cryptocurrencies trade mixed - Bitcoin trades 1.3% higher, Ethereum gains 0.6%, Dogecoin drops 0.1% and Ripple trades 0.8% down

• Oil trades flat while US natural gas prices trade 0.5% lower

• Precious metals have erased part of earlier gains and now trade slightly higher on the day. Gold, silver and palladium gain around 0.2% each while platinum drops 0.2%

• GBP and USD are the best performing major currencies while AUD and NZD lag the most

EURUSD jumped after the close of the Wall Street session on the back of Fitch downgrade. However, the pair has since erased all the gains and is now attempting to deliver a decisive break below the 1.10 support zone. Source: xStation5