Morning Wrap (19.07.2024)

Asia-Pacific indices are extending declines after Wall Street indices closed lower. Indexes from China are losing between 1.00-1.20%, Japan's Nikkei 225 index is trading flat around support at 40000 points and Australia's S&P/ASX200 is trading 0.05% lower. Singapore's SG20cash index contracts are losing 0.15%.

European index futures pointed to a slightly higher opening to the cash session on the Old Continent. The UK100 gains 0.05% and the DAX 0.15%.

In the forex market, the US dollar gains the most in the first part of the day. Against most currencies, the USD is gaining 0.1% from as high as 0.3%, and the USDIDX dollar index is trading up 0.12%. On the weaker side of currencies, the Japanese yen, Swiss franc and New Zealand dollar are once again on the weakest side. USDJPY is gaining 0.25% to JPY157.6600 per USD.

Japanese consumer inflation rose slightly below expectations in June, adding to uncertainty about when the Bank of Japan will raise interest rates. The country's core CPI rose by 2.6% y/y in June, below expectations of 2.7%, but up from 2.5% in May.

Core CPI inflation was unchanged at 2.8% from the previous month. Following the report, we saw the Japanese yen weakening as a result of lower chances of a 0.10% interest rate hike at the next BoJ meeting.

Donald Trump formally accepted the Republican Party's presidential nomination on Thursday evening. In the speech, Trump made frequent references to the attempt on his life last week. The speech was not strongly substantive in terms of potential election promises and post-election policies.

Federal Reserve Bank of San Francisco President Mary Daly said on Thursday that she would like more certainty that inflation will return to the Fed's 2% target before calling for interest rate cuts. Daly remained sceptical and stressed that a longer history of stable data was needed to be confident of a sustained return of inflation to the target. However, she acknowledged that recent reports point in the right direction.

Several people close to President Biden said on Thursday that they believe he has begun to accept the idea that he may not be able to win in November and may have to withdraw his candidacy. Concern has been growing among many in the Democratic Party in recent weeks. 

One person close to him admitted that the president still has not made a final decision by insisting on his candidacy. Other voices, however, confirm that the president's opinion is beginning to gently shift and it would not be surprising if Biden were to issue a statement supporting Vice President Kamala Harris as his successor soon.

Cryptocurrencies are holding off from major moves and are trading slightly higher. Bitcoin is gaining around 0.30% to the $64,000 level, Ethereum 0.05% to $3430 and the altcoin sector is seeing little change.