DAX Weakness; Silver Shines & Tesla Stumbles

1. Asian Markets

• Regional Performance:
  • MSCI’s Asia-Pacific ex-Japan index rose 0.26%.
  • Japan’s Nikkei slipped 0.33%.
• Drivers: Gains followed Wall Street’s strong performance, underpinned by technology and AI-related optimism.

2. Nvidia & AI Strength

• Earnings Report:
  • Nvidia reported a 56% revenue jump, highlighting strong demand for AI infrastructure.
  • Despite boosting the S&P 500 and Dow to record highs, Nvidia’s stock ended lower due to cautious sentiment on its data centre revenue and guidance.
• Semiconductors: Overall sector benefited, with optimism reinforced by CEO Jensen Huang’s confirmation of talks with the White House on Blackwell chip sales to China.

3. China Technology Weakness

• Market Declines:
  • The STAR 50 index dropped 3%.
  • Cambricon Technologies fell 7%+, citing risks after a sharp rally.
• Sentiment: Reflects renewed caution around China’s tech sector.

4. US Economic Data Focus

• PCE Inflation: Investors await July PCE inflation, the Fed’s preferred measure.
• Rate Cut Bets: Markets price in an 85% chance of a September Fed rate cut.
• Other Data:
  • GDP Q2 revised higher.
  • Core PCE slightly cooler.
  • Jobless claims fell more than expected.

5. Dollar & Federal Reserve

• Currency Moves:
  • The dollar headed for a 2% monthly drop, pressured by rate cut bets.
• Fed Independence Concerns: Questions arise over Trump’s efforts to remove Fed Governor Lisa Cook.
• Fed Officials: Governor Waller indicated support for a 25bps cut in September, with more cuts likely over the next 3–6 months.

6. Commodities

• Oil & Gold:
  • Brent crude fell 0.55% to $68.24/bbl.
  • Spot gold eased 0.23% to $3,408/oz.
• Silver Rally:
  • Silver up 32% YTD, second only to platinum.
  • Demand supported by:
    • Retail investment (coins, bars).
    • Tax incentives in US IRAs.
    • Industrial use (especially solar).
  • Outlook: Analysts forecast +25% demand in 2025, with silver seen as undervalued relative to gold.

7. European Developments

• French Budget Crisis:
  • Government risks collapse next month.
  • Despite tensions, French and eurozone stocks rallied.
  • 30-year French bond yields eased after hitting 13-year highs.
• Tesla vs. BYD in Europe:
  • Tesla sales plunged 40% YoY in July (7th monthly decline).
  • BYD surged 225% YoY, with 13,503 new registrations vs. Tesla’s 8,837.
  • Tesla faces competition, brand damage, and reputational risks in Europe.
• DAX Technical Analysis 4 Hours:

• Despite the latest retracement, the index remains above its 100- and 200-day EMAs, which is typically considered a bullish sign. The broader bullish structure stays intact unless price closes decisively below the 23,700–23,600 area (the 100-day EMA and lower trendline).
• RSI (14): Currently sitting around 43, the RSI is in neutral territory but moving downward, suggesting a decrease in bullish momentum.
• Stoch RSI: Has crossed into oversold territory and appears to be bottoming, which could indicate a near-term bounce is possible.
• Support: 23,800 → 23,600 → 23,200 (channel bottom)

8. Cryptocurrency & Blockchain

• American Bitcoin:
  • Backed by Trump’s sons, merging with Gryphon Digital Mining.
  • Plans Nasdaq listing in early September.
  • Anchor investors include Gemini co-founders Tyler & Cameron Winklevoss.

9. US Market Moves

• Stocks:
  • S&P 500 extended record highs; Nasdaq outperformed.
  • Gains led by tech, energy, and communication services.
• Trade Policy:
  • White House ending global de minimis exemption (duty-free imports under $800).
  • Aim: restrict narcotics, counterfeiting, and support domestic jobs.
  • Six-month transition for postal shipments at flat rates.
  • Result: disruption to e-commerce supply chains; many EU states suspended shipments to the US.

10. Geopolitical Updates

• Russia-Ukraine:
  • European leaders propose a 40km buffer zone, though Kyiv may reject due to territorial concessions.
• Venezuela-US Tensions:
  • Venezuela protested US naval deployment at the UN.
  • President Maduro claimed US cannot enter Venezuela, citing support from China, Russia, and India.

11. Key Takeaways

• Markets: Asian and US equities buoyed by Nvidia-driven optimism.
• Fed Outlook: Strong rate cut expectations dominate currency and bond markets.
• Commodities: Silver stands out as both an investment and industrial play.
• Europe: Tesla struggles while BYD expands rapidly; French fiscal tensions persist.
• Crypto: American Bitcoin set to debut with strong political and investor backing.
• Policy & Geopolitics: US trade rules shift disrupts global supply chains; geopolitical flashpoints remain in Europe and Latin America.

 

By: Philip Papageorgiou – EU Market Analyst
-X ex Twitter: PhilipForexCom