Daily Market Commentary 2nd August 2024

US equity markets were plunged into mayhem overnight, with big falls across all of the bourses. The trigger appears to be the inaction of the Fed, in the face of continued economic woes. The Fed has reiterated the need to have timely rate cuts to support and even stimulate the economy, but has continued to pontificate, for fear of sparking new inflationary pressures. The Bank of England joined the ECB and kicked off the rate cutting cycle overnight. This was in sharp contrast to the Fed which continues to prevaricate. The markets have had enough and were put to the sword overnight. US ISM and Manufacturing PMI data continues to show sharp declines in the Manufacturing sector and begs for investment. The US Dollar remained strong, with the EUR trading back towards 1.0800, while the GBP fell back to 1.2730, following the B of E decision.

The carnage on US and European markets will likely be felt on the local front in today’s trade. The reserve remains bid, as the AUD fell back below 0.6500, while the NZD clung onto recent gains. The AUD has been undermined by weaker inflationary numbers, released a couple of days back, but also weakening manufacturing data coming from China. Markets will be focused on tonight’s Non-Farm Payroll number before the weekend close.