Japan hit by tech sell-off

US stock index futures drifted lower in early trade this morning, with traders maintaining a cautious stance ahead of the release this evening of minutes from the Federal Reserve’s July meeting. This was when policymakers held rates steady but faced their first dual dissent since 1993. Governors Christopher Waller and Michelle Bowman broke ranks, a move seen as significant given the Fed’s history of consensus-driven decision-making.

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Looking ahead, the spotlight is firmly on Fed Chair Jerome Powell’s speech on Friday at the Jackson Hole Economic Symposium, which starts tomorrow. Markets are already pricing in an 85% probability of a 25-basis point rate cut at the September meeting.

Meanwhile, the second quarter earnings season continues to wind down, with a clutch of updates expected from big retailers. Yesterday, positive results from Home Depot helped the Dow to edge into positive territory by the close, even as the other major indices posted losses. Walmart will report tomorrow, while today, we will see updates from Lowe’s, Target, and TJX Companies.

Nvidia shares slipped more than 3% yesterday after reports surfaced that the company is evaluating a new artificial intelligence chip designed for the Chinese market. The product, tentatively named the B30A, is expected to be based on Nvidia’s Blackwell architecture and would offer more processing power than the currently available H20. The company hopes to deliver sample units for testing to Chinese clients as soon as next month.

Commerce Secretary Howard Lutnick praised CEO Jensen Huang and noted that it would not be surprising if Nvidia sought to sell such a chip in China. Earlier this month, both Nvidia and Advanced Micro Devices agreed to hand over 15% of their China sales revenue to the US government in exchange for permission to resume chip sales in the region.

The Trump administration initially blocked the sale of advanced computer chips to China in April, citing national security concerns. Nvidia previously developed its H20 chip after the Biden administration imposed export restrictions in 2023, while AMD created the MI308 for Chinese buyers.

President Trump said last week that he had initially requested a 20% cut of Nvidia’s sales, though Huang negotiated it down to 15%. Trump also suggested he could allow the sale of a significantly scaled-down Blackwell chip to China under this framework.

The British pound gained ground early Wednesday after UK inflation figures came in stronger than expected. Headline inflation accelerated to 3.8% in July. The breakdown showed core inflation rising 3.8% year-on-year, slightly above June’s 3.7%.

Services inflation added to the upward pressure, climbing to 5% from 4.7%, reflecting higher costs in labour-intensive sectors and the impact of recent increases to National Insurance contributions. Analysts suggest the figures pose further challenges for the Bank of England, reducing the likelihood of additional rate cuts this year as policymakers continue to battle persistent price pressures. The news saw sterling break above 1.3500 against the US dollar. But elsewhere, there has been little movement across the Forex market this morning.

Source: TN Trader

European stock indices were mixed in early trade on Wednesday, with sentiment cautious following yesterday’s weakness across Wall Street and today’s softer tone in US stock index futures. German producer price data came in lower than expected in July. Investors across the region remain focused on global central bank guidance and any upcoming policy signals from Jackson Hole later this week.

Gold was little changed in early trade on Wednesday, although there was a slightly positive bias. Gold made back some of yesterday’s losses and continued to hold above $3,300 while also being rangebound.

Traders are keeping a close eye on the US dollar as a significant move here could prove to be the catalyst for gold to break out of its current range of $3,450 to $3,250, which has been building for ten weeks now. Possible triggers include the release of the Fed’s FOMC minutes later tonight, or more likely, Fed Chair Jerome Powell’s Jackson Hole speech on Friday. 

Source: TN Trader

Meanwhile, silver took a large tumble yesterday in a move which saw it slump below $38. It was weaker again in early trade this morning, having broken below $37 before it managed to steady. The next obvious support comes in around $36.

Crude oil prices were firmer in early trade this morning, with front-month WTI trading back around Friday’s close. Crude prices fell at the beginning of this week after Presidents Trump and Zelenskyy (along with a few European leaders) appeared to have positive conversations over ending the war between Russia and Ukraine.

Source: TN Trader

That suggested that sanctions on Russian oil could soon be lifted. But the situation is far more complicated, and President Trump has already suggested that Mr Putin may be in no mood to compromise in any future peace talks. In other words, it’s unlikely that the war will be over anytime soon.

Mr Trump has said that the next step is to bring Presidents Zelenskyy and Putin together for head-to-head discussions. So far, there has been no word from Moscow to indicate that Mr Putin is prepared to take part.  

In the meantime, the latest crude sell-off, which began at the end of last month, has decelerated, and front-month WTI appears to have steadied a touch north of $62 per barrel. Whether this proves to be a base from which crude can rally or if this is simply a pause before prices continue lower looks likely to depend on any data that can shed some light on the outlook for global demand and supply.