{"id":1477760,"date":"2024-07-16T12:16:46","date_gmt":"2024-07-16T16:16:46","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1477760"},"modified":"2024-07-16T12:16:46","modified_gmt":"2024-07-16T16:16:46","slug":"futures-rise-led-by-small-caps-as-great-rotation-continues","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/futures-rise-led-by-small-caps-as-great-rotation-continues\/1477760\/","title":{"rendered":"Futures Rise Led By Small Caps As Great Rotation Continues"},"content":{"rendered":"

Futures Rise Led By Small Caps As Great Rotation Continues<\/span><\/p>\n

\n

US equity futures are modestly higher, rebounding from session lows, and led by Russell futures as the rotation looks poised to continue as bond yields are lower with the curve bull flattening. As of 7:45am, S&P futures are 0.1% higher with Nasdaq futures rising 0.2%. Premarket, Mag7 is mixed with TSLA +1.7% the standout with Semis flattish. European stocks were red across the board, as China also traded lower after Trump\u2019s selection of JD Vance – who said China represents the biggest threat to the US <\/em>– as his VP, triggered further trade and geopolitical concerns in the region. FTSE -20bp\/DAX -35bps\/CAC -70bps\/Shanghai +8bps\/Hang Seng -1.6%\/Nikkei +20bps\/Kospi +18bps. Treasuries rose, pushing yields to their lowest since March, as expectations for a September rate cut rose: 10-year rates fell to as low as 4.17% while 2Y yields was at 4.41%. At the same time, the US Dollar is seeing some support, but the story is the BOJ and potential JPY intervention, though JPY is weaker. Commodities are weaker across all 3 complex with precious metals, natgas, and softs providing some support. Today\u2019s macro data focus is on Retail Sales where the headline number likely is negative based upon lower gasoline prices but the Control Group is likely higher as the consumer spent on everything else.<\/p>\n

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In premarket trading, Bank of America rose more than 2% after the lender said it sees fourth-quarter net interest income on a fully taxable-equivalent basis of about $14.5 billion, ahead of analyst estimates for $14.33 billion. Morgan Stanley initially rose after reporting Q2 earnings but then slumped after the market focused on the bank’s Wealth Management revenue miss. Here are some other notable premarket movers:<\/p>\n

Chegg gains 7% as Morgan Stanley raises the stock to equal-weight, with analysts saying that the educational platform provider\u2019s shares are pricing in a \u201cchallenged\u201d path ahead.
\n\tMatch Group jumps 9% after Starboard Value built a stake in the dating-app company.
\n\tTrump Media falls 9.6% after the owner of Truth Social registered 38 million shares that could be sold as part of a pact with Yorkville Advisors.
\n\tVerizon Communications ticks 0.3% higher as the carrier explores selling thousands of mobile-phone towers across the country, according to people familiar with the matter.
\n\tPalantir dropped -1.7% after it was cut\u00a0to underperform at Mizuho Securities with a PT $22<\/p>\n

Overnight news was quiet outside of headlines from the RNC (JD Vance said Trump would negotiate with Russia & Ukraine so American can focus on the real issue, which is China<\/strong>) and another weak consumer print out of Europe (Hugo Boss). German Zew Survey declined for the first time in a year.<\/p>\n

Meanwhile, the great rotation continues: The small-cap Russell index is now +1% for four straight sessions (up ~7.8% in that time window) vs NDX -30bps over same 4 days. Reminder S&P 500 has set 37 record highs this year while RTY remains ~10.5% below ATH from Nov \u201921. <\/strong>Traders now await US retail sales data later for fresh insights on whether inflation and growth have cooled enough to satisfy policymakers who are deliberating when it\u2019s safe to begin bringing down interest rates. Fed Chair Jerome Powell said Monday that\u00a0inflation\u00a0is heading toward the central bank\u2019s 2% goal on the basis of second-quarter economic data.<\/p>\n

\u201cWhile he was not saying, \u2018right we have high confidence that inflation is under control,\u2019 which would fire the starting gun, it\u2019s enough to support market expectations of a couple of cuts for this year and then for more of the same into next year,<\/em>\u201d said\u00a0Sunil Krishnan, head of multi asset funds at Aviva Investors.<\/p>\n

As traders start to embrace the idea of three\u00a0interest-rate cuts\u00a0this year, starting in September, Treasuries have\u00a0wiped out\u00a0their 2024 losses. <\/strong>Strategists at UniCredit SpA have pencilled in that many rate cuts and recommend positioning for the yield curve to steepen.\u00a0Steepener trades\u00a0favor buying short dated notes and selling long bonds, and are getting a boost from speculation that fiscal expansion will drive up long-dated yields.<\/p>\n

European stocks and US equity futures pared earlier gains as disappointing earnings weighed on risk sentiment. Estoxx 50 trades lower by 0.7% on the day with consumer discretionary and energy sectors underperforming; Miners, insurance and autos were the worst performing sectors in Europe.<\/p>\n

Ocado\u00a0shares jump as much as 20% after the online grocer reported first-half results that analysts said should provide reassurance following a rough year for the stock. The rally followed a 10% drop on Monday after a double-downgrade from Bernstein.
\n\tSEB\u00a0shares rise as much as 4.3% to a record high after reporting results that Jefferies said showed \u201cpositive trends\u201d and included a bigger-than-expected buyback. Citi said net interest income beat estimates and consensus estimates should rise.
\n\tFineco\u00a0shares rose as much as 3.4% in Milan after Italian newspaper Il Sole 24 Ore mentioned it among target companies managing Italians\u2019 savings that could have been studied by investment firms such as Bain, CVC and Advent.
\n\tRichemont\u00a0shares rise as much as 2.3%, recouping an initial slide, as its first-quarter sales met expectations, contrasting with disappointing results this week from luxury peers Swatch, Burberry and Hugo Boss. The resilience of Richemont\u2019s jewelry division impressed analysts.
\n\tRio Tinto\u00a0shares fell as much as 2.8% after the \u00a0global miner warned that full-year copper output would be at the lower end of its guidance range.
\n\tSalzgitter\u00a0falls as much as 7.2% while SSAB drops 3.9% after JPMorgan puts both stocks on negative catalyst watch ahead of their upcoming second quarter results.
\n\tDKSH\u00a0shares rise as much as 9.1% after the company, which helps others with their expansion plans, delivered earnings above expectations in the first half.
\n\tWise\u00a0shares rise as much as 5.2% after the UK financial-software developer reported volumes for the first quarter that beat the average analyst estimate.
\n\tHugo Boss\u00a0shares slump as much as 11% after the German clothing producer lowered its full-year outlook, citing the impact on demand from \u201cpersistent macroeconomic and geopolitical challenges.\u201d
\n\tScor\u00a0drops as much as 30%, the most since 2002, after the French insurer issued a profit warning related to its life and health (L&H) insurance service result, while accelerating its annual reserving review.
\n\tSwedbank\u00a0shares slip as much as 1.9% after the Swedish lender missed expectations on the key net-interest-income (NII) metric, offsetting better-than-expected income from fees and trading, analysts say.
\n\tTrustpilot\u00a0shares drop as much as 9% after a holder sold shares in the online review platform at a discounted price of 220p.
\n\tShares in\u00a0UK utilities\u00a0fell, led by Severn Trent and United Utilities, after Ofwat\u2019s announcement that it is opening enforcement cases into four more water and wastewater companies.<\/p>\n

Earlier in the session, China traded lower as Trump\u2019s selection of JD Vance as his running mate triggered further trade and geopolitical concerns in the region. New tariffs of 60% on all Chinese exports to the US would more than\u00a0halve\u00a0China\u2019s annual growth rate, according to UBS Group AG, underscoring the risks for Beijing if Trump returns to the White House. Vance told Fox News that China is the biggest threat to the US.<\/p>\n

Asian stocks declined for a third consecutive day, as Hong Kong shares extended losses amid weak economics cues and growing geopolitical worries. The MSCI Asia Pacific Index fell 0.3%, with Tencent and AIA Group among the biggest drags. <\/strong>Hong Kong-listed stocks slid for a second day after Chinese economic growth data came in\u00a0below\u00a0expectations. Prospects for a victory by Donald Trump in the US presidential election are seen having\u00a0negative\u00a0implications for Chinese stocks. That comes on top of the already shaky economic outlook amid a continued crisis in the Asian nation\u2019s property market. Sectors to watch:<\/p>\n

Shares of\u00a0South Korean construction firms including HDC Hyundai Development rise, extending their recent rally on interest rate cut bets, a recovery in Seoul real estate prices and expectations for overseas nuclear deals.
\n\tChinese robotaxi-linked\u00a0stocks extend a rally as investors bet on brighter prospects for this sector on continuous policy support.
\n\tTaiyo Yuden,\u00a0Murata Manufacturing and TDK shares climb after Jefferies raised its price target on Japan\u2019s electronics components makers on view they will benefit from AI-related demand.
\n\tShares of\u00a0Apple suppliers advance in Asia as the tech giant surged to another record high after Morgan Stanley named the stock as its top pick.
\n\tShares of\u00a0LG Energy Solution and other EV battery-related stocks extend losses in Asia after Donald Trump announced JD Vance as his running mate.
\n\tChinese environment\u00a0equipment-related stocks rise as authorities plan to increase financial support for projects to reduce emissions at coal power plants.<\/p>\n

In FX, Bloomberg dollar spot index was flat, erasing an earlier gain driven by speculation that Donald Trump is virtually assured to win the US presidential election. EUR and DKK were the strongest performers in G-10 FX, AUD and JPY lagged. The yen weakened against the dollar as local markets reopened, following a three-day weekend, with traders focusing on the monetary policy divergence between Japan and the US.<\/p>\n

\u201cThe Trump trade that sees rising stocks, bond yields and dollar could continue in the short term as Trump\u2019s chances of election win increase,\u201d said Daisaku Ueno, chief foreign-exchange strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. \u201cI\u2019d expect Japan intervention to take place\u201d when yen weakness accelerates due to Trump trade, he said. Traders added to bets the\u00a0Federal Reserve will cut interest rates three times this year after Goldman Sachs Group Inc. said conditions were ripe for easing.<\/p>\n

In rates, global bonds rallied as traders increased the odds of more cuts from the BOE and Fed by the end of 2024. Treasuries advanced with the curve flatter as Monday\u2019s aggressive steepening move is slightly unwound. Similar gains seen across European rates as traders price in two quarter-point rate Bank of England cuts this year, following UK grocery price inflation data. US session focus includes retail sales data. \u00a0Treasury yields richer on the day by up to 5bp across long-end of the curve with 2s10s spread flattening by 1bp; 10-year yields around 4.18% with bunds and gilts both lagging by around 1.5bp in the sector. <\/strong>Odds of three 25bps of Fed cuts by December were at 90%, while traders fully priced in the likelihood of two BOE 25bps cuts this year, swaps tied to meeting dates showed.<\/p>\n

In commodities, WTI drifted 0.8% lower to near $81.25. Spot gold rose roughly $16 to ~$2,439\/oz. Bitcoin fell to around $63,000.<\/p>\n

Today’s US economic data slate includes July New York Fed services business index and June retail sales and import\/export prices (8:30am), May business inventories and July NAHB housing market index (10am). Fed members scheduled to speak include Kugler at 2:45pm<\/p>\n

Market Snapshot<\/strong><\/p>\n

S&P 500 futures\u00a0little changed at 5,678.25
\n\tSTOXX Europe 600\u00a0down 0.5% to 516.01
\n\tMXAP\u00a0down 0.3% to 187.02
\n\tMXAPJ\u00a0down 0.4% to 582.92
\n\tNikkei\u00a0up 0.2% to 41,275.08
\n\tTopix\u00a0up 0.3% to 2,904.50
\n\tHang Seng Index\u00a0down 1.6% to 17,727.98
\n\tShanghai Composite\u00a0little changed at 2,976.30
\n\tSensex\u00a0little changed at 80,717.27
\n\tAustralia S&P\/ASX 200\u00a0down 0.2% to 7,999.32
\n\tKospi\u00a0up 0.2% to 2,866.09
\n\tGerman 10Y yield\u00a0-3.5bps at 2.44%
\n\tEuro\u00a0little changed at $1.0900
\n\tBrent Futures\u00a0down 0.8% to $84.16\/bbl
\n\tGold spot\u00a0up 0.6% to $2,437.84
\n\tUS Dollar Index\u00a0little changed at 104.28<\/p>\n

Top Overnight News<\/strong><\/p>\n

Fed’s Daly (voter) said confidence is growing that they are getting nearer to a sustainable pace of getting inflation to 2%, while she sees a policy adjustment over the coming term and said some normalisation of policy is a likely outcome.\u00a0Furthermore, she said the US economy is slowing and inflation is lower but they are not there yet although they are nearer to the time of achieving their goals.
\n\tUS President Biden is reportedly on the brink of failing to win a key labour endorsement as leaders of the 1.3mln member Teamsters union consider backing no candidate at all in the presidential race,\u00a0according to Reuters citing sources. It was later reported that\u00a0Teamsters union president O’Brien said they are not beholden to any party.
\n\tUS Special Counsel spokesperson said the dismissal of the Trump documents case deviates from the uniform conclusion of all previous courts to have considered the issue that the Attorney General is statutorily authorised to appoint a Special Counsel,\u00a0while the Justice Department authorised the Special Counsel to appeal the court\u2019s order.
\n\tBofA Fund Manager Survey:\u00a0investors remain bullish, driven by expectations of Fed cuts and a soft landing. Global growth expectations: -27% (prev. -6%), largest drop since March 2022. Soft landing expected by 68%, 18% see no landing. 67% see no recession in the next 12-months. Long ‘Magnificent 7’ the most crowded trade by a ‘country mile’. 39% believe that monetary policy is too restrictive. Geopols has replaced higher inflation as the main tail risk.
\n\tFormer President Trump\u00a0is reportedly ready to hold talks with Russian President Putin on resolving the Russia-Ukraine conflict without any intermediary, according to Tass
\n\tFederal Reserve Chair Jerome Powell\u00a0said second-quarter economic data has provided policymakers greater confidence that inflation is heading down to the central bank\u2019s 2% goal, possibly paving the way for near-term interest-rate cuts.
\n\tMajor Silicon Valley investors\u00a0hailed Donald Trump\u2019s choice of Ohio senator and former venture capitalist JD Vance as his running mate, a move that puts the technology industry closer to center stage in Washington if the former president takes the White House in November.
\n\tFor months, as copper spiked to record\u00a0levels and then fell back down again, one key question has bubbled up across the metals industry: What is China\u2019s state grid operator up to?
\n\tChina\u2019s twin-track economy\u00a0is generating doom-and-gloom headlines about domestic woes one moment and growing fears around the world about the dominance of its manufacturers the next.
\n\tNew tariffs of 60% on all Chinese exports\u00a0to the US would more than halve China\u2019s annual growth rate, according to new research from UBS Group AG, underscoring the risks for Beijing if former President Donald Trump returns to the White House.
\n\tFrench President Emmanuel Macron\u00a0is about to set in motion the appointment of a caretaker government until negotiations to find a new prime minister bear fruit.<\/p>\n

A more detailed look at global markets courtesy of Newsquawk<\/em><\/p>\n

APAC stocks were mixed amid a quiet calendar and after the choppy but positive performance stateside following the latest comments from Fed Chair Powell. <\/strong>ASX 200 traded marginally lower with weakness in mining stocks following Rio Tinto’s production update. Nikkei 225 gained on return from the holiday weekend with the upside helped by a weaker currency. Hang Seng and Shanghai Comp. were subdued with underperformance in the Hong Kong benchmark after it gapped beneath the psychologically key 18,000 level, while sentiment in the mainland was clouded amid the lingering risks of higher tariffs but with downside stemmed after the PBoC upped its liquidity efforts with a CNY 676bln injection through 7-day reverse repos.<\/p>\n

Top Asian News<\/em><\/p>\n

BoJ accounts point to intervention of about JPY 2.1tln on July 12th, via Bloomberg.<\/p>\n

European bourses, Stoxx 600 (-0.4%) are entirely in the red, having opened on the backfoot and continued to extend on losses as the morning progressed. Since then, indices have found support and traverse across worst levels. <\/strong>European sectors hold a strong negative bias; Basic Resources is the clear underperformer, dragged down by losses in the underlying metals complex as well as a poor production update from Rio Tinto (-2.2%). US Equity Futures (ES +0.1%, NQ U\/C, RTY U\/C) are flat\/mixed, with the ES and NQ trading on either side of the unchanged mark, whilst the RTY outperforms. BlackRock Investment raises UK equities to Overweight from Neutral<\/p>\n

Top European News<\/em><\/p>\n

ECB Bank Lending Survey<\/strong>\u00a0Credit standards were broadly unchanged at tight levels in the second quarter of 2024. Banks reported a small net tightening of corporate credit standards and a moderate easing for mortgages. Loan demand continued to decline for firms, while recording the first increase for households since 2022. Credit standards for firms displayed some heterogeneity across economic sectors, tightening strongly in commercial real estate<\/p>\n

FX<\/strong><\/p>\n

Mixed performance for the USD\u00a0vs. peers, performing best vs.\u00a0JPY, AUD, NZD. Today’s focus will be on US retail sales, whereby a dovish release could prompt DXY to move onto a 103 handle vs current 104.28.
\n\tEUR\u00a0is steady vs. the\u00a0USD\u00a0after a brief incursion above the 1.09 mark to a 1.0902 high.\u00a0German ZEW was mixed\u00a0and failed to move the dial for the Single-currency.
\n\tGBP\u00a0is steady vs. the\u00a0USD\u00a0with 1.30 seemingly currently too tough a nut to crack for\u00a0Cable. The pair got as high as 1.2995 yesterday before running out of steam.
\n\tUSD\u00a0attempting to claw back some lost ground vs. the\u00a0JPY\u00a0after last week’s US CPI, dovish Powell and Japanese intervention sent the pair markedly lower. 158.78 is the high watermark for today’s session but is still a far cry from the July multi-decade high at 161.95
\n\tAntipodeans\u00a0are both suffering at the hands of the\u00a0USD\u00a0with commodity currencies seeing a soft start to the week post-Chinese data over the weekend.<\/p>\n

Fixed Income<\/strong><\/p>\n

USTs\u00a0are firmer and holding near highs of 111-10+, as Powell’s inflation language serves to weigh on short-term yields, alongside an ongoing pullback in crude; action which is also being seen at the long end of the curve which is currently underperforming and the curve as a whole is flattening.
\n\tBunds\u00a0are firmer in-fitting with\u00a0USTs, eclipsing last week’s 132.08 best to a 132.31 peak which now looks to a cluster between 132.56-80 from the 20th-26th June. The latest ECB Bank Lending Survey passed without reaction while the mixed ZEW pushed Bunds away from best levels.
\n\tGilts\u00a0remains focussed on upcoming events which commence with CPI and the King’s Speech on Wednesday. DMO outing was robust and spurred an incremental fresh high of 98.62.
\n\tOAT-Bund\u00a010yr yield spread remains steady at 64bps ahead of today’s political risk event whereby President Macron should accept and allow PM Attal to resign, but it remains to be seen exactly who will be appointed as a caretaker.
\n\tUK\u00a0sells GBP 2.25bln 4.75% 2043 Gilt: b\/c 3.29x (prev. 3.67x), average yield 4.519% (prev. 4.580%) & 0.1bps (prev. 0.4bps)
\n\tGermany\u00a0sells EUR 3.261bln vs exp. EUR 4bln 2.50% 2029 Bobl: b\/c 2.0x, average yield 2.39%, retention 18.48%<\/p>\n

Commodities<\/strong><\/p>\n

A subdued session for the crude complex\u00a0thus far despite the lack of fresh fundamentals, but as the Dollar remains firm and amid the ongoing woes surrounding Chinese demand following several downbeat data releases.\u00a0Brent\u00a0September resides near the trough of a USD 84.15-84.86\/bbl parameter.
\n\tMixed trade\u00a0across the precious metals despite quiet newsflow in the European morning, with\u00a0spot gold\u00a0the outperformer amid increased momentum as the yellow metal approaches ATHs.\u00a0Spot gold\u00a0probes yesterday’s peak (USD 2,439.59\/oz) as it eyes its current ATH at USD 2,449.89\/oz.
\n\tBase metals\u00a0are mostly lower with the complex dampened by the prognosis of the Chinese economy following the recent string of disappointing data, whilst some also flag rising inventory as warehouses.
\n\tFreeport LNG expects to restart the first LNG train this week after damage from Hurricane Beryl and plans to restart the remaining two LNG trains shortly after the first one.
\n\tBolivia\u2019s President announced the discovery of a 1.7tln cubic feet natural gas reserve\u00a0in the north of the department of La Paz.
\n\tSome Japaense aluminium\u00a0purchasers have agreed on a July-September premium of USD 172\/T, +16-19% Q\/Q, via Reuters citing sources<\/p>\n

Geopolitics<\/strong><\/p>\n

North Korea warned that South Korea will face devastating consequences over anti-North Korea leaflets,\u00a0according to KCNA.<\/p>\n

US Event Calendar<\/strong><\/p>\n

08:30: June Retail Sales Advance MoM, est. -0.3%, prior 0.1%
\n\tJune Retail Sales Ex Auto MoM, est. 0.1%, prior -0.1%
\n\t\tJune Retail Sales Control Group, est. 0.2%, prior 0.4%<\/p>\n

\t08:30: June Import Price Index MoM, est. -0.2%, prior -0.4%
\n\tJune Import Price Index YoY, est. 1.0%, prior 1.1%
\n\t\tJune Export Price Index MoM, est. -0.1%, prior -0.6%
\n\t\tJune Export Price Index YoY, est. 1.0%, prior 0.6%<\/p>\n

\t10:00: May Business Inventories, est. 0.5%, prior 0.3%
\n\t10:00: July NAHB Housing Market Index, est. 43, prior 43<\/p>\n

DB’s Jim Reid concludes the overnight wrap<\/strong><\/p>\n

I spent a day at a Theme Park yesterday in the driving rain. The good news was that there was hardly any queues for any of the rides given the weather. The bad news was…… …. there wasn’t any queues for any of the rides.<\/p>\n

While I was loop the looping, politics dominated most of the session yesterday with markets trying to price potential Trump presidential trades after the weekend developments with a steeper Treasury curve the key theme in the rates space. Equities saw a clear rotation into stocks that stand to benefit from Trump\u2019s policies and closed (+0.28%) less than a tenth of a percent below last week\u2019s record high, whilst the small-cap Russell 2000 (+1.80%) surged to a two-and-a-half year high as well.<\/p>\n

The other major story of the day was Fed Chair Powell’s interview at the Economic Club of Washington DC. Powell\u2019s initial comments noted that \u201c the three readings in the second quarter\u2026 do add somewhat to confidence\u201d that inflation is returning to the 2% target, and that the inflation and labour market mandates are now \u201cin much better balance\u201d. However, he did not get drawn on the timing of rate cuts and commented that policy is \u201crestrictive but not severely restrictive\u201d. The pricing of Fed cuts for rest of the year rose by +3.7bps on the day to 67bps, the highest since early April, but the move came largely outside of Powell\u2019s comments.<\/p>\n

In terms of Treasuries, the 2yr yield was marginally (+0.7bps) higher on the day at 4.46%, having traded as low as 4.42% during Powell\u2019s initial comments. By contrast, the 10yr yield (+4.6bps to 4.23%), and the 30yr yield (+6.1bps to 4.46%) saw sizeable increases. At one point intraday, we even saw the 2s30s yield curve un-invert for the first time since January, although it was just about negative at -0.2bps by the close. Similarly, the 2s10s curve steepened by +4.1bps to -23.0bps, which is the least inverted it\u2019s been since January. This morning in Asia, 10yr UST yields (-1.9bps) have moved back down, trading at 4.21% as we go to print with a similar move at the front end. Next stop an important US retail sales print today.<\/p>\n

A Trump-driven shift in market pricing was also apparent for equities. For instance, Trump\u2019s own media company, Trump Media & Technology Group, surged by +31.37%. Another beneficiary were private prison groups, with GEO Group (+9.35%) and CoreCivic (+8.02%) both experiencing their strongest daily performances for over a year. With Trump seen as a more pro-crypto candidate, Bitcoin (+5.57%) moved back up to $63,469, and Coinbase (+11.39%) had its best performance since March. In the meantime, the best-performing sectors in the S&P 500 were energy stocks (+1.56%) followed by financials (+1.42%).<\/p>\n

But whilst many assets benefited from the prospect of a Trump presidency, there were also clear points of weakness. For instance, solar energy firms lost ground given the view they\u2019d fare better under a Democratic administration, including decent losses for Sunrun (-8.95%), SolarEdge Technologies (-15.36%) and SunPower (-7.06%). The broader utilities sector (-2.39%) was the main underperformer within the S&P 500. Elsewhere, there was a significant underperformance for Mexican assets, with the Mexican Peso down by -0.96% against the US Dollar, making it one of the worst-performing global currencies yesterday. Moreover, Mexico\u2019s equity index, the S&P\/BMV IPC (-1.11%) fell back, with the decline being even larger in USD terms.<\/p>\n

In terms of the politics itself, yesterday saw Trump confirm that his running mate on the ticket would be J.D. Vance, the Senator from Ohio. At 39, Vance is the second youngest member of the current Senate and the pick is seen as embracing the Trump campaign\u2019s populist leanings. Vance\u2019s notable policy comments this year have included criticism of the Biden administration on border control and on military aid to Ukraine . We\u2019ll have to wait for some polls to get a better sense of how public opinion has shifted after recent events, but from betting and prediction markets, there\u2019s no doubt that a Trump victory is now viewed as more likely. For instance, the average betting odds from RealClearPolitics now give Trump a 66% chance of victory, up from around 55% on Friday. One thing to bear in mind is that it\u2019s fairly common for the party with a convention to experience a \u201cconvention bounce\u201d in the polls as it becomes the focus of media attention. But this time, it could be more difficult to disentangle the effect of the convention if public opinion has also shifted as a result of the assassination attempt.<\/p>\n

Over in Europe, markets followed a completely different pattern to the US, with equities sliding alongside a rally in sovereign bonds. That meant the STOXX 600 (-1.02%) posted its worst daily performance in the last month, although the backdrop was already a tough one given the weaker-than-expected Chinese GDP data before the open. Those declines were echoed across the continent, and the CAC 40 (-1.19%) underperformed given the implications for luxury stocks. Meanwhile for bonds, there was a clear risk-off move, which left yields on 10yr bunds (-2.3bps), OATs (-4.0bps) and BTPs (-4.6bps) all lower on the day.<\/p>\n

In Asia, China risk continues to be mixed to weaker but the rest of the region is largely higher. The Nikkei (+0.23%) is up as it has resumed trading after a public holiday with the CSI (+0.19%) and the KOSPI (+0.25%) also edging higher. Meanwhile, the Hang Seng (-1.38%) is sharply lower with the Shanghai Composite (-0.21%) also trading down. S&P 500 (+0.19%) and NASDAQ 100 (+0.30%) futures are higher.<\/p>\n

In FX, the J apanese yen (-0.36%) is extending its losses for the second consecutive day trading at 158.64 against the dollar despite last week\u2019s suspected intervention by Japanese authorities.<\/p>\n

There was very little other data yesterday, although Euro Area industrial production was down -0.6% in May (vs. -0.7% expected). Elsewhere, the New York Fed\u2019s Empire State manufacturing survey fell to -6.6 (vs. -7.6 expected).<\/p>\n

To the day ahead now, and data releases include the German ZEW survey for July, US retail sales for June, the NAHB\u2019s housing market index for July, and Canada\u2019s CPI for June. From central banks, we\u2019ll hear from the ECB\u2019s Villeroy and the Fed\u2019s Kugler, and also get the Euro Area Bank Lending Survey from the ECB. Finally, earnings releases include Morgan Stanley and Bank of America.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nTue, 07\/16\/2024 – 08:16<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/futures-rise-led-small-caps-great-rotation-continues<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Futures Rise Led By Small Caps As Great Rotation Continues US equity futures are modestly higher, rebounding from session lows, and led by Russell futures…<\/p>\n","protected":false},"author":0,"featured_media":1477761,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1477760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1477760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1477760"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1477760\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1477761"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1477760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1477760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1477760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}