Risk Appetite Improves, Gold Retreats

Market Overview

Buoyed by strong AI demand reflected in Googles earnings and a sixth consecutive weekly decline in U.S. initial jobless claims, tech stocks rallied, pushing the Nasdaq and S&P 500 to fresh all-time highs. That said, market performance was mixed: Nvidia closed at a record high, while Google reversed early gains and Tesla plunged over 8% on a gloomy outlook. Intel also dropped in after-hours trading due to disappointing earnings. Small-cap stocks broadly ended lower.

Robust economic data dampened expectations for Federal Reserve rate cuts, lifting both the U.S. dollar and the 2-year Treasury yield. As a result, gold prices came under pressure, slipping 0.55%. Crude oil rebounded after volatile trading, ending the session with a gain of more than 1%.

Hot Topics to Watch

● ECB Holds Rates Steady

With inflation returning to 2% and trade negotiations with the U.S. still stalled, the European Central Bank opted to leave rates unchanged—its first pause in over a year. On Thursday local time, the ECBs rate decision maintained the deposit facility rate at 2.00%, the marginal lending facility rate at 2.40%, and the main refinancing operations rate at 2.15%, all in line with market expectations and prior levels. However, due to lingering uncertainty over trade tariffs, the ECB refrained from providing any forward guidance on future policy direction.

● U.S. July Markit Manufacturing PMI Contracts Again

The preliminary July Markit Manufacturing PMI fell to 49.5, the lowest since December 2023, signaling renewed contraction. Conversely, the Services PMI rose to 55.2 and the Composite PMI to 54.6—both at their highest levels since December. Despite this, business confidence for the year ahead in both sectors dropped to one of the lowest levels in the past two and a half years, amid rising inflationary pressures.

Key Data to Watch

20:30 GMT+8 – U.S. June Durable Goods Orders (MoM)