U.S. Stocks Rebound from Lows; Gold, Oil, and Crypto Rally Together

Market Overview

Markets experienced sharp volatility yesterday, with bulls and bears locked in a tug-of-war. U.S. equities staged a “bottoming rebound,” led by tech stocks that drove the Nasdaq from an intraday loss of nearly 2% to a strong recovery. The Dow Jones closed narrowly higher, while the S&P 500 ended slightly lower, marking its fourth consecutive day of declines.

The Fed‘s meeting minutes, released during the session, carried a hawkish tone, prompting two-year Treasury yields to erase their earlier decline. The U.S. dollar index, after hitting a one-week high, reversed lower and extended losses following President Trump’s call for Fed Governor Cook to resign. In contrast, gold, oil, and cryptocurrencies all rebounded. Gold bounced after hitting a two-week low; U.S. EIA crude inventories fell more than expected, pushing oil up nearly 2% at one point; and Bitcoin surged more than $2,000 after touching a two-week low.

Hot Topics Ahead

Japans July Exports Mark Biggest Drop in Four Years

July trade data highlighted the continued impact of tariffs: exports of automobiles and parts to the U.S. fell 28.4% and 17.4%, respectively, while semiconductor manufacturing equipment exports slumped 31.3%. Weak exports threaten Japans growth outlook, with economists warning of potential recession risks. Markets expect the Bank of Japan to adopt a more cautious monetary policy stance.

U.S. M2 Returns to Peak Levels

With U.S. money supply (M2) returning to its 5% peak and PPI climbing to elevated levels, concerns are mounting over a possible “second wave” of inflation. Economists caution that the current situation is eerily similar to the 1970s, when premature Fed rate cuts led to recurring inflation. The Feds cautious approach will be critical going forward.

Key Events to Watch

20:30 (GMT+8) – U.S. Initial Jobless Claims (for the week ending Aug. 16), Philadelphia Fed Manufacturing Index (Aug)

21:45 (GMT+8) – U.S. S&P Global Manufacturing & Services PMI Flash (Aug)

22:00 (GMT+8) – U.S. Existing Home Sales (July), Conference Board Leading Index (July)