U.S. Equity Markets closed mixed but with a downside bias. The Russell 2000 underperformed while the NASDAQ 100 closed marginally green but both the S&P and Dow reversed earlier gains to close lower. Sectors were predominantly red with Energy, Health Care and Materials lagging, while Utilities and Tech were the only sectors in the green with upside in Nvidia (NVDA) supporting the move while for communications, Meta (META) was bid after its Meta Connect day where it announced a slew of AI updates. In FX, the Dollar saw strong outperformance led by an escalation of Middle East geopolitics with New Zealand Dollar hit the most after recent gains but the Australian Dollar and Japanese Yen were the next worst hit in the G10 space. The Yen was weighed on by firmer US Treasury Yields, with T-Note futures hit by chunky corporate supply, namely the USD 6.5billion from Oracle’s (ORCL) 4-parter, while there was likely some dealer concession for the 5-year supply, which ultimately came in mixed with little reaction. Crude prices were lower on hopes of Libya’s resumption of exports after reports that rival factions resumed talks with the oil blockade nearing its second month, meanwhile, it also announced that proceedings were in place to name a new central bank governor. The heightened Middle East geopolitics had little impact on oil with Libya updates dominating, while bullish inventory data only saw a minor reaction. Attention on Thursday turns to US GDP (Final estimate, Q2), plus a plethora of Fed speak and the 7 Year Treasury Auction. New Home Sales fell 4.7% in August to 716k from 739k, but above the expected 700k, whereby new home supply was 7.8 months’ worth (prev. 7.3 months’ worth). Overall, Oxford Economics notes that plentiful supply and homebuilder incentives have weighed on new home prices, which have trended lower over the last year. However, as the consultancy adds, builders are scaling back their use of price cuts as mortgage rates decline, which should limit any further declines in new home prices and should support modest growth in new home sales over the rest of 2024 and in 2025. Elsewhere, Oil closed 2.61% lower while despite a stronger Dollar Gold closed flat.
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