Nvidia slumps, gold reverses Friday loss.

US markets posted a mixed set of results on Monday with the S&P and Nasdaq falling 0.12% and 0.10% while DJIA gained 0.09%.

Investors were caught turning down renewed risk sentiment provided by the Inflation Reduction Act passing the Senate and weighed NVIDIA’s poor earnings in instead as it fell by 6.30%.

The real focus seems to be diverting to the actual inflation data numbers due on Wednesday.

Pre-markets are slightly up on Tuesday morning, but expected intraday gains are likely to subdue by the close.

Key factors for today

● “Inflation Reduction Act” overshadowed by tech and CPI
● Gold reverses most losses on increased geopolitical tensions
● Debacle around Nord Stream turbine intensifies on all fronts
● Prolonged heatwave in the EU opens up the door to another crisis; water

Increased spending but optimism on hold

The US Senate approved a $739bn Healthcare, Climate, Tax, and Drug bill by minimum vote early in the week, called the “Inflation Reduction Act”. The legislation adds yet another $739bn in government spending and marks a landline win for Biden ahead of November’s midterms.

Short-term bond yields came down with the 3-month posting the biggest loss after closing 0.031 lower. But the 10-year yield was unchanged, underlying the waiting game ahead markets play ahead of the CPI numbers due on Wednesday. Meanwhile, the Survey of Consumer Expectations showed a slowdown in consumer expectations of inflation.

Nvidia’s preliminary results came out $1.4bn below expectations, warning that the tech and chip sectors could still be under pressure. Markets responded.

Geopolitics send gold ~1% higher

Gold prices saw a near-full reversal of last Friday’s losses to $1788/oz as China extended military exercises around Taiwan that were scheduled to conclude on Monday. Taiwan also initiated live-fire exercises. The Pentagon reiterated the stance that China planned an invasion of Taiwan in two years.

Meanwhile, Russia refused to allow US inspections of nuclear weapons as part of the Head Start agreement, in response to sanctions against the country. The Russian Deputy Ambassador to the UN also said that sanctions made it impossible to complete technical work on Nord Stream 1. Siemens assures that the turbine is ready and waiting for Russia to accept it. Oil and natural gas prices ended 0.63% lower and 1.54% higher, respectively.

Europe affected by dry summer weather

The French government allowed nuclear power plants to operate with higher emission temperatures. The Rhine River continues to get shallower from lack of rain, leading to cargo ships loading partial cargo. Low water flows threaten energy production along the river since its used for cooling. Meanwhile, prolonged high temperatures pose a real threat to UK farmers as the lack of rain causes watering restrictions to corps. Several EU and UK stocks are at risk of downside price action.

Europe’s 600 index closed 0.8% higher supported by Hargreaves Lansdown, and FTSE posted a decent gain of 0.57% mainly led by retail stocks. Europe’s Sentix economic sentiment index saw a marginal improvement.

Market movers

● Novavax fell 5% following a revenue cut due to poor demand for Covid-19 vaccine
● Karuna exploded 71% following meeting the endpoint in schizophrenia treatment
● Global Blood Therapeutics ~1% higher after Pfizer announcement to acquire company
● Bed Bath & Beyond jumps 17% on continued meme stock activity
● Palantir falls 1.75% after Q3 outlook disappointed investors.

Today’s Calendar

● Mexican inflation rate expected to rise, core to fall
● Quarterly Nonfarm productivity forecast to improve
● API report could drag oil lower if in line with expectations