Biden Exits, Harris Gains, China Cuts Rates

President Joe Biden has exited the 2024 presidential race, endorsing Kamala Harris, which boosted her betting odds to 40 cents. Wall Street futures are slightly up, with bond yields down and the dollar steady, while China's surprise rate cut saw bond yields dip and the yuan ease. Tech stocks like Alphabet, Tesla, and Amazon saw a $900 billion pullback, setting the stage for key second-quarter earnings reports this week.

Equities

The FTSE 100 fell 0.6% on Friday, concluding the week lower due to a global cyber outage and disappointing domestic retail sales in June. Commodity-linked stocks were the primary drag on the index, with precious metal miners down 0.8% and Fresnillo falling 1.4% in line with declining gold prices. Industrial metal miners dropped 1.7% as copper prices hit a three-month low. However, aerospace and defence stocks gained 0.7% after executives from British defence firms, including BAE Systems and Babcock, met with Ukrainian President Volodymyr Zelenskiy to discuss increased military support. Shares of Beazley Plc fell 3.3%, driven by fears of losses related to the Microsoft cloud outage.

In the US, stocks slumped on Friday amid ongoing chaos from a global technical outage caused by a software glitch in Crowdstrike's cybersecurity software, which led to issues with Microsoft's Windows operating system. The Dow Jones Industrial Average fell 0.93%, the S&P 500 dropped 0.71%, and the Nasdaq Composite lost 0.81%. Crowdstrike shares plummeted 11.1%, while rival cybersecurity firms Palo Alto Networks and SentinelOne rose 2.2% and 7.8%, respectively.

Nvidia led a sell-off in chip stocks, contributing to the Philadelphia SE Semiconductor index's 3.1% decline. Meanwhile, Eli Lilly advanced 1% after China approved its weight-loss drug tirzepatide, and Intuitive Surgical surged 9.4% following strong quarterly results. However, Netflix fell 1.5% as the streaming giant warned of lower third-quarter subscriber additions compared to the previous year. Travelers Companies tumbled 7.8% on disappointing growth in net written premiums, while oilfield services provider SLB rose 1.9% on strong second-quarter profits.

Forex & Commodities

The dollar eased slightly as investors assessed the implications of President Joe Biden's decision to end his re-election bid, endorsing Vice President Kamala Harris as the Democratic candidate. The US currency slipped 0.03% to 157.435 yen, while the euro gained 0.07% to $1.0891 and sterling added 0.08% to $1.2921. The Chinese yuan weakened after the central bank unexpectedly cut the seven-day reverse repo rate to 1.7% from 1.8%, followed by reductions in the one- and five-year loan prime rates. The dollar strengthened 0.1% to 7.2943 yuan in offshore trading.

Gold prices firmed as the dollar eased, with spot gold rising 0.2% to $2,405.40 per ounce, and US gold futures gaining 0.3% to $2,407.20.

Oil prices slipped, with Brent crude falling 1% to $84.28 a barrel and US West Texas Intermediate crude futures down 0.8% to $82.19. The stronger US dollar and concerns over China’s economic growth, following a slower-than-expected 4.7% GDP increase in the second quarter, weighed on oil prices.