Global Economic Developments: July 15, 2024

1

At the opening of a significant political convention, criticism was directed at the current administration's economic management. A younger political figure was chosen as a running mate, emphasizing a populist message aimed at reclaiming control. This announcement was made via a social platform as the convention began.

Analysis:

Impact on FX:Increased political activity and uncertainty could strengthen the USD as a safe-haven currency.

FX Pair:EUR/USD, USD/JPY, GBP/USD

Impact on Shares:US Market: Potential positive impact on stocks associated with the discussed policies.

Companies:General Market Indices

3

A major financial institution plans to reduce stock buybacks due to regulatory stress test requirements, which mandate more capital reserves. This decision was announced during an earnings call, citing the stress capital buffer as larger than expected.

Analysis:

Impact on FX:Regulatory pressures could weaken the USD.

FX Pair:EUR/USD, USD/JPY, GBP/USD

Impact on Shares:US Financial Market: Potential negative impact on the financial institution's stock.

Companies:Specific Financial Institution

4

Latest economic data strengthens confidence that inflation is moving towards the target, potentially paving the way for near-term rate cuts. This was discussed in a recent interview, emphasizing recent inflation readings without specifying a timeline for rate cuts.

Analysis:

Impact on FX:Expectations of rate cuts could weaken the USD.

FX Pair:EUR/USD, USD/JPY, GBP/USD

Impact on Shares:US Market: Positive impact on general market indices.

Companies:General Market Indices

5

A university, a talent source for a major technology firm. This reflects the pressure faced in restricting chip technology exports.

Analysis:

Impact on FX:Increased geopolitical tension could strengthen the USD as a safe-haven currency.

FX Pair:EUR/USD, USD/JPY, USD/CNY

Impact on Shares:Global Tech Market: Mixed impact due to regulatory pressures.

Companies:Major Tech Firm

7

Long-term US Treasury yields rose amid political campaign activities, boosting the bond market's return. Investors expect that certain policy plans would spur inflation and worsen the fiscal situation. This trend may intensify with potential changes in congressional control.

Analysis:

Impact on FX:Increased political activity and fiscal concerns could strengthen the USD as a safe-haven currency.

FX Pair:EUR/USD, USD/JPY, GBP/USD

Impact on Shares:US Market: Potential positive impact on financial sector stocks.

Companies:General Market Indices

8

Two exchange-traded funds (ETFs) focused on foreign stocks debuted on Chinese stock exchanges today, offering investors new options to invest in international markets. These ETFs raised significant funds, enabling mainland investors to diversify internationally, particularly in influential sectors. 

Analysis:

Impact on FX:Increased international investment opportunities could strengthen the CNY.

FX Pair:USD/CNY, EUR/CNY, GBP/CNY

Impact on Shares:Chinese Market: Positive impact on financial and energy sector stocks.

Companies:Major Chinese financial and energy firms

9

Greece has extended naval exercises, which have largely prevented the transshipment of certain goods near its coast, forcing these activities to relocate to other centers. The Greek Navy's hydrographic service notified that the exercises have been extended for two more months, marking the longest extension to date.

Analysis:

Impact on FX:Increased geopolitical tension could strengthen the EUR.

FX Pair:EUR/USD, EUR/JPY, EUR/GBP

Impact on Shares:European Market: Mixed impact due to geopolitical tensions.

Companies:General Market Indices

10

For months, the metal industry has been focused on a key question as copper prices retreated from historic highs: What is Chinas State Grid Corp. doing？ The world's largest copper buyer has reduced copper wire purchases while increasing aluminum wire procurement. This shift has sparked discussions about a broader policy change that could significantly impact global markets.

Analysis:

Impact on FX:Market uncertainty could lead to CNY volatility.

FX Pair:USD/CNY, EUR/CNY, GBP/CNY

Impact on Shares:Global Market: Mixed impact on metal sector stocks.

Companies:Major global metal firms

11

Indonesia's incoming administration's choice for finance minister will significantly impact the country's turbulent bond market. Investors believe a technocrat is crucial to preventing yield spikes. Recent spending plans have pushed debt insurance costs to a 20-year high.

Analysis:

Impact on FX:Increased political uncertainty could weaken the IDR.

FX Pair:USD/IDR, EUR/IDR, GBP/IDR

Impact on Shares:Indonesian Market: Negative impact on financial sector stocks.

Companies:Major Indonesian financial firms

12

Hong Kong is requesting banks to issue green bonds in three currencies. Investor calls will begin soon to discuss potential green bond issuances denominated in USD, EUR, and offshore CNY. The Hong Kong Monetary Authority will represent this issuance. Earlier this year, Hong Kong issued digital green bonds and sustainable bonds, the largest green debt issuance in Asia's history.

Analysis:

Impact on FX:Increased green bond issuance could stabilize the HKD.

FX Pair:USD/HKD, EUR/HKD

Impact on Shares:Hong Kong Market: Positive impact on financial sector stocks.

Companies:Major Hong Kong financial institutions

13

In a challenging year for Asia-Pacific trading activity, Malaysia's M&A activity has shown bright spots. M&A volume grew significantly this year, attracting global investors, including tech companies. Major tech firms announced plans to invest billions to support Malaysia's AI ambitions. The government also pledged substantial funding for the semiconductor industry.

Analysis:

Impact on FX:Increased foreign investment could strengthen the MYR.

FX Pair:USD/MYR, EUR/MYR

Impact on Shares:Malaysian Market: Positive impact on tech and semiconductor sector stocks.

Companies:Major Malaysian tech firms

14

Factory activity in New York state contracted for the eighth consecutive month in July, while the prices received index fell to its lowest level in a year. The New York Federal Reserve's overall business conditions index fell slightly, indicating contraction.

Analysis:

Impact on FX:Continued economic contraction could weaken the USD.

FX Pair:EUR/USD, USD/JPY, GBP/USD

Impact on Shares:US Market: Negative impact on manufacturing sector stocks.

Companies:General Market Indices

15

Despite prior upward revisions, Brazil's economy grew slightly less than expected in May, with the central bank's main activity index showing borrowing costs will remain high. The economic activity index rose from April, but below analysts' expectations. The index grew year-over-year.

Analysis:

Impact on FX:Slower-than-expected growth could weaken the BRL.

FX Pair:USD/BRL, EUR/BRLI

mpact on Shares:Brazilian Market: Negative impact on general market indices.

Companies:General Market Indices