On July 22, 2024, global financial markets demonstrated resilience as investors processed significant political and economic developments. The MSCI All Country World Index, a key indicator of global stock market performance, stabilized with a 0.75% increase, reaching 816.92 points. This came after a challenging previous week when the index experienced its most substantial decline since April, dropping 2.1%.
The market's attention was focused on two major events: President Joe Biden's decision to withdraw from the U.S. presidential race and an unexpected rate cut by China's central bank. Biden's announcement, made over the weekend, included an endorsement of Vice President Kamala Harris as the Democratic nominee to challenge former President Donald Trump.
Lou Basenese, president and chief market strategist at MDB Capital in New York, commented on the market's reaction:
"I think largely the Biden bailing out was priced in; we just needed definitiveness on that. Now you're seeing the Trump trades, more risk taking, and small caps, going long oil and gas, and bitcoin really returning to the market."
The People's Bank of China implemented a 10 basis point reduction in short-term rates, a move that influenced long-term borrowing costs and bond yields. Despite this action, Asian markets failed to show significant improvement.
In the United States, Wall Street indices concluded the day positively, with technology and communication services stocks leading the gains. The S&P 500 rose 1.08% to 5,564.41, while the Nasdaq Composite increased by 1.58% to 18,007.57. Nvidia stood out with a nearly 5% gain, bolstered by news of its work on a new AI chip for the Chinese market.
Investors are now turning their attention to a busy week of corporate earnings reports. Tesla and Alphabet, part of the "Magnificent Seven" group of megacap stocks, are set to initiate the reporting season. This group, which includes other tech giants like Apple, Microsoft, Amazon, Meta Platforms, and Nvidia, has been a significant driver of market performance.
The Federal Reserve's potential actions remain a focal point for market participants. Current expectations fully price in a rate cut by September 2024, which has contributed to supporting risk appetite.
In the commodities sector, oil prices experienced a decline for the second consecutive session. Brent crude futures settled at $82.40 per barrel, marking the lowest price since June 11. Gold prices also retreated, with spot gold slightly decreasing to $2,398.32 an ounce.
As markets navigate these complex dynamics, the interplay between political developments, economic indicators, and corporate performance continues to shape the global financial landscape.