Natural gas prices fell by 4%. Oil also remains under pressure from weak demand

At Monday’s close, the Dow Jones (US30) Index was up 1.16%, while the S&P 500 (US500) Index added 1.16%. The NASDAQ Technology Index (US100) closed positive 1.30%. A rise in chip company stocks provided support for the broader market. In addition, positive corporate news drove the stock higher. Palantir Technologies (PLTR) closed higher by more than 13%, and Dell Technologies (DELL) closed higher by more than 3% after news that both companies will join the S&P 500 in the index’s latest quarterly change before trading opens on September 23. Boeing (BA) also closed higher by more than 3% on optimism that an agreement with its largest labor union will avoid a strike at factories.

Mexico’s annualized inflation rate fell to 4.99% in August 2024, down from a 14-month high of 5.57% in the prior period and slightly below market estimates of 5.09%. The annualized core inflation rate fell to 4% in August, the lowest since February 2021, down from 4.05% in the previous month. Lower inflationary pressures could be negative for the MXN currency.

Equity markets in Europe’s advantage rallied yesterday. The German DAX (DE40) gained 0.77%, the French CAC 40 (FR40) closed higher by 0.99%, the Spanish IBEX 35 (ES35) rose by 0.89%, the British FTSE 100 (UK100) closed up 1.09%. In Europe, the focus is on Thursday’s European Central Bank monetary policy decision, where a 25 basis point rate cut is widely expected. Investors are also awaiting the final French inflation data, which is due out on Friday. 

WTI crude oil prices fell to around $68.6 a barrel on Tuesday, reversing earlier gains. Concerns over weak consumption in China persist as a shift to low-carbon fuels and a sluggish economy continue to slow demand growth in the world’s top oil consumer. In addition, consumption in Europe and the US is expected to decline as the summer season ends.

US natural gas (XNG/USD) prices fell more than 3% to below $2.35 per MMBtu due to a looming hurricane expected to hit Louisiana this week. The hurricane, which the National Hurricane Center predicts will form in the Gulf of Mexico and hit Louisiana, where several large LNG plants are located, could reduce demand, cause power outages, and disrupt LNG exports. 

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.48%, China’s FTSE China A50 (CHA50) was down 1.22%, Hong Kong’s Hang Seng (HK50) lost 1.34%, and Australia’s ASX 200 (AU200) was negative 0.32%. 

The offshore yuan weakened to 7.11 per dollar, marking the third straight session of declines, as the US dollar strengthened on expectations that the Federal Reserve will opt for a modest interest rate cut at its meeting next week. Traders assessed the latest economic data from China. On Tuesday, China reported a sharp widening of its trade surplus to 91.02 billion US dollars in August 2024 from 67.81 billion US dollars a year earlier. Export growth slowed to a four-month low of 4.6% year-on-year, falling short of the projected 6.5% growth, compared with a 7% increase in the previous month. Meanwhile, import growth slowed to 2.5% from a three-month high of 7.2% in July, although slightly above the expected 2% increase. 

NAB Australia’s August 2024 business confidence index fell to 4 from July’s reading of 1. This was the first negative reading in three months and the lowest in a year amid sharp declines in leisure and personal services, transport and utilities, construction, and manufacturing.