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Gold soared to a new peak and bonds surged on Wednesday, while semiconductor stocks plunged following U.S. presidential candidate Donald Trump’s ambivalence about defending Taiwan. His remarks sent ripples through financial markets, highlighting geopolitical concerns.
🔵 GOLD AT RECORD HIGHS AS RATE CUTS BECKON, TRUMP TALK HITS TAIWAN STOCKS
Gold hit a record and bonds rallied on Wednesday as markets prepared for global interest rates to fall, while stocks in Taiwan slipped after U.S. presidential candidate Donald Trump sounded lukewarm in… pic.twitter.com/cyzVfyrW8E
— PiQ (@PiQSuite) July 17, 2024
In the UK, the British pound edged higher as inflation data for June showed a year-on-year rate of 2%, exceeding expectations of 1.9%. The services sector, in particular, remained problematic with inflation stuck at 5.7%.
European markets saw mixed reactions, with futures for the Stoxx share index down 0.2% and S&P 500 futures declining by 0.5%, despite the cash index hitting a record high the previous day.
In Taiwan, the semiconductor giant TSMC experienced a 3% drop, erasing nearly $30 billion from its market value. This decline followed Trump’s comments in an interview with Bloomberg Businessweek, suggesting that Taiwan should finance its own defense against China.
ASML, a leading equipment provider to the chip industry, reported stronger-than-expected profits for the second quarter, yet its shares plummeted by up to 7.7%. Uncertainty over Trump’s foreign policy, especially with his selection of trade hawk J.D. Vance as a running mate, has heightened market anxiety regarding U.S.-China relations.
Chinese equities remained subdued for the second consecutive day. The Taiwanese dollar dipped to a two-week low, and China’s yuan stabilized at 7.2673 per dollar as investors awaited outcomes from a leadership meeting in Beijing.
Brent Donnelly, president of Spectra Markets, speculated that Trump’s potential policies could boost the U.S. dollar in the short term, predicting that the USD/CNH pair might exceed 7.50 by the end of 2024 if Trump wins in November.
Trump’s Taiwan talk rattles chip stocks, gold shines as rate cuts beckon https://t.co/qBiu6o6mNi Follow for more #StocksToWatch #StocksToBuy #StockMarketNews pic.twitter.com/05WRRRXrn3
— ProfitTradingUSA (@ProfitTradingUS) July 17, 2024
New Zealand stocks reached their highest level since March 2022, bolstered by data indicating a slowdown in inflation. However, the rates market softened and the New Zealand dollar appreciated due to persistent domestic inflation pressures.
U.S. Treasuries retained their gains, with 10-year yields hitting four-month lows after Federal Reserve Chair Jerome Powell expressed optimism about controlling inflation. Fed funds futures have priced in a rate cut for September, with additional cuts expected by January 2025. Ten-year yields were steady at 4.167%, while two-year yields hovered at 4.45%. German Bund yields dropped slightly to 4.423%.
These lower yields contributed to gold’s significant rise, breaking through resistance levels and touching a record $2,482 per ounce, despite a generally strong dollar. “Gold’s resilience in various market conditions this year is noteworthy,” commented Vivek Dhar, a commodity strategist at Commonwealth Bank of Australia. He suggested that ongoing uncertainty could push gold prices above the forecasted $2,500 per ounce by year’s end.
The Japanese yen strengthened as European trading began on Wednesday, causing the dollar to drop by 0.75% to 157.08, moving away from early July’s 38-year high of 161.96. This shift followed probable interventions by Tokyo authorities.
Gold hit a record, bonds rallied, and chip stocks tumbled after Trump’s lukewarm stance on defending Taiwan. Sterling rose as British inflation held at 2%. TSMC fell 3%, wiping out $30 billion. ASML’s shares dropped 7.7% despite good profits.#cTrader #FIXIO #Forex #Copytrading pic.twitter.com/f5c2RdhHGi
— FIXIO 《Official》 (@FIXIOOfficial) July 17, 2024
The euro remained stable at $1.0905, while oil prices experienced slight declines amid signs of weakening demand from China. Brent crude futures rose by 0.4% to $84.04 per barrel, and U.S. crude futures increased by 0.5% to $81.12 per barrel.
Major Points:
- Gold hits a record high as bonds rally, but semiconductor stocks fall after Trump’s comments on Taiwan.
- British pound rises with inflation data exceeding expectations, particularly in the services sector.
- TSMC’s market value drops significantly due to geopolitical concerns.
- New Zealand stocks rise, while U.S. Treasuries hold gains and gold prices surge.
- Japanese yen strengthens, euro remains stable, and oil prices slip amid China’s demand concerns.
Lap Fu Ip – Reprinted with permission of Whatfinger News
