Sentiment improves amid Nvidia recovery, FedEx earnings

Nvidia selloff didn’t deepen yesterday, on the contrary, the recent end-of-quarter / end-of-the-first-half pullback attracted dip buyers - if you can call it a dip yet - and Nvidia shares ended up jumping by almost 7% in a single session. Yesterday’s jump will certainly help to cool the downside pressure and ease long squeeze worries for Nvidia, but the decent and rapid price pullback is a sign that we might see an increased volatility and two-sided price moves moving forward. For now though, the fact that the selloff was not due to a fundamental reason certainly helped limiting damages.

When Nvidia smiles, major US indices follow suit. The S&P500 advanced 0.39% yesterday while Nasdaq 100 jumped more than 1%. Bitcoin also recovered after tipping a toe below the $60K per coin earlier in the weak.

In other crispy news, Rivian jumped more than 8.5% yesterday and soared 50% in the afterhours trading after Volkswagen announced that it will invest $5 billion to form a joint venture to develop the ’next generation battery-powered vehicles with leading-edge software’. It won’t bring Rivian’s share price to $180 per share seen right after an incredibly speculative and non-sense IPO, but it could help the company survive and grow at a reasonable pace.

Elsewhere, good news also came from FedEx. The shares jumped 15% after the company announced better-than-expected revenue and earnings amid massive cost cutting efforts tempered capital spending. Fedex expect demand to moderately improve through the next fiscal year and they are believed to be an indicator for the economic health.

All in all, yesterday was a good session, except for the Chinese stocks that were already under pressure and saw the downside pressure increase on news that OpenAI will be further curbing China’s access to its software. European stocks that remained under the pressure of French political shenanigans while Airbus was hit by a 9% selloff after lowering its profit outlook for this year by 20% due to supply chain problems in engines, aerostructures and cabin equipment. The Stoxx 600 was slightly lower on Tuesday, the French CAC 40 fell 0.58% but found support near the 200-DMA and the futures are pointing at a bullish start to the session at the time of writing; positive vibes from the US may help improve European investors’ mood despite political uncertainties and Airbus worries. Elsewhere, stocks in Japan continue to surf on a weak Japanese yen, and the USDJPY is still hovering near the 160 level, with limited appetite for further upside due to the FX intervention threat.

On the bond side, a $69bn US 2-year note sale saw a good demand and kept the 2-year yield near 4.70%. But consumer sentiment data from the US showed that current market conditions improved for the first time since the beginning of this year. Five out of eight Fed surveys released this month indicated increases in employment. Additionally, S&P Global’s preliminary purchasing managers’ index for June revealed that service sector payrolls grew at the fastest pace in five months, while manufacturing payrolls rose at the highest rate in 21 months. So it’s not time to cry victory for bond bulls just yet.

In the FX, the US dollar remains upbeat on mixed economic data and on a foggy outlook regarding what the Federal Reserve (Fed) might and might not do with its rates. The EURUSD remains offered into 1.0750 while the Loonie continues to remain bid on strong appetite for oil, and after a stronger-than-expected CPI update yesterday spoiled the rate cut expectations from the Bank of Canada (BoC).

In commodities, US crude consolidates gains below the $82pb Fibonacci resistance, while cocoa futures extend losses at increased speed on the back of favourable news for cocoa producers, including rain in Ghana that eased the supply concerns The bearish mood is also believed to be amplified by a lack of liquidity and a long squeeze. At this point, it looks like the cocoa bubble may have burst and the downside correction could continue until we reach reasonable levels for cocoa prices. My understanding of reasonable levels goes all the way down $2500/3000 a ton in the long run – which has been the trading range of the last 8 years - while we are still near $7800 a ton right now.