Market Wrap US-Europe 15 July: Wall Street Adds a Second Day of Gains on Soft Producer Prices as the DAX Slips Below 25,000 and Oil Revives the ECB Rate Question

By The Edge Research Team

Wall Street kept rallying on disinflation on Wednesday while Europe blinked at oil. The S&P 500 rose 0.38 percent to 7,572.40 and the Nasdaq 0.62 percent to 26,269.23 after June producer prices delivered the week’s second soft US inflation print, while the DAX fell 0.59 percent to 24,999.53, closing below the 25,000 line it had held through the escalation, our reading of the week’s closes, as crude’s surge put the European Central Bank’s July decision back in question. The VIX fell 5.03 percent to 15.67 and sterling jumped 1.08 percent, the largest move among the majors we track, as the dollar gave ground.

Wall Street traded the friendly side of the energy story. June producer prices fell 0.3 percent on the month on a 12.0 percent drop in gasoline, following Tuesday’s negative consumer inflation reading, both covered in our commodities wraps, and the 10-year Treasury yield eased about 3 basis points to 4.55 percent. The S&P 500’s 0.38 percent gain stacks a two-day advance of 0.76 percent, our calculation, the Dow rose 0.29 percent to 52,658.64 and the Nasdaq led again at 0.62 percent, with the VIX at 15.67 now barely 4.2 percent above its pre-blockade close, our calculation from the session record.

The earnings tape kept Tuesday’s split alive. IBM fell a further 2.70 percent to 211.20 dollars, taking its two-day loss to about 27 percent, our calculation, while Goldman Sachs added 1.06 percent to 1,152.07 on top of Tuesday’s surge and Nvidia edged up 0.33 percent. Chair Warsh’s Senate appearance produced headlines about Fed communication with the administration rather than the rate path, per CNBC, leaving the inflation prints as the week’s operative policy signal.

Europe traded the other side of it, the board splitting along the oil line. The FTSE 100 eased 0.13 percent to 10,515.92 and the Euro Stoxx 50 lost 0.23 percent to 6,265.58, while the CAC 40 added 0.19 percent to 8,382.43. The repricing beneath the surface was about the European Central Bank: investors had written off a move at next week’s meeting, which opens on 22 July with the decision due on 23 July per the ECB’s own calendar, after June’s 25 basis point deposit-rate hike, and the fresh rise in oil prices has put that call back in doubt, per CNBC’s reporting on the rate outlook. Brent, little changed through its afternoon settlement window as covered in our commodities wrap, was quoted 1.24 percent higher on the day at 85.78 dollars in evening trading, exactly the kind of print that keeps an energy-driven central bank guessing.

In currencies and crypto, the dollar weakened as softer inflation dimmed rate-hike expectations, per CNBC’s currency coverage: sterling jumped 1.08 percent to 1.3534 and the euro rose 0.39 percent to 1.1463, the yen was flat at 162.19 per dollar, the Kuwaiti dinar held at 0.3076, and the Egyptian pound firmed a second day, up 0.37 percent to 50.48 to the dollar. Bitcoin rose 0.57 percent to 64,910 dollars, and gold eased 0.20 percent to 4,061.60.

Further east, Wednesday’s closes from our MENA-Asia wrap remain the reference: the Gulf barely moved through the day’s fresh strikes near the strait, with TASI down 0.10 percent and Dubai up 0.35 percent, Cairo added 0.50 percent, and Asia rebounded hard, the Kospi surging 6.24 percent with Shanghai and Shenzhen lower on China’s 4.3 percent second-quarter growth. The Qatar Stock Exchange remains suspended and resumes on Sunday, 19 July.

Why it matters: The same oil price is now writing two different policy stories: in Washington it is June’s cheap fuel that just produced two soft inflation prints, and in Frankfurt it is the July risk that may force the ECB’s hand at next week’s decision. Markets are trading the first story and only hedging the second. For the dollar-pegged Gulf, US yields easing on disinflation while oil holds near 86 dollars is the friendly corner of this matrix, lower funding costs at the margin against firmer export revenue, for as long as the combination lasts.

Outlook: Thursday brings the Bank of Korea’s decision and UK GDP in the morning, with more big-bank earnings through the week. The ECB’s decision, due 23 July, is now a live question the next oil print can move, and Qatar’s exchange reopening on Sunday gives the region its next sentiment test. The IBM slide, now 27 percent in two sessions, remains the tell on whether the memory and AI-infrastructure spending squeeze stays a company story or becomes the earnings season’s theme.

Table – US and Europe, 15 July closes, ranked by change:

Table – MENA and Asia equities, Wednesday 15 July closes, for reference, ranked by change:

Table – Commodities, rates, volatility, FX and crypto, 15 July:

Price basis: Europe closing prints pulled 22:52 Kuwait time and US closing prints 23:02 Kuwait time on 15 July via CNBC; commodity and FX figures are late-session quotes, not settlements.

Sources: CNBC; US Bureau of Labor Statistics; European Central Bank.

Get Complimentary Insights

Follow us