Global Economic and Political Events Shaping Markets

1.

On July 1, 2024, the US Supreme Court ruled that former President Trump enjoys immunity from criminal prosecution in certain cases, meaning Trump will not be criminally prosecuted before the November presidential election. (Positive for Trump-related stocks DJT)

Analysis:

Impact on FX: This decision could reduce political uncertainty in the US, potentially strengthening the USD.

FX Pair: EUR/USD, USD/JPY, GBP/USD

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Positive impact on stocks associated with Trump.

Companies:

Digital World Acquisition Corp (DWAC)

2.

The Democratic National Committee (DNC) is considering formally nominating Joe Biden in mid-July to ensure his appearance on the November ballot and to quell internal discussions about replacing him. The potential nomination date is July 21, when the DNC's Credentials Committee will hold a virtual meeting. (Reduced political uncertainty in the US)

Analysis:

Impact on FX:Reduced political uncertainty could strengthen the USD.

FX Pair: EUR/USD, USD/JPY, GBP/USD

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Positive impact on market sentiment due to reduced political uncertainty.

Companies:

General Market Indices

3.

Over the past decade, factories have been massively built in China's eastern coastal regions to meet the demand for plastics and to help refineries cope with the decline in fuel demand brought by the rise of electric vehicles. Despite weak demand and thin profits post-pandemic, companies continue production to maintain market share. 

Analysis:

Impact on FX:Ongoing trade tensions could weaken the CNY.

FX Pair: USD/CNY, EUR/CNY, GBP/CNY

Impact on Shares:

H Shares and A Shares: Negative impact on Chinese plastics and chemical companies.

Companies:

Sinopec Shanghai Petrochemical (338.SH), PetroChina (857.HK)

4.

India's largest conglomerates, such as Tata Group, Reliance Industries, and Adani Group, are striving to develop “super apps” in hopes of attracting hundreds of millions of users like Tencent and Alibaba. (India continues to emulate “China's economic miracle”)

Analysis:

Impact on FX:Positive developments in the tech sector could strengthen the INR.

FX Pair: USD/INR, EUR/INR, GBP/INR

Impact on Shares:

Indian Market: Positive impact on large tech and conglomerate stocks.

Companies:

Reliance Industries (RELIANCE.NS), Tata Consultancy Services (TCS.NS), Adani Enterprises (ADANIENT.NS)

5.

Vanguard expects that if the Bank of Japan's (BOJ) policy changes this month fail to raise bond yields, the yen could drop to 170 against the dollar.

Analysis:

Impact on FX: Continued BOJ easing policies could weaken the JPY.

FX Pair: USD/JPY, EUR/JPY, GBP/JPY

Impact on Shares:

Japanese Market: Negative impact on Japanese financial stocks.

Companies:

Mitsubishi UFJ Financial Group (8306.T), Nomura Holdings (8604.T)

6.

Tokyo will decide this weekend whether to re-elect the governor supported by Prime Minister Fumio Kishida's Liberal Democratic Party or choose an opposition-backed challenger. This is a new test for Kishida, whose support has fallen to its lowest since taking office in 2021, despite some popular measures.

Analysis:

Impact on FX:Political instability in Japan could weaken the JPY.

FX Pair: USD/JPY, EUR/JPY, GBP/JPY

Impact on Shares:

Japanese Market: Political uncertainty could negatively impact Japanese stocks.

Companies:

Toyota (7203.T), Sony (6758.T)

7.

Facing high inflation and post-pandemic economic pressures, US consumers have reduced spending on personal care and beauty products. In response, major packaged goods companies like Procter & Gamble (P&G), Unilever, and Edgewell Personal Care are launching innovative products and raising prices, a strategy referred to as “upflation.” (Indicates pricing power has returned to consumers, beneficial for inflation control)

Analysis:

Impact on FX:Reduced consumer spending could weaken the USD.

FX Pair: EUR/USD, GBP/USD, USD/JPY

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Negative impact on consumer goods companies.

Companies:

Procter & Gamble (PG), Unilever (UL), Edgewell Personal Care (EPC)