Biden Withdraws from Presidential Race
The withdrawal of President Biden from the race and the endorsement of Kamala Harris marks a significant shift in the US political landscape. Harris’s emergence as the likely Democratic candidate could introduce uncertainty, affecting market sentiment. This uncertainty and risk aversion are expected to support the Dollar as a safe haven asset. Last week, Trump’s speech at the Republican convention highlighted his views on China and Iran, suggesting a pragmatic approach to foreign policy that could influence market dynamics going forward. Trump’s stance on trade and potential negotiations with Iran indicate a focus on commercial competition rather than purely ideological conflict.
China Cuts Loan Prime Rate
Surprisingly, the People’s Bank of China has cut its Loan Prime rate by 10bps to stimulate China’s struggling economy. Emerging Market currencies have started the week softer as risk sentiment remains negative. The Rand is trading at R18.27, as we await inflation data out od SA this week. The market will also look forward to release of the PCE deflator from the US.
Commodity Update
Gold is holding above $2,400 this morning after a 1.8% drop on Friday. Platinum remains flat at $964, while Palladium is up just over 1.0% at $918. Base metal prices have mainly opened unchanged, with the PBoC’s rate cut helping to stem last week’s losses. Brent crude is trading around 0.5% higher at $83.05 in hopes of increasing demand from China. However, traders are closely watching developments around a potential ceasefire between Israel and Hamas, which could impact market dynamics.