Nasdaq 100 Treads Water as Traders Await NVDA Earnings

Also, two-year T-note, gold, natural gas and Japanese yen futures

1. Nasdaq 100 E-mini futures (/NQ): -0.06% 

2. 2-year T-Note futures (/ZT): -0.02% 

3. Gold futures (/GC): -0.11 

4. Natural Gas futures (/NG): -1.69% 

5. Japanese Yen futures (/6J): +0.17% 

It’s a Tuesday of the final week of summer, which can mean only one thing: quieter equity markets. And with Nvidia (NVDA) earnings due tomorrow after the closing bell, active investors don’t have many reasons to deploy any dry powder. Bonds are modestly weaker because U.S economic data is coming in better than expected, warding off fear of recession fears and pulling back the odds of a Federal Reserve cut in interest rates. Precious metals are mixed, even as geopolitical tensions appear to be cooling given the reversal in energy markets. Elsewhere, the U.S. dollar ($DXY) is on approach to a fresh closing low for 2024. 

Active investors remain hesitant to participate on the long side of the market this morning, continuing yesterday’s trend for technology stocks. Markets are braced for Nvidia’s earnings results due, which will likely influence market direction through the rest of the week. Apple (AAPL) fell after the iPhone maker announced its chief financial officer, Luca Maestri, would be leaving the company.  

Short-term yields remain mostly unchanged from earlier this month following a big drop as August started. two-year T-note futures (/ZTZ4) fell 0.02% this morning. Markets continue to price in a 25-basis-point rate cut in September from the Fed. Home prices rose in June, but the pace of increases eased, underscoring some easing of appetite in the housing market. There is a two-year note auction due later today. 

Gold prices (/GCZ4) fell this morning as higher yields throttled gains. The metal remains near all-time highs and is coming off a fourth straight weekly gain. That said, some profit-taking could slow the advance we’ve seen over the past month. Traders are now looking beyond the September rate cut with that one all but locked in. If the rate cut path supports lower real yields, we could continue to see a supportive environment for gold.  

Despite some late-summer heat in the United States, natural gas futures (/NGV4) fell nearly 2% this morning. Stockpiles in the United States and Europe remain above seasonal levels, helping to assuage some fear as we look ahead to the winter withdrawal season. Production has pulled back amid low prices over the last month but not as much as some have feared. The picture going into the winter is one of a well-supplied market. The question now is, how much further can prices fall? 

The Japanese Yen has traded in a tight range so far this week, with the price hovering just below the 0.70000 level. Traders are weighing the chances for a rate hike from the Bank of Japan and just how bullish the central bank will become next year. There is little Japanese economic data due this week, so the dollar will likely drive much of the price action.  

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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