Gonet: market news as of July 29

Gonet: market news as of July 29

Dow +1.03%, S&P 500 +1.21%, Nasdaq +0.92%, Russell 2000 +1.37%, SOX +1.15%, Eurostoxx +1.23%, SMI +0.66% .

“And in the middle flows a river of fantasized liquidities”. One could sum up the mood of Wall Street like this. Since the sweet words whispered Wednesday evening by Jerome Powell in the ears of a market in need, the equity indices have never ceased to celebrate this return of a tiny hope of a more accommodating monetary policy to come. After the more than 4% rise in the Nasdaq100 (NDX) observed on Wednesday, no one would have been shocked to see the indices take a break, or even consolidate yesterday, all the more so as yesterday the American GDP in the second quarter tells us that growth has contracted again in the country of Uncle Sam, it has been two consecutive quarters and borders on a recession, even if the ad hoc office has not yet decreed it.

The market barely raises an eyebrow, stocks to be precise, on the bond side it’s another story, I’ll come back to that. It takes an hour for the S&P500 (SPX) index to establish a base and move north again. At the bell, the 100-day moving average seems less and less utopian, it stands at 4122 points against a close of the SPX at 4072. The day’s podium of the index is made up of real estate, utilities and industrial markets, volatility fell by 4%, the VIX broke its upward trend, the bears are definitely having a hard time these days.

But why is the market ignoring the US growth statistic like this? Well… First of all we must remember that the SPX fell 24% from its high to its low in June, so we can say that a recession may already be in prices, I say “may -be”. But above all, a contracting economy could encourage the Fed to really slow down its rate hike process. And the market to celebrate again, it’s as simple as that.

On the bond market front, the reaction to the publication of the US GDP is quite different from that of equities. The 10-year yield, which was trading at 2.80% before the figures, quickly fell to its support of 2.70%, broke it, which triggered stop-loss orders, and traded this morning at 2.67%. The Fed Funds remain fairly flat from Wednesday night, seeing rates around 100 basis points above the current level at the end of the year.

Dear bears, your Friday is likely to look like Wednesday and Thursday, Apple and Amazon went through the confessional after the Wall Street bell and, guess what, that went pretty well. The shares are soaring after the market, finally especially Amazon which takes off by 13.6%, Apple gains 3%. Amazon beats sales forecasts and says it’s making progress on cost control. The net loss of $2 billion is due to its investment in Rivian. Apple was helped by iPhone and iPad sales, but Macs and wearables fell short. CEO Tim Cook expects revenue to accelerate this quarter and sees an improvement in China (note: the words “China” and “improvement” together are likely to drive some algorithms totally crazy…). Let’s go back for a moment to Amazon, from which everyone could fear a disappointment, follow my gaze on the side of Walmart… but if we scratch a little under the surface of the results, we see that this good quarterly result is due to AWS (Amazon Web Services), the cloud what, which generates 5.7 billion in profits against the e-commerce division, which makes 2.4 billion dollars… in losses. But in the end, what counts is the consolidation, isn’t it?

The United States approves arms sales to Germany worth up to $8.4 billion, including F-35 fighter jets made by Lockheed Martin, stressing its ally’s role as a “force important for political and economic stability in Europe.” Ukrainian ships loaded with grain are ready to leave Odessa but are waiting for procedures to leave, the UN says. Russia requires customers of the Sakhalin-2 LNG plant to make payments through a Russian bank.

Rishi Sunak admits he is the underdog in the race against Liz Truss to become the next Prime Minister of the UK. The former chancellor points out that his promise not to cut personal taxes until inflation is brought under control is not very popular, but “it is the honest thing to do”. Truss is opposed to the idea of ​​adopting a windfall tax on the profits of energy companies, reports the FinancialTimes.

Joe Biden and Xi Jinping ask their aides in their call yesterday to start planning an in-person meeting, which could be their first such meeting since Joe Biden became president. They exchange warnings about the growing risks of a confrontation over Taiwan. Nancy Pelosi leaves today for Asia with a stop on the island which remains to be confirmed, according to the Bloomberg Agency.

Bill Ackman takes to Twitter to challenge Jerome Powell’s claim that the Fed is in the range of what the FOMC considers neutral policy. “We are not close to a neutral rate,” says the founder of Pershing Square. He calls current policy “extremely accommodative” given inflation at 9%, and says rates needed to reach 4% or more.

Janet Yellen brushes aside the rhetoric of the recession, saying that a real recession is a general weakening of the economy. “That’s not what we’re seeing right now,” says the Treasury Secretary. Speaking after data came out showing that US GDP unexpectedly contracted for the second quarter, Ms Yellen said: “We need to see a slowdown. The labor market is extremely tight, and may be the source of some inflationary pressures.”

On the program for this Friday the French consumer price index for July (released online on a monthly basis) then the German GDP for the second quarter (10:00 a.m.) and inflation in the euro zone in July (11:00 a.m.). In the United States, PCE inflation and household income & expenditure are for 2:30 p.m. before the Chicago PMI at 3:45 p.m. and the University of Michigan consumer confidence index at 4:00 p.m.

Givaudan: Research Partners goes from holding to buying, aiming for 4,000 francs. Nestlé: Berenberg remains on the buy side with a price target raised from 128 to 130 francs. Lonza: RBC remains outperforming with a price target raised from 650 to 670 francs. STMicroelectronics: Berenberg remains to be kept with a price target raised from 35 to 37 euros. Air France-KLM: the airline is profitable in the first fiscal quarter, you read correctly: bé-né-fi-ciaire! BNP Paribas: the bank publishes a net profit up 9.1% in the second quarter, to 3.18 billion euros, higher than expected. Hermès: the results are up sharply by 40% in the first half. L’Oréal: the results are slightly above expectations. Organic growth is more dynamic than expected. Renault: the manufacturer is revising its forecasts for the 2022 financial year upwards, following the exit from Russia. AMS-OSRAM: the company returns to profit in the first half despite a slight drop in turnover. AstraZeneca: Lab beats second-quarter earnings and revenue estimates. The forecasts are revised upwards. Intel: the title falls heavily outside the session by 8% after disappointing results. Sulzer: the group is in losses in the first half due to an impairment charge on the exit from Russia. Instagram (Meta Platforms) is taking a break from its TikTok-like transformation.

Tonight and this morning in Asia, the indices are trading down overall, except for Seoul, which has gained 0.67%. Tokyo fell 0.05% at the bell, Hong Kong lost 2.71% and Shanghai dropped 1.05%. It is technology and real estate stocks that weigh mainly on the Hang Seng index, the market is disappointed that the Chinese politburo has not announced a support plan. The SPX future gains 30 points, tribute to Apple and Amazon, while Europe opens up 0.7%. The dollar is losing ground against the euro, the pair is moving to 1.0241, which illustrates a form of further relaxation in general market sentiment, yesterday only equities were celebrating. Gold has picked up again, an ounce is moving at 1766 dollars, oil too, a barrel of WTI Light Crude is moving slightly below 100 dollars.

Return of market news on Tuesday 2 August.

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