Fall after Alphabet and Tesla reports, European reports in the center, rate cut in China

Market Reviews

• Markets were subdued ahead of Alphabet GOOGL.O and Tesla TSLA.O's second-quarter earnings, released after regular trading closed on Tuesday. The first mega-cap market leader to report left a mixed picture for after-hours trading, with the possibility of spreading across time zones on Wednesday. Shares of both companies fell despite reporting better-than-expected revenue.

• European banks were in focus on Wednesday, with focus on whether the gains from high interest rates have run their course and whether recent political drama has weighed on sentiment. The eurozone's two biggest lenders by market value, Spain's Santander and France's BNP Paribas, are due to report for the April-June period, as are Germany's Deutsche Bank and Italy's UniCredit.

• Luxury stocks in Europe are likely to take a hit after LVMH, which owns Louis Vuitton, Tiffany & Co and Hennessy, reported sales in Asia (excluding Japan) fell 14% in the second quarter after falling 6%. % in the first quarter.

• An index of Europe's top 10 luxury stocks had already fallen 2.6% in July, marking a fifth straight month of negative performance, following a profit warning from smaller brand Burberry last week. Europe's technology subindex, which has been volatile in recent weeks on concerns over rising trade tensions over chips, is likely to come under pressure after electric vehicle maker Tesla reported its weakest profit margin in five years.

• Spot Ethereum ETFs begin trading, analysts forecast up to $1 billion in monthly proceeds - The Street. Most funds have waived their initial fees - in some cases up to an entire year - to attract new investors.

• The European Commission has launched an antitrust investigation against Delivery Hero and Glovo. The EC suspects that the services may have distributed geographic markets and shared commercially sensitive information before the takeover. If these facts are proven during an in-depth investigation, the services will face a fine of 10% of global revenues.

• Apple is working on a foldable iPhone that could be released as early as 2026 - The Information. Rolls-Royce is exploring technologies for the narrow-body aircraft market - Reuters. The company is developing a smaller version of its Ultrafan engine demonstrator to explore technologies for the next generation of narrowbody aircraft, CEO Tufan Erginbilgic said Tuesday.

• Leonardo believes fighter jet project will survive UK defense policy review - Reuters. A review of British defense policy will not derail the multi-billion pound fighter jet program being developed by Italy, Japan and the UK, according to a Leonardo executive.

• Coca-Cola raised its annual sales and profit forecasts. As the beverage maker expects to benefit from higher prices and an advertising blitz, mainly in international markets where demand for its carbonated drinks and juices has been relatively strong. KO shares were trading neutral.

• Shares of construction companies staged a strong rally amid expectations of a Fed rate cut. This month could be their best month this year.

• Bosch will acquire JCI's air conditioning assets for $8 billion. Robert Bosch GmbH plans to acquire the heating and ventilation assets of Johnson Controls International Plc for $8 billion, in what would be the largest deal in the history of the German company as it diversifies away from automotive supplies.

• Lockheed raises sales forecast for fighter jets and radars. Lockheed Martin raised its profit and revenue forecasts as demand for its fighter and radar programs exceeded expectations in the second quarter. LMT shares rose 5% yesterday.

• Neuralink employees want to sell shares of the company after successful human testing of the implant. Now some Neuralink employees and investors are preparing for Musk's company to launch a tender offer as early as next month to buy shares from employees who want to sell them.

• Meta Platforms releases largest artificial intelligence model ever, Llama 3 Meta Platforms on Tuesday released the largest version of its mostly free artificial intelligence model, Llama 3, which boasts multilingual skills and overall performance scores that top five paid models from competitors such as OpenAI . The new Llama 3 can speak eight languages, write better computer code, and solve more complex math problems.

• GM's 2nd quarter earnings beat expectations. The company raises its annual forecast. GM already posted strong second-quarter results and raised its forecast for the second time this year as customers continue to buy fuel-powered vehicles.
GM shares fell 6% yesterday.

• Oil falls to five-week lows amid summer trading. Oil fell for a third session as futures hit key technical levels, sparking a flare-up of programmatic selling amid low summer liquidity.

• Currency traders are eyeing a strong rally for the yen, which has risen 3.7% against the US dollar this month to a more than six-week high as expected intervention from Tokyo and speculators covering short positions in the weak currency.

• Head of Research at Coinbase on “regime change” in cryptocurrency. Political shifts and market dynamics are influencing institutional cryptocurrency investments, according to Coinbase's head of research.

• SunPower falls after installations and supplies stop. SunPower shares fell to all-time lows after the solar company told dealers it would no longer support new installations and would stop shipping.

• American and European regulators signed a joint statement on effective competition in the field of AI. Generative AI has advanced rapidly in recent years, and “technological inflection points” could introduce new means of competition, creating opportunity, innovation and growth.

• UPS shares fell 13% after the report. UPS increased U.S. volumes for the first time since 2022, but profits and revenue fell.

Stocks in the morning after the report
ENPH +5%
TXN +3%
GOOG -2%
V -3%
TSLA -8%

Today reports: TMO, IBM, NOW, NEE, T, BSX, KLAC

• The Bank of Japan and the US Federal Reserve are set to meet next week, and while both may keep rates unchanged, there will be a lot at stake if they hint at divergent rate outlooks, with the Bank of Japan hinting at a hike and the Fed - to decrease.

Fundamental Reviews

• The US macroeconomy is slowing
- The Richmond Fed Manufacturing Index fell from -10 to -17 in July (expected to improve to -7)
- Existing home sales in June fell from 4.11 million to 3.89 million homes year-on-year (expected 3.99 million ).

• Aside from earnings, there won't be much of interest on the economic front until the release of second-quarter US GDP on Thursday and the June consumer price index on Friday, which markets are betting will ease Fed policy easing in September.

• Kamala Harris has gained enough votes from delegates at the upcoming Democratic Party Convention to be formally approved as a US presidential candidate in the November elections - AP. Harris called the Democratic campaign a "roller coaster."
Harris led Trump in the first national Reuters/Ipsos poll, 44% to 42%.
Antony Blinken may leave the post of US Secretary of State if Kamala Harris wins the 2024 elections - WSJ.
The resignation of other key appointees of Joe Biden is also likely: Pentagon chief Lloyd Austin and national security adviser Jake Sullivan.

 The key role in the White House administration, according to journalists, will go to Philip Gordon, Harris' assistant.
Gordon served as Special Assistant to President Obama and White House Coordinator for the Middle East, North Africa and Gulf Region (2013-2015). And served as Assistant Secretary of State for European and Eurasian Affairs under Secretary of State Hillary Clinton (2009-2013).

• Organized cybercrime has increased in the EU. Investment-related fraud remains the most common online scam, Europol said, along with compromised business emails and “romance scams.” In addition, criminals are increasingly using tools based on artificial intelligence and machine learning.

• Palestinian factions agreed on a government - Chinese Foreign Ministry. During negotiations in China, 14 Palestinian factions reached an agreement to create a “national interim government for reconciliation” after the end of hostilities in the Gaza Strip. The signing of the “Beijing Declaration” was announced by Chinese Foreign Minister Wang Yi.
According to the statement, among the signatories of the declaration are the terrorist group Hamas, as well as its rival, the Fatah party, the strongest faction in the Palestine Liberation Organization (PLO), which recognizes Israel’s right to exist and is considered in most Western countries to be a representative of the Palestinians.

• China cut its key lending rate in an attempt to revive its slowing economy - NIkkei. The People's Bank of China cut the policy rate on 7-day repurchase transactions, known as reverse repo, to 1.7% from 1.8% to "strengthen financial support for the real economy."
The NBK also allowed the country's banks to reduce the base rate on one-year loans to 3.35% from 3.45%, which was the first reduction since August last year. This is more of a psychological move that is unlikely to help the weakening Chinese economy.

• The head of the US Secret Service resigned after the assassination attempt on Trump. Earlier, Kimberly Cheatle admitted that insufficient security measures, which made it possible to assassinate Donald Trump during a campaign rally, were her department’s “most significant failure” in recent decades.