Quiet stock week in a growing bullish trend, company and economic news
Market Reviews
• Much depends on Federal Reserve Chairman Jerome Powell's speech later this week, but until then stocks look set to rise as investor confidence strengthens thanks to dovish rhetoric from the world's most powerful central banker. Asian shares hit a one-month high on Tuesday, with equity futures broadly pointing to a positive opening as London and New York woke up. Even Japan's Nikkei index shrugged off the brunt of the yen's strength and hit its highest level in two weeks.
• A number of Fed speakers have signaled their intention to cut interest rates in September in recent days, making it even more unlikely that Powell will deviate from script on Friday when he speaks at the central bank's annual meeting in Jackson Hole, Wyoming. Markets have already fully laid the groundwork for a 25 basis point rate easing next month, so the focus will be on whether Powell gives clues about the possibility of even deeper cuts and what he says about the outlook for the world's largest economy.
• Sweden's central bank announces a policy decision later on Tuesday, with analysts expecting a rate cut of a quarter of a percentage point. They see two more declines likely before the end of the year.
• Canada will release inflation data for July, which is expected to slow to 2.5% year on year from 2.7% in June. This will likely strengthen the case for further rate cuts by the Bank of Canada.
• In Asia, China on Tuesday, as expected, left its benchmark lending rates unchanged at the monthly fixed level as lenders' interest margins tightened, limiting Beijing's efforts to ease monetary policy.
• The stock market continued to grow and the main stock indices added +1%. The dollar remains under slight selling pressure. Oil updates local lows - the premium for the war in the Middle East is coming to naught.
• Fed chief to mention willingness to cut rates by 0.5% in speech at Jackson Hall symposium on Friday - Evercore.
• Total European bond issuance increased by 28% YoY. Investors want to use accumulated funds to make deals and lock in returns ahead of a possible central bank rate cut.
• Oil prices fell as concerns about weaker demand in China, the world's largest oil importer, weighed on market sentiment - Reuters.
• Fed's Kashkari: debate about a possible rate cut in September is quite appropriate - WSJ.
• Defense stocks fall as Germany cuts aid to Ukraine - Bloomberg.
• Goldman Sachs' basket of defense stocks fell more than 3%.
• The merger of Canada's Circle K and Japan's 7-Eleven will create one of the world's largest retail groups - WSJ. Couche-Tard intends to acquire all of Seven & i's outstanding shares, according to Seven & i's announcement. Because Seven & i's market value exceeds $38 billion.
• The official presentation of the iPhone 16 will take place on September 10.
• US struck a deal with billionaire Carl Icahn for using the company to secure billions of dollars in personal loans - AP
Billionaire Carl Icahn and his company have been accused by US regulators of failing to disclose billions of dollars in personal loans that were secured by Icahn Enterprises securities as collateral. Icahn Enterprises and Icahn agreed to pay $1.5 million.
• GM is laying off more than 1,000 software and services jobs.
• GoPro will lay off about 15% of its workforce.
• It may take Boeing's new CEO a decade to truly turn things around, says one veteran leader. Turning things around at Boeing won't happen overnight.
• AMD (AMD): Shares of the chipmaker were up about 2% in early trading. The company announced plans to acquire hyperscale solutions provider ZT Systems in a deal valued at $4.9 billion.
• Berkshire Hathaway has sold $550 million worth of Bank of America shares in recent days, dropping its stake to 12%. Berkshire has had a fairly aggressive selling policy, accounting for nearly 20% of Bank of America's trading volume on Monday.
• PANW shares rise 2% after the report. Palo Alto Networks released an upbeat earnings report that provided some relief from the dramatic downturn in the cybersecurity market.
• The activity of American clients stimulates transatlantic transport, says Hapag-Lloyd - Reuters. Replenishment of inventories and the rush to fill them ahead of the end of labor contracts at the end of September are keeping transatlantic container traffic volumes strong in the United States.
• WSJ: New Starbucks boss gets an unusual perk: Remote work. Brian Niccol will be able to live in his home in Southern California and fly to Starbucks headquarters on a corporate jet.
• European companies that list in New York tend to receive higher valuations. Partially due to the dominance of passive investing in the United States, according to an analysis by JPMorgan Chase & Co.
• Leveraged trading, which crashed in 2008, gets $600 million ETF - Bloomberg. The leveraged investment diversification strategy that failed during the financial crisis is back. This time the developers claim that they have fixed the bugs.
• Hedge funds sell planes, trains, cars; are buying shares of energy companies, reports Goldman - Reuters. Hedge funds sold industrial stocks at the fastest pace since December, while buying energy stocks for the fourth week in a row, Goldman Sachs said in a report seen by Reuters on Monday.
• UAW workers at Stellantis are preparing to file grievances, may strike. Several local chapters of the United Auto Workers (UAW) union representing Stellantis workers are preparing to file grievances over what the union group claims is the automaker's failure to meet its investment obligations and honor its contract with the union.
Key events that may affect markets on Tuesday:
- Producer prices in Germany (July).
- Speech by Bostic and Barr from the Fed.
- Riksbank decision on interest rate.
- Canada Inflation Report (July).
International reviews
• Europe's economic growth is extremely fragile - The Economist. The risk is concentrated in one country: Germany.
• Western airlines are cutting flights to China. The reason is low demand and high costs of flights around Russian airspace, which undermine the ability to compete with local carriers. The number of flights by international carriers from Europe and North America to China during the busy summer season fell by more than 60% from a peak of more than 13,000 in 2018.
• Kamala Harris proposes raising the corporate tax rate to 28%. If elected. Which would be the first increase in this tax in 40 years. And for the position of Treasury Secretary, Harris is considering Gary Hensler, the current head of the SEC.
• In the US, a record 59,000 home buyers pulled out of deals in July. Many people are concerned about the political climate during an election year.
A lack of interest from buyers, as well as oversupply in some local real estate markets, have also pushed sellers to lower the prices of their homes. Redfin reported that the total number of homes for sale in July rose nearly 14% year over year.
• The LEI index of leading economic indicators in the US fell more than expected. From -0.2% to -0.6% m/m (-0.4% expected). But the current LEI dynamics contain many references to outdated parameters, so the market ignored the numbers.
• Azerbaijan allegedly wants to join BRICS. The Russian state agency TASS reports about Azerbaijan’s desire to join BRICS, citing the ambassador of this country to the Russian Federation, Polad Bulbul oglu. According to him, a discussion of this took place in Moscow, but there are no specific dates yet.
• Chinese Coast Guard ships rammed Philippine Coast Guard ships in Philippine territorial waters. Both ships suffered serious damage after Chinese aggression. Chinese coast guard spokesman Geng Yu said the Philippine vessel "illegally" entered territorial waters that China considers its own and then "deliberately collided" with the Chinese ship. Geng called on Filipinos to “immediately stop provocations.”
• Chinese authorities have restricted access to a key source of data on domestic investment - FT. As global funds continue to pull money out of the country's stock market, threatening to make 2024 the first year of capital outflows.
• The Israeli army carried out a massive attack on Hezbollah targets in southern Lebanon. The IDF press service reports that the military attacked a Hezbollah detachment and a weapons depot in the Sheeb area in southern Lebanon. The Israeli Air Force attacked a weapons depot in Aita al-Shab.
• Iran may announce before the end of this year that it has nuclear weapons - American intelligence.
• On July 7, a temperature record was set in Las Vegas. 120 degrees Fahrenheit or 49 degrees Celsius.