Round up of today’s market news

North American News

The Dow Industrial Average manages to extend its winning streak with a marginal gain

• NASDAQ index down for the 2nd consecutive day

The Dow industrial average kept its winning streak alive with a slim gain of 0.01% today. The S&P index also rose modestly.The NASDAQ index fell for the 2nd consecutive day and is closing lower on the week.

The final numbers are showing:

• Dow industrial average up 2.5 points or 0.01% at 35227.70
• S&P index up 1.48 points or 0.03% at 4536.34
• NASDAQ index fell -30.51 points or -0.2% at 14032.80

This week:

• The Dow industrial average is now risen for 10 consecutive trading days
• The Dow streak is the longest since August/September 2017
• On Thursday the NASDAQ index had its worst day since March
• Healthcare, energy and financials were the biggest gainers this week
• Dow is up for the 2nd consecutive week

The final numbers for the week are showing:

• Dow industrial average +2.08%
• S&P index rose 0.69%
• NASDAQ index fell -0.57%

For the month of July with 6 more trading days left:

• Dow industrial average is up 2.38%
• S&P index is up 1.93%
• NASDAQ index is up 1.78%

Earnings calendar heats up next week along with key central bank policy announcements

• A number of key companies will help define the stock market bias going forward

Looking ahead to next week, in addition to the FOMC rate decision on Wednesday, the ECB will announce its rate decision on Thursday and the Bank of Japan on Friday. The Fed and the ECB are expected to increase by 0.25 basis points, while the BOJ is expected to remain unchanged once again.

Flash PMI data will be released on Monday in Europe and the US.
Australian CPI will be released on Wednesday (Tuesday night in the US). The advanced US GDP for the Q2 will be released on Thursday.
PCE inflation data will be released in the US on Friday.

There will also be a number of key earnings releases from some of the large-cap stocks including Alphabet, Microsoft, Amazon, and Meta.
Apple will release its earnings the following week (on August 3).

Below is the schedule of the major releases next week

Monday, July 24

• Domino’s pizza
• Whirlpool

Tuesday, July 25

• Alphabet
• Microsoft
• 3M
• General Electric
• General Motors
• Visa
• Dow

Wednesday, July 26

• Meta-platforms
• Boeing
• Chipotle
• Coca-Cola
• Qualcomm
• ServiceNow
• General Dynamics

Thursday, July 27

• Amazon
• Bristol-Myers Squibb
• Intel
• McDonald’s
• Honeywell
• Northrop Grumman
• MasterCard
• Ford Motor Company

Friday, July 28

• Procter & Gamble
• Chevron
• Exxon Mobile
• Colgate-Palmolive

As far as the Big 4 releasing next week – Microsoft, Alphabet, Meta and Amazon – earnings and revenue forecasts show:

Microsoft:

• Expected Q4 EPS: $2.55 up 14.3% YoY from $2.23.
• Expected Q4 Revenue: $55.48 billion up 7% YoY.
• Previous quarter performance: surpassed both EPS and revenue expectations.
• Comments: Best quarter anticipated in Microsoft’s 48-year history, with strength attributed to the cloud business and AI initiatives.

Alphabet:

• Expected Q2 EPS: $1.34 up 10.7% YoY from $1.21.
• Expected Q2 Revenue: $72.66 billion up 4% YoY.
• Previous quarter performance: revenue and earnings topped estimates after four straight quarters of missing expectations.
• Comments: Benefits from ongoing cost-cutting measures contributing to EPS growth.

Meta Platforms:

• Expected Q2 EPS: $2.88 up 17.1% YoY from $2.46.
• Expected Q2 Revenue: $31 billion (up 7.6% YoY).
• Previous quarter performance: unexpected increase in revenue following three quarters of declines.
• Comments: Digital advertising market showing signs of improvement.

Amazon:

• Expected Q2 EPS: $0.34 improvement from a loss of $0.20 per share in Q2 2022.
• Expected Q2 Revenue: $131.3 billion up 8.3% YoY.
• Comments: Performance bolstered by cost-saving measures, cloud computing, and advertising businesses.

Apple will announce on August 3. The earning expectations shows:

Apple:

• Expected Q2 EPS: $1.19 down 0.8% YoY from $1.20.
• Expected Q2 Revenue: $81.77 billion down 1.4% YoY.
• Comments: Slowing demand for high-end smartphones and computers negatively impacting earnings and revenue.

Morgan Stanley revise their US GDP forecast to +1.3%, from +0.6%, citing Biden Boom

Morgan Stanley have made what they refer to as, quite rightly, a “sizeable upward revision” to their 2023 US economic growth forecast.

Analysts at the bank now expect +1.7% Q4/Q4, from +0.6% previously.

ICYMI: Nasdaq to undergo “special” rebalancing effective next week

• The AI boom is forcing the index to rebalance its weighting composition, effective 24 July

Essentially, the cause of this “special” rebalance is the fact that have seen a significant rise in Big Tech shares amid the AI boom. Nvidia, Microsoft, Alphabet, Amazon, Apple, and Tesla have seen their stock price rise by roughly 60% on average this year and that is nearly three times more than the average stock of the Nasdaq index itself.

Put together, they now consist of just a little over 50% of the total index and that is too much for the Nasdaq’s liking. As such, the latest shift will see a reduction in their weightings to other smaller tech stocks so as to not see too much concentration on the above stocks. The change will see:

• Nvidia (7.28% -> 4.30%)
• Microsoft (12.74% -> 9.80%)
• Alphabet (7.61% -> 5.70%)
• Amazon (6.91% -> 5.30%)
• Apple (12.06% -> 11.50%)
• Tesla (4.44% -> 3.40%)

This will see their total weighting fall to roughly 40% of the total index. So, how does this impact the Nasdaq and the other stocks in general?

In general, fund houses will just have to also rebalance their portfolios accordingly if they are just tracking the Nasdaq. So, the “arbitrage” way of looking at it is that buying stocks that are set to see their weightings grow would be the ideal scenario. But of course, this announcement already came on 7 July so as you can see, Big Tech isn’t really that much affected by the news.

May Canada retail sales +0.2% vs +0.5% expected

• Canadian May 2023 retail sales data
• The advance reading was +0.5%
• Prior was +1.1% (revised to +1.0%)
• Ex autos 0.0% vs +0.3% expected (prior was +1.3%, revised to +1.2%)
• June advance reading 0.0%
• Year-over-year sales +0.5% vs +1.4% prior

• Coming into this report, core sales had risen for five consecutive months so a flat reading isn’t a big red flag but higher interest rates are undoubtedly starting to bite.

Commodities

Silver drops amid USD strength, poised for a weekly decline

• XAG/USD retreated below the $24.70 level, poised to close a more than 1% weekly loss.
• USD gained some ground following lower-thank expected unemployment figures on Thursday.
• All eyes on next week’s Fed decision.

At the end of the week, the XAG/USD lost ground and is set to close a weekly loss following three weeks of gains. The USD measured by the DXY index, is recovering and tallied a fourth consecutive day of gains jumping above 101.00 making the grey metal struggle to find demand.

The USD gained some ground following labour market data on Thursday, which fueled hawkish bets on the Federal Reserve (Fed) and a rise in US yields, weakening metal prices. The US Bureau of Labor Statistics (BLS) released unemployment data, showing a decrease in jobless claims to 228,000, below the expected 242,000.Investors are speculating on a hawkish stance from the Fed, anticipating the need to maintain higher interest rates for a longer period as the labour market remains robust.

In today’s session, US yields trade mixed across the board following Thursday’s increase. The 2-year yield jumped to 4.85%, seeing mild gains while the 5 and 10-year rates slightly decreased to 4.08% and 3.82%.

Regarding next week’s decision, markets are mainly discounting a 25 basis point (bps) hike, but the odds of a second week past July have increased following Jobless Claims data but still remain low at nearly 35%. In addition, markets will closely watch Jerome Powell’s presser to look for clues regarding forward guidance.

WTI crude oil futures for September settle at $77.07

• Up $1.42 or 1.88%

The price of WTI crude oil futures is settling near the high for the day at $77.07.That’s up $1.42 or 1.88%. The low for the day was at $75.69.

The closing level is just below the 200-day moving average at $77.18.Recall from last week the price tested that level and rotated back down toward the 100-day moving average currently at $73.68 on Monday and Tuesday of this week. The low price for the week reached $73.82.

Oil traders heads up: OPEC+ panel (JMMC) meeting shifted a day later (to August 3)

One for the oil folks. Reuters carried the snippet on Thursday that the OPEC+ group’s Joint Ministerial Monitoring Committee (JMMC) panel will hold an online meeting on August 4, a day later than had been scheduled earlier.

Reuters cite two unnamed OPEC+ sources.

EU News

European equity close: Mixed finish but a good week, especially for UK stocks

• How did European equity markets do in the past week?

The softer UK inflation print was the major driver in European equity markets this week, still the 3% weekly gain for the FTSE 100 only returned it to mid-June levels.

Closing changes for the day:

• Stoxx 600 +0.3%
• German DAX -0.2%
• FTSE 100 +0.2%
• French CAC +0.6%
• Italy MIB +0.2%
• Spain IBEX +0.4%

For the week:

• Stoxx 600 1.0%
• German DAX +0.4%
• FTSE 100 +3.0%
• Italy MIB +0.7%
• Spain IBEX +1.3%

UK June retail sales +0.7% vs +0.2% m/m expected

• Latest data released by ONS – 21 July 2023

• Prior +0.3%; revised to +0.1%
• Retail sales -1.0% vs -1.5% y/y expected
• Prior -2.1%; revised to -2.3%
• Retail sales (ex autos, fuel) +0.8% vs +0.2% m/m expected
• Prior +0.1%; revised to 0.0%
• Retail sales (ex autos, fuel) -0.9% vs -1.6% y/y expected
• Prior -1.7%; revised to -1.9%

Other News

Trump classified documents trial date set for May 20, 2024

• That’s just after the Republican primaries

A judge today set the trial date for former President Donald Trump for May 20, 2024.

That creates the possibility that Trump could be going on trial as the presumptive Republican candidate for President.The primaries will largely wrap up on March 12 and the Republican national convention is schedule for July 15-18.The trial would fall in between those dates, and that’s later than the earlier assumed date of March 25.

Japan top currency diplomat Kanda says watching FX market with sense of urgency

• Kanda says excessive FX moves are undesirable

Well, there were certainly no complaints when the yen was strengthening up until the end of last week. But now as yen bulls are throwing in the towel amid the latest round of disappointment from the BOJ, we are starting to see the verbal jawboning return.

BOJ reportedly erring towards leaving policy unchanged next week

• Reuters reports, citing five sources familiar with the central bank’s thinking

The Japanese yen is falling further on the headline here, with the sources stating that the BOJ is not likely to introduce any changes to its yield curve control settings next week. Adding that many policymakers see no imminent need to take fresh steps on that matter, with there being no consensus as well as to when they may start to phase out stimulus measures.

The central bank is expected to revise up its inflation forecasts for this year though but to leave the forecast for the fiscal year 2024 and 2025 largely unchanged. It is also being reported that the BOJ would prefer to wait for more data before thinking about any possible changes to policy.

China’s SAFE says will forcefully prevent sharp volatility in the yuan

SAFE with more specific yuan comments now:

• Yuan flexibility is increasing, market understanding of two-way fluctuation and ‘risk neutral’ also increased
• Fed tightening is coming to an end, spillover effect is weakening
• Will keep yuan basically stable at balanced levels in a forceful manner
• Will prevent sharp volatilities in the yuan exchange rate
• Will comprehensively use policy measures to stabilise expectations

Cryptocurrency News

Ripple Europe Chief chases UK license after partial win in SEC vs Ripple lawsuit

• Ripple is keen on acquiring a license from the UK’s Financial Conduct Authority, as a crypto asset company. 
• The cross-border remittance firm’s Europe managing director told DL News that Ripple applied for a payment institution license in Ireland. 
• Partial win in the SEC vs Ripple lawsuit supports the firm’s plans to expand in Europe and the UK.

Ripple, a cross-border remittance firm, is working on its expansion in Europe and the UK, after scoring a partial victory in the lawsuit brought by the US Securities and Exchange Commission (SEC).

The SEC vs Ripple ruling solidified Ripple’s plans to treat the US as a global hub while setting foot in the UK as a crypto asset firm, seeking a license from the Financial Conduct Authority (FCA).

Ripple Europe arm recently applied for registration with the UK FCA

Ripple’s European managing director, Sendi Young told DL News, the news arm of DeFiLlama, that the firm has “very recently” applied for registration as a crypto asset firm with the UK’s Financial Conduct Authority (FCA). The payment remittance firm applied for a license in Ireland as well.

After scoring a partial win against the US SEC, Ripple’s expansion plans took shape and the firm decided to treat US as a base for its global hub. Applying for a crypto asset firm license in the UK and a payment firm license in Ireland, Ripple has solidified its European expansion plans.

Alt season likely in Q3 with declining Bitcoin dominance, July emerges as altcoin month

• Over the past 30 days, 75% of altcoins outperformed Bitcoin, indicating that July is altcoin month.
• Bitcoin’s declining dominance and higher returns on altcoins have fueled the July alt season.
• Altcoins tend to rally when the tech-heavy US Nasdaq index climbs, as it pushes closer to it’s all-time high of 15,871 points alt season is kicking in.

Alt season is a brief period where money flows out of Bitcoin and into altcoins and results in an increase in price for cryptocurrencies.

Altcoins outperform Bitcoin in July, kicking off alt season

The alt season tracker at Blockchaincenter.net requires 75% of the top 50 cryptocurrencies to perform better than Bitcoin over a 30-day period to confirm that alt season is in. Over the past thirty days, excluding stablecoins and asset-backed tokens, assets in the top 50 have consistently outperformed Bitcoin. 

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