Corporate Earnings News
Global market indices
Currencies
Cryptocurrencies
Fixed Income
Commodity sector news
Key data to move markets this week
Global macro updates
Corporate Earnings News
Corporate earnings calendar 25th July - 1st August 2024
Thursday: AbbVie, Willis Towers Watson, Keurig Dr. Pepper, Digital Realty Trust, Valero Energy
Friday: Bristol-Myers-Squibb, 3M, Aon
Monday: McDonald’s, Monolithic Power Systems, ON Semiconductor, Loews
Tuesday: Microsoft, Merck, PayPal,Pfizer, Procter & Gamble, Advanced Micro Devices, Pinterest, Starbucks, Arista Networks, Lemonade, Mondelez
Wednesday: Meta Platforms, Qualcomm, Automatic Data Processing, Boeing, Fiverr International, Mastercard, Kraft Heinz, Takeda Pharmaceutical, ARM Holdings, Etsy, Teladoc Health
Thursday: Amazon, Apple, Block, Ball, Cloudflare, Coinbase Global, Intel, Marathon Digital, MicroStrategy, Moderna, Roblox, Snap, Twilio
Global market indices
US Stock Indices Price Performance
Nasdaq 100 +0.36% MTD +17.40% YTD
Dow Jones Industrial Average +1.88% MTD +5.74% YTD
NYSE +1.56%MTD +8.64% YTD
S&P 500 -0.61% MTD +13.78% YTD
Wednesday witnessed an intensified stock market selloff, erasing hundreds of billions of dollars in value from the Magnificent Seven and driving the Nasdaq Composite to its first decline of 3% or more in 400 trading days.
Following a surge fueled by AI optimism earlier this year, investors have become increasingly sceptical about its potential returns. This drastic shift resulted in the S&P 500's worst day since December 2022, ending its longest streak without a 2% drop since the global financial crisis. The Dow Jones Industrial Average also experienced a 1.2% decrease, losing 504 points. The Nasdaq's 3.6% fall marked its largest decline since October 2022, a period when the Fed was actively raising interest rates to curb inflation.
Disappointing earnings reports from Tesla and Alphabet sparked the selloff, pushing all Magnificent Seven members into negative territory. Collectively, these stocks lost $768 billion in market value.
The shift in sentiment rippled through stocks associated with the emerging AI supply chain, impacting semiconductors and other related products. Super Micro Computer declined by 9.1%, while Broadcom fell 7.6%. Qualcomm and Advanced Micro Devices both experienced declines exceeding 6%.
The challenges facing the tech sector extend beyond less-than-ideal earnings. The group remains entangled in the volatile rotation trade that commenced with the June Consumer Price Index (CPI) data. This ongoing trend has exacerbated concerns and contributed to further selling pressure.
As tech stocks have faltered, investors have increasingly reallocated capital towards small and midsize companies. While the Russell 2000 index declined 2.1% on Wednesday, its 10.9% outperformance of the S&P 500 over the past 11 trading sessions marks the most substantial margin in over 24 years, according to Dow Jones Market Data.
The CBOE Market Volatility Index, often referred to as Wall Street's fear gauge, experienced its steepest rise since 2022 on Wednesday. Upcoming earnings reports from Apple, Microsoft, Amazon, and Meta Platforms next week may contribute to continued market volatility.
According to LSEG I/B/E/S data, y/o/y earnings growth for the S&P 500 in Q2 2024 is projected to be 11.6%. This number jumps to 12.6% when excluding the Energy sector. Of the 133 companies in the S&P 500 that have reported earnings to date for Q2 2024, 78.9% have reported earnings above analyst estimates, with 55.6% of companies reporting revenues exceeding analyst expectations. This falls short of the historical average of 62.2% and last year's average (65.3%). The y/o/y revenue growth is projected to be 4.6% in 24Q2, decreasing to 4.5% excluding the Energy sector.
Real Estate, Materials, and Health Care, at 100%, were the sectors with the most companies reporting above estimates. Consumer Discretionary, at 6.5%, was the sector that beat earnings expectations by the highest surprise factor. In the Utilities sector 0% of companies have reported above estimates so far. The Utilities sectors’ earnings surprise factor was the lowest at -2.0% . The S&P 500 surprise factor is 4.3%. The forward four-quarter price-to-earnings ratio (P/E) for the S&P 500 sits at 21.4x.
US stocks
Mega caps: A negative week for the ‘Magnificent Seven’ due to the continuation of rotation away from the AI trade and into small and mid-cap companies and more defensive sectors, as well as a somewhat lacklustre beginning of the earnings season for this group led by Tesla and Alphabet on Tuesday. Alphabet -4.63%, Amazon -3.78%, Apple -4.52%, Meta Platforms -0.16%, Microsoft -3.30%, Nvidia -3.17%, and Tesla -13.08%.
Alphabet surpasses Q2 expectations, driven by advertising and cloud, but investors cautious on AI investments. Alphabet reported a robust Q2 performance, with a 14% y/o/y revenue increase driven by double-digit growth in advertising and cloud computing. Revenue for the three months ending in June reached $84.7 billion, surpassing the consensus estimate of $84.2 billion. YouTube ad sales grew by 13%, reaching $8.67 billion, while cloud computing services, a critical indicator of enterprise technology spending, experienced a 28.8% increase in revenue to $10.35 billion, exceeding analyst expectations of $10.16 billion. Net income also saw a substantial rise of 28% to $23.6 billion, surpassing estimates of $22.9 billion.
During the earnings call, outgoing CFO Ruth Porat informed investors that quarterly capital expenditures for the remainder of 2024 would be at or above $12 billion. Shares declined following the call as CEO Sundar Pichai indicated that investors would need to be patient to see tangible results from the company's investments in AI.
Tesla misses profit mark in Q2 despite revenue growth, robotaxi launch pushed back. Tesla, on the other hand, reported underwhelming results for Q2. Revenue increased by 2% to $25.5 billion, beating analyst expectations, but net income fell by 45% to $1.47 billion, missing the $1.9 billion consensus estimate. Despite efforts to reduce costs and streamline its workforce, Tesla saw a significant drop in net income, and its operating margin decreased to 6.3% in Q2, down from 9.6% a year earlier. Tesla has projected a "notably lower" growth rate for 2024, a forecast reaffirmed in the recent announcement.
During the earnings call, Elon Musk provided additional details about Tesla's future vehicle plans, revealing a two-month delay in the unveiling of the highly anticipated robotaxi, now expected in early October.
Energy stocks reflected a negative performance this week, as the Energy sector itself was -2.98%, lessening the sector’s YTD performance to +8.13%.Halliburton -9.27%, Apa Corp (US) -6.02%, Occidental Petroleum -4.88%, ConocoPhillips -4.29%, Chevron -3.82%, Baker Hughes -3.48%, ExxonMobil -2.24%, Phillips 66 -1.83%, and Shell -1.23%, while Marathon Petroleum +1.20%.
Halliburton Q2 earnings. Halliburton's Q2 results were largely in line with market expectations, with EBITDA and EPS meeting analyst forecasts. However, North American (NAM) revenues experienced a 3% q/o/q decline. Notably, the company repurchased $250 million worth of stock during the quarter.
Initial analyst reactions to the results were neutral to slightly negative. Positive aspects highlighted included the free cash flow exceeding expectations, strong international results, and the share buyback program. Negative factors noted included the overall revenue miss and the sequential decline in NAM revenue due to weaker pressure pumping and Gulf of Mexico operations. Market focus will likely shift towards the company's outlook for the second half of 2024 in North America.
Occidental Petroleum provides an update on negotiations regarding Ecopetrol's potential CrownRock investment. As a background, under the joint venture agreement established between Occidental and Ecopetrol (EC) in 2019, both parties were granted the right to participate in oil and gas interests acquired by the other within a defined area of mutual interest.
On 4th March, 2024, Occidental Midland Basin and Ecopetrol entered into a letter agreement concerning Ecopetrol's evaluation of CrownRock's assets. On 31st May, 2024, Ecopetrol formally notified Occidental of its intention to acquire an undivided 30% interest in the CrownRock assets, contingent upon the successful negotiation of a mutually agreeable transaction structure.
Occidental and Ecopetrol are engaged in discussions regarding the structure for Ecopetrol's potential acquisition of the 30% interest in the CrownRock assets. If this transaction is successfully completed, Occidental anticipates the purchase price to be approximately $3.6 billion, equivalent to approximately 30% of the aggregate consideration paid by Occidental for the acquisition of CrownRock.
Should Occidental and Ecopetrol fail to reach an agreement regarding the transaction structure and joint ownership, development, and operation of the CrownRock assets by August 2024, Ecopetrol retains the option to elect for the Rodeo Midland Basin Joint Venture to acquire the CrownRock assets. This would result in Ecopetrol indirectly owning an undivided 49% interest in the CrownRock assets. It is important to note that this option expires in August 2024, and there is no assurance that Ecopetrol will exercise it.
Occidental intends to utilise any proceeds from the potential transaction with Ecopetrol to reduce a portion of its outstanding term loans.
Materials and Mining stocks had a negative week, as the materials sector was -2.42%, moderating the sector’s YTD performance to +4.63%. Freeport-McMoRan -8.91%, Mosaic -6.70%, Nucor -5.62%, Albemarle -4.42%, Sibanye Stillwater -2.27%, Newmont Corporation -1.18%, and CF Industries -1.91%, while Yara International +5.43%.
Freeport-McMoRan Q2 earnings. Reported Q2 EPS of $0.46, excluding special items. Revenue for the quarter reached $6.62 billion, surpassing the consensus estimate of $6.00 billion. Operating income amounted to $2.05 billion, exceeding the consensus of $1.92 billion. Capex totaled $1.12 billion, slightly above the consensus of $1.02 billion.
For Q3, the company anticipates consolidated sales volumes of approximately 1.0 billion pounds of copper, 475,000 ounces of gold, and 20 million pounds of molybdenum.
For 2024, the company projects consolidated sales volumes of approximately 4.1 billion pounds of copper, 1.8 million ounces of gold, and 82 million pounds of molybdenum. Consolidated copper and gold production volumes are expected to surpass 2024 sales volumes, with approximately 100 million pounds of copper and 120,000 ounces of gold deferred for processing by PT-FI's new downstream facilities and subsequent sale as refined metal in 2025.
Newmont Q2 earnings. The company reported revenue of $4.40 billion, exceeding the consensus estimate of $4.13 billion. Adjusted EBITDA reached $1.97 billion, surpassing the consensus of $1.88 billion. Production figures included 1.6 million attributable gold ounces and 477,000 gold equivalent ounces (GEOs) from copper, silver, lead, and zinc, with copper production totaling 38,000 tonnes.
Yara International Q2 earnings. For Q2, the company reported revenue of $3.53 billion, slightly below the consensus estimate of $3.65 billion. Excluding special items, EBITDA reached $513 million, surpassing the consensus forecast of $457.0 million.
Yara International has initiated a comprehensive cost and capex reduction program that aims to reduce fixed costs and capex by $150 million each by the end of 2025. The company plans to achieve this through a focused approach that prioritises high-return key assets and scales down lower-return activities.
Based on current forward markets for natural gas as of 11th July, and assuming stable gas purchase volumes, the company estimates its gas cost for Q3 to be $15 million higher y/o/y, while Q4 is estimated to be $70 million lower. The company's net debt/EBITDA ratio, excluding special items, stood at 1.87x, and the net debt/equity ratio was 0.49x.
Nucor Q2 earnings. For Q2, the company reported revenue of $8.08 billion, exceeding the consensus estimate of $7.69 billion. EBITDA reached $1.23 billion, surpassing the consensus of $1.17 billion. The company also repurchased approximately 2.9 million shares of its common stock at an average price of $170.70 per share.
Regarding Q3, the company anticipates a decrease in earnings compared to Q2. This is primarily attributed to an expected decrease in earnings from the steel mills segment, mainly due to lower average selling prices.
European Stock Indices Price Performance
Stoxx 600 +0.17% MTD +6.95% YTD
DAX +0.83% MTD +9.77% YTD
CAC 40 +0.46% MTD -0.75% YTD
IBEX 35 +2.43% MTD +10.97% YTD
FTSE MIB +3.97% MTD +13.57% YTD
FTSE 100 -0.13% MTD +5.44% YTD
This week, the pan-European Stoxx Europe 600 index declined -0.49%, closing at 512.30.
Germany's DAX index was -0.27% and closed at 18,387.46. France's CAC 40 index was -0.75%, closing at 7,513.73.
The UK's FTSE 100 index declined to 8,153.69, reflecting a -0.41% loss for the week.
In Wednesday's trading session, the Personal & Household Goods sector experienced the most significant decline, primarily driven by the Luxury subsector following subdued Q2 results. LVMH's Q2 sales growth weakened to 1%, missing expectations due to fading high-end demand. Christian Dior reported a 5.3% decline in its fashion and leather goods division, with its UK arm experiencing a profit decrease y/o/y. Additionally, Remy Cointreau reported a steeper-than-expected Q1 sales decline of 15.6% in organic sales versus the anticipated 13.6%, citing challenges in the US impacting liqueurs and spirits, and a decline in Asian operations. However, the group maintained its FY guidance.
In the European Tech space, ASML faced pressure as negative sentiment towards tech overshadowed news of its Q2 orders beating estimates. Temenos came into focus after lowering its 2024 guidance, citing the impact of a short-seller Hindenburg Research report on its H1 performance.
On the positive side, Travel & Leisure emerged as the top performer, with the spotlight on easyJet following their announcement that airline ticket prices are holding up during the crucial summer period, resulting in a 16% rise in pretax profits in Q3. The Energy sector also strengthened, with attention on Repsol's plans to buy back an additional 20 million outstanding shares, aided by higher oil prices contributing to a Q2 profit exceeding expectations.
Eurozone banks' share prices muted despite strong earnings, reflecting cautious outlook. The eurozone's largest banks predominantly surpassed Q2 earnings expectations, buoyed by persistently high interest rates and robust investment banking activity. However, concerns regarding a more challenging economic outlook tempered share price reactions.
European banking shares, which have been suppressed for a decade due to low profitability during a period of near-zero central bank interest rates, have rebounded by 20% YTD and are currently trading near nine-year highs.
Despite this overall positive trend, the STOXX Europe 600 Banks index experienced a 0.5% decline on Wednesday, reflecting analyst and investor anxieties about the sustainability of profit growth within the sector.
Deutsche Bank diverged from the general trend, reporting a quarterly loss attributed to a previously disclosed provision for a lawsuit related to its Postbank unit. The unexpected decision to halt further share buybacks and an increase in bad loan loss charges led to a 7% decline in its stock price.
BNP Paribas exceeded analyst expectations for both revenue and profits, driven by an exceptionally strong quarter for its equities traders, mirroring the broader equities boom among Wall Street banks, and a significant increase in revenue from its investment banking division. Despite these positive results, BNP Paribas' shares wavered due to concerns about weakness in its retail unit, where net interest income (NII) decreased by 11% even before the ECB initiated its anticipated rate cuts.
Santander, the second-largest eurozone bank by market cap, reported record net profits, reflecting a 20% y/o/y increase, consistent with forecasts and attributed to robust results in Spain and Brazil. While the bank's NII fell short of expectations, it raised its profitability targets.
Italian lender UniCredit also exceeded profit forecasts and announced the acquisition of a Belgian digital bank utilising its own cloud-based IT platform. Despite a minor decline in quarterly revenues, the bank, whose shares have surged 72% in the past 12 months due to CEO Andrea Orcel's strategy of returning nearly all profits to shareholders through buybacks and dividends, reaffirmed its 2024 profit goal.
The upcoming earnings reports of Lloyds Banking Group, Societe Generale, Credit Agricole, and BBVA will provide further insights into the performance and outlook of the European banking sector.
Other Global Stock Indices Price Performance
MSCI World Index +0.12% MTD +10.94% YTD
Hang Seng -2.30% MTD +2.55% YTD
This week, the Hang Seng Index decreased by -2.41%, while the MSCI World Index contracted by -2.54%.
Currencies
EUR+1.20% MTD -1.82% YTD to $1.0840
GBP+1.96% MTD +1.26% YTD to $1.2906
The euro was -0.95% against the USD over the past week, while the British Pound was -0.88%. The Dollar Index is +0.61% this week, -1.40% MTD, and +3.01% YTD.
The British pound strengthened against the euro on Wednesday, following the release of flash PMI data revealing that business activity in the UK grew to 52.7 from June's six-month low of 52.3, supported by the most rapid manufacturing growth in two years and the strongest inflow of new orders since April 2023. In contrast, growth in eurozone business activity dropped to 50.1 this month from June's 50.9.
The euro depreciated by 0.1% against the pound, reaching 84.04 pence, nearing its two-year low of 83.84 pence observed earlier in July.
The pound has benefited in recent months from stronger-than-anticipated economic data, increased stability under a new government, and the BoE taking a more cautious approach to rate cuts due to concerns about persistent services inflation. The BoE meets on 1 August and markets are pricing in a 45% probability of a rate cut.
The pound remained unchanged against the dollar, trading at $1.2906 on Wednesday. However, Sterling fell against the Japanese yen, with a 0.55% decline to 199.67 yen, having previously exceeded 207 yen earlier this month. The yen was supported by the ending of carry trades on rising expectations of a Fed rate cut and it was also supported by its traditional role as a safe-haven currency, as a tech-led sell-off in global stocks continued.
Beyond routine intervention: Japan's multi-pronged approach to bolster the yen. Japanese authorities have adopted innovative intervention tactics, making it more challenging for investors to anticipate their actions in the foreign exchange market.
At the Ministry of Finance's directive, the BoJ is estimated to have allocated nearly ¥6 trillion ($38.4 billion) this month to bolster the yen. As the dollar traded at 38-year highs around ¥160 two weeks ago, officials in Tokyo issued frequent warnings of potential intervention should excessive volatility persist or the yen's value not align with underlying economic and monetary policy conditions. Consequently, another round of intervention was anticipated.
Although no official confirmation of intervention exists, traders believe the BoJ capitalised on weak US inflation data that negatively affected the dollar on 11th July. The BoJ is suspected of selling dollars into the slide of the US currency, rather than responding directly to the yen's weakness. This atypical approach resulted in a rapid decline of the dollar/yen pair from approximately 161 to 158.3 within minutes.
A second round of suspected official buying on 12th July heightened investor apprehension. A subsequent yen rally on 15th July was initially attributed to intervention, but market data later revealed this was likely not the case.
Japanese authorities may have had three primary objectives: maximising impact, increasing the element of surprise, and deterring excessive speculation.
The yen has strengthened by almost 4% this month, and options positioning is beginning to shift. The carry trade is reversing as the likelihood of a Fed cut increases and the BoJ appears to be reconsidering its rates policy. The derivatives market indicates a growing premium in the price of call options relative to put options on the yen, suggesting a more bullish outlook among traders.
The primary driver of the 30% decline in the yen over the past four years has been the interest rate differential between Japan and the US. However, the BoJ monetary policy meeting on 31st July may result in a reduction of this differential. There is increasing pressure on the BoJ, but with mixed economic data, the probability of a rate hike from 0.1% is estimated to be around 50/50. Nevertheless, speculators still hold one of the largest bets against the yen on record, nearly $12 billion, which has more than doubled since the beginning of 2024.
Cryptocurrencies
Bitcoin +8.57% MTD +55.98% YTD to $65,497.00.
Ethereum -1.24% MTD +45.16% YTD to $3,332.90.
Bitcoin had a positive week, gaining +2.09%, while Ethereum posted a -1.76% weekly loss.
The much expected Ethereum ETF launched on 23 July and saw over $100 million in net inflows on their first trading day. Over $1 billion shares traded between the nine exchange-traded funds. While a strong start, it falls short of the impressive debut of Bitcoin ETFs in January, which saw $4.6 billion traded during its first day. This suggests that Ethereum ETFs might face more challenges in gaining traction among traditional investors that are just trying to get exposure to cryptocurrencies. It is being suggested that overall flows for the Spot Ether ETFs could potentially total about 30% of Spot Bitcoin ETF flows given that Bitcoin’s market cap is around three times larger than that of Ether’s.
Note: As of 5:00 pm EDT 24 July 2024
Fixed Income
US 10-year yield -10.9 basis points MTD +41.2 basis points YTD to 4.293%.
German 10-year yield -5.5 basis points MTD +43.7 basis points YTD to 2.446%.
UK 10-year yield -1.7 basis points MTD +62.1 basis points YTD to 4.160%.
US Treasury 10-year bond yields are +13.2 basis points (bps) up this week.
On Wednesday, yields on shorter-dated US Treasuries experienced a decline, while those on longer-dated Treasuries rose. The yield on the two-year US Treasury note decreased by -3.5 basis points to 4.41%, while the yield on the 10-year US Treasury note increased by +3.8 basis points. The yield on the 30-year bond saw the most significant increase, rising by +7.1 basis points to 4.541%, marking its largest daily gain since 1st July.
The upward movement in yields was observed following a relatively lacklustre Treasury auction of $70 billion in five-year notes, which concluded with a high yield of 4.121% and a bid-to-cover ratio of 2.4x. The final auction of the week, offering $44 billion in seven-year notes, is scheduled for Thursday.
The German 10-year yield was +3.8 bps this week, while the UK 10-year yield was +9.1 bps this week. The spread between US 10-year Treasuries and German Bunds currently stands at 184.7 bps, +9.4 bps from last week.
Italian bond yields, a benchmark for the eurozone periphery, were +8.6 bps this week to 3.803%. Consequently, the spread between Italian and German 10-year yields widened +4.8 bps to 135.7 bps from 130.9 bps last week.
France's 10-year bond yield was up +2.9 bps at 3.159%. On a weekly basis, it increased by +8.1 bps from 3.078%. The spread between French and German yields widened by +4.3 bps to 71.3 bps.
In Wednesday’s trading session, eurozone short-dated yields experienced a slight decline following the release of a survey indicating stagnant business activity in the region for July. This development led investors to increase their expectations of two additional rate cuts by the ECB before the end of the year.
The HCOB's preliminary composite Purchasing Managers' Index (PMI), compiled by S&P Global, dropped from 50.9 in June to 50.1 in July. This figure fell short of the anticipated increase to 51.1.
In response, German two-year yields, which are sensitive to the interest rate outlook, were - 5.4 basis points (bps) to 2.713%. However, the yield on the 10-year bond remained relatively stable at 2.446%.
Money markets indicated a shift in sentiment, with an increased likelihood of two rate cuts by the ECB by year-end, now estimated at 92%, compared to less than 80% before the release of the PMI data.
This rise in the risk premium for French bonds, reflecting heightened investor anxiety, coincided with President Macron's decision on Tuesday to keep his outgoing government in place until mid-August to oversee the Olympic Games in France. This decision was met with resistance.
Additionally, French credit default swaps (CDS) reached 30 bps, their highest level in a month. At the height of the angst over France's political future in late June, French five-year CDS hit a four-year high of 36 bps.
Commodities
Gold spot +3.68% MTD +17.01% YTD to $2,413.30 per ounce.
Silver spot -1.84% MTD +20.46% YTD to $29.02 per ounce.
West Texas Intermediate crude -7.11% MTD +7.02% YTD to $76.94 a barrel.
Brent crude -5.19% MTD +4.61% YTD to $80.59 a barrel.
Spot gold prices are down -1.69% this week. Gold has been down due to some profit taking and investors focusing on today’s US GDP number and Friday’s PCE data that could offer additional insights into the timing of the Federal Reserve's potential interest rate cuts.
Both WTI and Brent are in negative territory this week by -8.58% and -5.28%, respectively. Oil has been down due to weaker fuel demand from China, which is still struggling with sluggish economic growth.
EIA report: crude oil, gasoline, and distillate stocks fall across the board. According to the Energy Information Administration (EIA) report released on Wednesday, US oil inventories experienced a broad decline last week, attributed to increased crude exports and heightened gasoline demand.
Crude inventories decreased by 3.7 million barrels, reaching 436.5 million barrels in the week ending July 19th. This surpassed analysts' forecasts of a 1.6 million-barrel reduction. Net US crude imports also fell by 388,000 barrels per day (bpd) to 2.7 million bpd, as exports rose by 222,000 bpd to 4.2 million bpd.
Stocks at the Cushing, Oklahoma, delivery hub for US crude futures declined by 1.7 million barrels. The EIA suggested that some of the inventory drawdowns may be attributed to the normalisation of operations following a recent Atlantic storm that impacted the US state of Texas, a major crude oil production and refining hub.
Refinery crude runs decreased by 521,000 bpd, with refinery utilisation rates dropping by 2.1 percentage points to 91.6% of capacity. Gasoline stocks also fell by 5.6 million barrels to 227.4 million barrels, significantly exceeding expectations of a 400,000-barrel draw.
Furthermore, the EIA's measure of gasoline demand, product supplied, increased by 673,000 bpd, marking the largest weekly increase since November 2023. This brought the total to 9.46 million bpd, the highest level for this time of year since 2021's record high of over 10 million bpd.
Lastly, distillate stockpiles, including diesel and heating oil, decreased by 2.8 million barrels to 125.3 million barrels, contrary to expectations of a 250,000-barrel increase.
Note: As of 5:00 pm EDT 24 July 2024
Key data to move markets this week
EUROPE
Thursday: German IFO Business Climate, Current Assessment and Expectations Surveys, Eurogroup Meeting and a speech by ECB President Christine Lagarde.
Monday: German Retail Sales.
Tuesday: German GDP, CPI and Harmonised Index of Consumer Prices, Spanish GDP, CPI and Harmonised Index of Consumer Prices, eurozone GDP, Business Climate and Consumer Confidence Indicators.
Wednesday: German Unemployment Change and Retail Sales, French CPI, Italian CPI, Eurozone Harmonised Index of Consumer Prices, and Eurozone Core Harmonised Index of Consumer Prices.
UK
Thursday: BoE Monetary Policy Decision, BoE Monetary Policy Report, BoE Asset Purchase Facility, and a Speech by BoE Governor Andrew Bailey.
US
Thursday: GDP, Personal Consumption Expenditures (PCE) Prices, Core PCE, Initial and Continuing Jobless Claims, Durable Goods Orders, Nondefense Capital Goods Orders ex Aircraft and Pending Home Sales.
Friday: Personal Consumption Expenditures (PCE) Price Index, Core Personal Consumption Expenditures (Core PCE) Price Index, Michigan Consumer Sentiment Index, and UoM 5-year Consumer Inflation Expectation.
Speeches by New York Fed President John Williams and Atlanta Fed President Raphael Bostic.
Tuesday: Housing Price Index, Consumer Confidence, and JOLTS Job Openings.
Wednesday: ADP Employment Change, Chicago Purchasing Managers’ Index, Fed Interest Rate Decision, Fed Monetary Policy Statement, and FOMC Press Conference.
JAPAN
Friday: Tokyo Consumer Price Index (CPI), Tokyo Core CPI.
Monday: Unemployment Rate.
Wednesday: Large Retailer Sales. BoJ Interest Rate Decision, Monetary Policy Statement, and Press Conference.
CHINA
Wednesday: NBS Manufacturing and Non-Manufacturing PMIs.
Monday: Caixin Manufacturing PMI.
Global Macro Updates
PMI data reveals weak demand and export slowdown weigh on eurozone economic outlook. The Eurozone flash PMI data indicates a loss of momentum in the region's economic recovery. The composite PMI reached a five-month low of 50.1, compared to the previous reading of 50.9, signalling a near stagnation of the economy due to persistent weakness in manufacturing and a moderating expansion in the services sector. The manufacturing PMI recorded 45.6, below the consensus forecast of 46.0 and the prior reading of 45.8, while the services sector PMI registered 51.9, lower than the projected 52.9 and the prior reading of 52.8.
A closer examination of the data reveals a second consecutive monthly decline in new orders and a six-month low in business confidence, leading firms to halt hiring activities. The German economy experienced a similar trend, with output contracting for the first time in four months due to an ongoing manufacturing downturn and waning services sector momentum.
Conversely, the French PMI indicated that the economy is nearing stabilisation, with the services sector PMI reaching a three-month high, attributed to the Olympic Games, and the conclusion of the election period. However, manufacturing activity remained weak.
Overall, the eurozone data reflects underlying weakness in demand and a significant decrease in exports, indicative of a softer global economic environment. The stagnation in activity has led to a softening of output prices, while input prices have risen to a three-month high.
Economic headwinds intensify: is a July Fed rate cut the answer? In a widely noted Bloomberg Opinion article, former New York Federal Reserve President William Dudley argued for a July rate cut, suggesting it might already be too late to avert a recession. Dudley cited factors such as tighter household spending due to higher interest rates, slower job growth and a labour market returning to pre-pandemic levels, and the unemployment rate nearing the Sahm Rule threshold, which has historically signalled recession.
Goldman Sachs economist Jan Hatzius echoed this sentiment, highlighting a compelling rationale for a July rate cut, although maintaining September as the base case. Hatzius pointed to an estimated federal funds rate of 4% based on unemployment and inflation figures, significantly below the actual policy rate, alongside a cooler June Consumer Price Index (CPI) and Chair Powell's recent testimony.
Despite these calls for an earlier rate cut, market reactions have been muted. Futures markets are currently pricing in a mere 5% chance of a July cut, with minimal change week-over-week. The median year-end federal funds rate projection of 4.80% is also down less than 5 basis points from the previous week.
While every effort has been made to verify the accuracy of this information, EXT Ltd. (hereafter known as “EXANTE”) cannot accept any responsibility or liability for reliance by any person on this publication or any of the information, opinions, or conclusions contained in this publication. The findings and views expressed in this publication do not necessarily reflect the views of EXANTE. Any action taken upon the information contained in this publication is strictly at your own risk. EXANTE will not be liable for any loss or damage in connection with this publication.
Questo articolo viene fornito all'utente soltanto a scopo informativo e non deve essere considerato come un'offerta o una sollecitazione di un'offerta di acquisto o di vendita di investimenti o servizi correlati che possono essere qui menzionati.
