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 11th July - 18th July 2024
Thursday: Delta Airlines, Pepsico
Friday: JP Morgan, Wells Fargo, Citigroup, Bank of New York Mellon, Fastenal.
Monday: BlackRock, Goldman Sachs
Tuesday: Bank of America, Morgan Stanley, UnitedHealth Group, Charles Scwab, PNC Financial Services Group, Autodesk, State Street Corp.
Wednesday: Johnson & Johnson, Prologis, U.S. Bancorp, Kinder Morgan, Crown Castle, Discover Financial Services, Las Vegas Sands, Northern Trust Corp., Citizens Financial Group, Synchrony Financial, Ally Financial
Thursday: Netflix, Novartis, Abbott Laboratories, Blackstone, Taiwan Semiconductor Manufacturing, Intuitive Surgical, Marsh & McLennan, Cintas, D.R. Horton, PPG Industries, KB Financial, Domino’s Pizza, Snap-On, KeyCorp
Global market indices
US Stock Indices Price Performance
Nasdaq 100 +3.91% MTD +21.56% YTD
Dow Jones Industrial Average +1.54% MTD +5.39% YTD
NYSE +1.05% MTD +8.08% YTD
S&P 500 +3.18% MTD +18.12% YTD
The S&P 500 +1.75% over the past week, with 10 of the 11 sectors having exhibited positive performance MTD. The Equally Weighted version of the S&P 500 posted a weekly +0.81%, its performance is +0.50% MTD +4.60% YTD.
The S&P 500 Information Technology is the leading sector this month, up +6.34% MTD +35.89% YTD, while the Energy sector has exhibited the weakest performance at -2.07% MTD +6.83% YTD.
This week the Information Technology sector outperformed within the S&P 500 with a +2.90% gain, followed by the Communication Services and Healthcare sectors at +2.45% and +2.05%, respectively. Conversely, the Energy sector underperformed, experiencing a -2.32% decline.
The S&P 500 and Nasdaq Composite reached new record highs on Wednesday, as investor confidence in impending interest-rate cuts grew. The S&P 500, with all eleven sectors advancing, achieved its sixth consecutive record close - the longest such streak since 2021. The tech-focused Nasdaq Composite also marked its seventh consecutive record. The Dow Jones Industrial Average reversed its two-day decline, closing higher.
The S&P 500 rose +1%, marking its 37th record close this year and surpassing 5,600 for the first time in history. The Dow Jones Industrial Average increased by +1.1%, or approximately 429 points, remaining 0.7% below its 17th May record. The Nasdaq Composite surged +1.2%, achieving its 27th record close of 2024.
Q2 2024 earnings preview: Financials sector in focus. The Financials sector is poised to capture significant market attention over the next two weeks, as more than 40% of S&P 500 companies scheduled to release second-quarter earnings belong to this sector. Key players such as Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo are among those reporting. Forecasts indicate that the Financials sector will achieve the seventh-highest y/o/y earnings growth rate across all eleven sectors, projected at 4.3% for Q2 2024.
Within the sector, three out of five sub sectors are expected to experience y/o/y earnings growth with the Insurance industry, at 31%, and the Capital Markets industry, at 23%, leading the way. These two industries are also projected to be the primary contributors to the sector's overall earnings growth.
Additionally, the Financial Services industry is expected to post a modest y/o/y earnings increase of less than 1%. Two sub sectors within the sector are forecasted to experience declines, led by the Banking sector, with an expected decrease of 10%. This decline is projected to significantly impact the sector's overall earnings growth. Excluding the Banking sector, the estimated earnings growth rate for the Financials sector would surge to 14.8%. At the sub-industry level, both Regional Banks (-26%) and Diversified Banks (-9%) are expected to report y/o/y earnings declines.
US stocks
Mega caps: A positive week for the ‘Magnificent Seven’ due momentum in the AI trade, coupled with expectations of potential lower interest rates later this year. Alphabet +2.88%, Amazon +1.11%, Apple +5.16%, Meta Platforms +4.85%, Microsoft +1.19%, Nvidia +5.17%, and Tesla +6.85%.
Energy stocks reflected a negative performance this week, as the energy sector itself was -2.32%, attenuating the sector’s YTD performance to +6.83%. Marathon Petroleum -7.32%, Phillips 66 -4.56%, Baker Hughes -1.83%, ExxonMobil -2.47%, Halliburton -2.25%, Apa Corp (US) -2.24%, ConocoPhillips -1.95%, Occidental Petroleum -1.46%, Chevron -1.01%, and Shell-0.63%.
Weak refining margins, impairments impact Oil Majors' Q2 outlook. Major European integrated oil companies have detailed the challenges faced in Q2 2024. BP highlighted weak refining margins and oil trading as factors expected to reduce its Q2 profit. The company also anticipates flat upstream production in Q2, with a slight decline in gas and low-carbon energy. For the full year, BP expects upstream production to be slightly higher than in 2023, with gas and low-carbon energy slightly lower. Capex for the full year remains unchanged at $16 billion. Additionally, BP expects Q2 charges of $1-2 billion due to a review of its Gelsenkirchen refinery.
Last week Shell announced a $2 billion impairment charge related to the sale of its Singapore refinery and the cessation of a biofuel plant in the Netherlands. Shell expects Q2 production to be between 940,000-980,000 barrels per day (bpd) in integrated gas and 1.72-1.83 million bpd in upstream. Jefferies noted that Shell's update was in line with expectations but predicted a 5-10% decrease in consensus full-year earnings from the current $6 billion.
Furthermore, OMV AG reported that legislative changes in Eastern Europe would negatively impact its Q2 earnings in the energy business, while its chemicals arm was burdened by negative inventory effects.
These Q2 updates follow a similar announcement from US oil major ExxonMobil, which signalled on Monday that lower refining margins and natural gas prices would affect its Q2 profit. The update was seen as negative, as the midpoint of the guidance provided suggests a shortfall compared to street expectations. Prior to this announcement, consensus EPS estimates were around $2.30, however, following Monday's update, results are expected to be between $1.92 and $2.05.
Materials and Miningstocks had a positive week, as the materials sector was +0.72%, elevating the sector’s YTD performance to +3.26%. Newmont Corporation +4.63%, Sibanye Stillwater +3.88%, Freeport-McMoRan +1.86%, while Albemarle -3.19%, Mosaic -2.61%, Yara International -2.38%, Nucor -1.96%, and CF Industries -0.30%.
Precious metals producer Sibanye Stillwater said that a cyberattack on its IT system that occurred Monday morning has caused limited disruption to its global operations, but its core mining and processing business was operating normally.
European Stock Indices Price Performance
Stoxx 600 +0.98% MTD +7.81% YTD
DAX +0.94% MTD +9.88% YTD
CAC 40 +1.26% MTD +0.40% YTD
IBEX 35 +1.17% MTD +9.60% YTD
FTSE MIB +3.48% MTD +13.03% YTD
FTSE 100 +0.36% MTD +5.95% YTD
This week, the pan-European Stoxx Europe 600 index gained +0.34%, closing at 516.42.
Germany's DAX index was +0.18% and closed at 18,407.22. France's CAC 40 index was -0.77%, closing at 7,573.55.
The UK's FTSE 100 index likewise rose to 8,193.51, reflecting a +0.27% gain for the week.
European equity markets closed on a positive note on Wednesday, with Spain (+1.6%) and Portugal (+1.4%) leading the gains. Greece (-0.5%) was the sole underperformer, bucking the broader upward trend.
Sector performance within the STOXX Europe 600 index was mixed on Wednesday. Outperformers included Real Estate (+2.07%), Retail (+1.45%), and Personal Care, Drug, and Grocery Stores (+1.36%). Underperformers included Chemicals (-0.21%), Media (-0.20%), and Energy (+0.22%).
Corporate news saw Porsche revise its 2024 consolidated profit after tax guidance to €3.5-5.5 billion, down from the previous €3.8-5.8 billion. Hapag-Lloyd reported preliminary Q2 EBIT of €0.4 billion, missing FactSet's estimate of €636.0 million. In the UK, JD Wetherspoon released a Q4 trading update showing like-for-like sales growth of +5.8% year-on-year in the 10 weeks leading up to 7th July, and reiterated its expectation for full-year profits to align with market expectations. In the Nordics, Kongsberg Gruppen reported Q2 EPS of NOK6.79, surpassing FactSet's estimate of NOK5.63.
Volkswagen announced a restructuring of its high-cost Brussels Audi facility, anticipating €1.7 billion in additional restructuring charges and expenses for 2024, primarily related to the plant manufacturing the Audi Q8 e-tron, affecting approximately 3,000 employees.
Other Global Stock Indices Price Performance
MSCI World Index +2.90% MTD +14.02% YTD
Hang Seng -0.51% MTD +3.41% YTD
This week, the Hang Seng Index decreased by -1.94%, while the MSCI World Index rose by +1.44%.
Currencies
EUR +1.21% MTD -1.81% YTD to $1.0828
GBP +1.71% MTD +1.02% YTD to $1.2848
The euro was +0.49% against the USD over the past week, while the British Pound was +0.93%. The Dollar Index this week is -0.46%, and -0.90% MTD, however and maintains a YTD gain of +3.54%.
In his second day of testimony before Congress, Federal Reserve Chair Jerome Powell reiterated his previous statements, acknowledging the cooling labour market and noting that the US economy now faces "two-sided risks." He emphasised that the US is "no longer an overheated economy."
The dollar index was down -0.07% at 105.05 on Wednesday. Traders are now pricing in a 73% probability of a rate cut by September, with a second cut likely by December, according to the CME Group's FedWatch Tool.
The euro gained +0.10% to $1.0828 on Wednesday, as investors absorbed the news of a hung parliament in France. The unexpected outcome of the snap election has created political uncertainty, with no clear path to a stable government. French Finance Minister Bruno Le Maire has stated he is planning on pressing on with spending cuts as he seeks to reassure markets of the country’s fiscal credibility by bringing the deficit to 5.1% economic output this year and within 3% by 2027. However, he is due to be replaced by whatever new government is formed. The Bank of France Governor François Villeroy de Galhau said on Thursday suggested that there may be further problems ahead if a government is not formed by September when parliament must vote on the French budget.
Sterling was +0.16% at $1.2808 on Wednesday, having peaked at $1.2845 on Monday. Sterling reached a four-week high after BoE Chief Economist Huw Pill indicated the central bank was moving closer to cutting interest rates, but noted that services price inflation and wage growth remained uncomfortably high. The UK economy grew 0.4% in May, double the expected figure, after a +0.2% rise in April. While May's CPI hit the Bank of England's 2% target, largely due to a drop in food prices, a sub-component of service-sector inflation indicates ongoing price pressures in that part of the economy, potentially making an August rate cut less certain. Growth in May was attributed to the services sector which expanded 0.3% and registered the fastest growth over three months since December 2021.
The stronger than expected growth number means that the quarterly expansion might exceed the Bank of England’s forecasts, potentially complicating whether to start cutting interest rates in August. The chance of a rate cut at the August meeting fell below 50% on the futures markets from just above 50% on Wednesday. However, despite the positive growth momentum, the economy is only 2.7% larger than its pre-pandemic level of late 2019. The UK’s annual GDP growth is now running at 1.4%, higher than the 1.2% forecast at the beginning of the year.
Additionally, the US dollar strengthened +0.29% against the Japanese yen, reaching ¥161.77 and nearing the 38-year high of ¥161.96 reached last week. The Japanese currency has been negatively impacted by the wide interest rate differential between the US and Japan.
Cryptocurrencies
Bitcoin -3.98% MTD +38.02% YTD to $57,961.00.
Ethereum -7.86% MTD +35.43% YTD to $3,109.50.
Bitcoin and Ethereum have been in negative territory over the past week, losing -3.66% and -5.65%, respectively. Some of the decline has been attributed to selling pressure from Bitcoin mining operators, the refunds coming from the defunct Mt. Gox exchange, and the German government selling off Bitcoin it had seized in Saxony in January. .
Note: As of 5:00 pm EDT 10 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 +3.5 basis points MTD +52.7 basis points YTD to 2.408%.
UK 10-year yield -4.4 basis points MTD +59.4 basis points YTD to 4.069%.
US Treasury 10-year bond yields -7.1 basis points (bps) this week, reaching 4.293%.
US Treasury yields declined on Wednesday, as Fed Chair Jerome Powell's remarks were generally interpreted as dovish, reinforcing expectations of the Fed easing cycle commencing later this year.
The auction of $39 billion in US 10-year notes exceeded expectations, with the high yield settling at 4.276%, below the anticipated rate at the bid deadline. This suggests strong investor demand, with buyers willing to accept a lower yield to secure the notes. The bid-to-cover ratio was 2.58x, slightly exceeding the average of 2.52x but marginally below last month's 2.67x cover.
Yields for other maturities also experienced a decline, with the 30-year yield falling -2.3 bps to 4.472%. Meanwhile, the two-year yield, often viewed as a reflection of interest rate expectations, remained unchanged at 4.63%.
The benchmark German 10-year yield was -3.1 bps this week, while the UK 10-year yield was -4.3 bps this week. The spread between US 10-year Treasuries and German Bunds currently stands at 175.7 bps, -4.0 bps from last week.
Italian bond yields, a benchmark for the eurozone periphery, were -12.4 bps this week to 3.867%. Consequently, the spread between Italian and German 10-year yields contracted -9.3 bps to 133.1 bps from 142.4 bps last week.
Eurozone bond yields fell on Wednesday, particularly in France and Italy, in a sign of investors unwinding the political risk premium they had attached to the countries before French parliamentary elections.
Germany's 10-year bond yield at 2.536%, -5.0 bps on the day, after rising 4 bps the previous day, while Germany's two-year bond yield, which is more sensitive to ECB rate expectations, was -3.0 bps lower at 2.898%.
France's 10-year bond yield was down -1.6 bps at 3.192% after rising 8.8 bps Tuesday, however, on a weekly basis, it dropped -1.6 bps from 3.206. The spread between French and German yields fell to its lowest since 13th June at 65.6 bps.
Commodities
Gold spot +1.91% MTD +15.02% YTD to $2,371.07 per ounce.
Silver spot +5.73% MTD +29.76% YTD to $30.81 per ounce.
West Texas Intermediate crude -1.63% MTD +13.34% YTD to $82.78 a barrel.
Brent crude +0.93% MTD +11.36% YTD to $85.36 a barrel.
Spot gold prices are +0.53% this week helped by a weaker US dollar and on rising Fed rate cut bets following dovish comments by Fed Chair Jerome Powell during his congressional testimony. Gold prices declined slightly on Wednesday -0.06%, but as US June CPI has come in cooler than expected, at 3.0% y/o/y and at -0.1% m/o/m, the likelihood of gold prices continuing its bull run is high.
WTI is -4.35% this week, while Brent is -1.80%.
US crude and gasoline stocks fall, defying expectations amid increased refinery activity. US crude oil and gasoline inventories declined more than anticipated last week due to increased refinery activity, while distillate stocks increased, according to the Energy Information Administration (EIA) report released on Wednesday.
Crude oil inventories decreased by 3.4 million barrels to 445.1 million barrels in the week ending 5th July, exceeding analysts' forecasts of a 1.3 million-barrel draw. Crude stocks at the Cushing, Oklahoma, delivery hub also fell by 702,000 barrels during this period.
Refinery crude runs increased by 317,000 barrels per day, and utilisation rates rose by 1.9 percentage points, with Gulf Coast refinery utilisation reaching its highest level since June 2023.
Despite heightened refining activity, gasoline inventories decreased due to sustained strong implied demand ahead of the extended holiday weekend. US gasoline stocks fell by 2 million barrels, surpassing analysts' expectations of a 0.6 million-barrel draw.
Distillate stockpiles, including diesel and heating oil, increased by 4.9 million barrels, exceeding forecasts of a 0.8 million-barrel rise.
Despite the decline in gasoline stocks, some market participants expressed concerns about demand, particularly in light of the EIA's report indicating a 615,000 barrel per day increase in net US crude imports.
OPEC maintains bullish oil demand forecast for 2024 and 2025. OPEC has maintained its forecast for relatively robust global oil demand growth in 2024 and 2025, citing resilient economic growth and sustained air travel as key drivers for fuel consumption during the summer months.
In its monthly report, OPEC reiterated its projection of a 2.25 million barrels per day (bpd) increase in global oil demand for 2024, followed by a 1.85 million bpd increase in 2025.
The organisation attributed the anticipated demand growth to "expected strong mobility and air travel in the Northern Hemisphere during the summer driving/holiday season," particularly in the US.
While OPEC maintains an optimistic outlook, there is a wider-than-usual disparity among oil forecasters regarding the strength of demand growth for this year and the medium term. This divergence is partly due to differing views on the pace of the global transition towards cleaner energy sources.
OPEC also revised its forecast for world economic growth upwards to 2.9% from 2.8%, noting potential for further upside due to momentum in non-OECD countries. The organisation highlighted the "resilient economic growth momentum in major economies" during the first half of the year as a factor supporting a positive growth trajectory in the near term.
The International Energy Agency, however, currently projects a significantly lower demand growth of 960,000 bpd for 2024 although it may alter this forecast in its latest report due out today.
OPEC's report indicates an anticipated oil supply deficit in the coming months and throughout 2025, exceeding the shortfall predicted by the EIA on Tuesday. Furthermore, the report forecasts demand for OPEC+ crude at 43.6 million bpd in Q3, surpassing the group's current production levels.
Note: As of 5:00 pm EDT 10 July 2024
Key data to move markets this week
EUROPE
Thursday: German CPI, German Harmonised Index of Consumer Prices, and Eurogroup meeting.
Friday: French CPI, Spanish CPI and Harmonised Index of Consumer Prices.
Monday: Eurozone Industrial Production, German Retail Sales, and Eurogroup meeting.
Tuesday: Ecofin meeting, Eurogroup Meeting, ECB Bank Lending Survey, Italian CPI, eurozone ZEW Economic Sentiment survey and German ZEW Current Situation and Economic Sentiment surveys.
Wednesday: Eurozone Harmonised Index of Consumer Prices and eurozone Core Harmonised Index of Consumer Prices.
Thursday: ECB Main Refinancing Operations Rate, Rate on Deposit Facility, Monetary Policy Statement, and Press Conference, and Eurogroup Meeting.
UK
Thursday: GDP, Industrial Production, and Manufacturing Production.
Wednesday: CPI, PPI, and RPI.
Thursday: Employment Change, ILO Unemployment Change, Average Earnings, Claimant Count Change, and GfK Consumer Confidence.
US
Thursday: CPI, Core CPI, Initial and Continuing Jobless Claims, Monthly Budget Statement, and a speech by Atlanta Fed President Raphael Bostic.
Friday: PPI, Core PPI, Michigan Consumer Sentiment Index, and UoM 5-year Consumer Inflation Expectations, S&P Global Composite, Manufacturing and Services PMIs and Existing Home Sales.
Monday: NY Empire State Manufacturing Index and a speech by San Francisco Fed President Mary Daly.
Tuesday: Retail Sales, and Retail Sales ex Autos.
Wednesday: Building Permits, Housing Starts, Industrial Production, and Fed’s Beige Book.
Thursday: Initial and Continuing Jobless Claims, Philadelphia Fed Manufacturing Survey, Existing Homes Sales, and a speech by San Francisco Fed President Mary Daly.
JAPAN
Wednesday: Imports, Exports, and Merchandise Trade Balance.
Thursday: National CPI, and National Core CPI.
CHINA
Friday: Trade Balance, Imports and Exports.
Monday: GDP, Industrial Production, and Retail Sales.
Global Macro Updates
Powell signals potential easing, emphasises data-driven decision making. In his testimony before the House Financial Services Committee on Wednesday, Federal Reserve Chair Jerome Powell emphasised that the Fed will make interest rate decisions "when and as" necessary, based solely on economic data and the evolving outlook, rather than political considerations. He rejected any suggestion that a potential September rate cut could be interpreted as a political manoeuvre ahead of the fall presidential election.
Powell stated, "Anything we do will be very well grounded. It's just not appropriate for us to get into the business of thinking about election cycles at all, one way or the other."
This discussion of Fed independence was a central theme in Powell's semi-annual Congressional hearings, despite the intended focus on the economy and monetary policy. Members of both parties in both chambers expressed their support for the principle of Fed independence.
Throughout his two days of testimony, Powell indicated that the Fed was moving closer to a rate cut decision, while also maintaining that he was not yet prepared to declare victory over inflation. When asked directly if the bar to cutting interest rates had been cleared, he stated, "I do have some confidence in that," but added, "I am not ready to say that yet."
Powell did acknowledge encouraging recent data and emphasised that the risks to the job market are now balanced with the risks of high inflation. He noted that the US was experiencing "good numbers." Powell is expected to make further public remarks on Monday at the Economic Club of Washington.
BoE's Pill cautions against premature rate cut amidst lingering inflation risks. On Wednesday, Bank of England Chief Economist Huw Pill tempered expectations of an August interest rate cut, emphasising the persistence of strong price pressures in the British economy and characterising the timing of any such move as an "open question."
Pill highlighted the "uncomfortable strength" of services inflation and wage growth, despite headline inflation falling to the Bank of England's 2% target in May. He noted that upcoming June inflation figures were unlikely to significantly alter the overall picture, and that uncertainty surrounding the outlook for currently strong wage growth was unlikely to dissipate soon.
In his prepared remarks, Pill acknowledged the strength of domestic price growth and suggested that the data indicated it had been contained, stating, "(They) may be starting to revert towards levels that are more consistent with the achievement of the inflation target."
He reaffirmed the BoE's "when-rather-than-if" stance on prospective Bank Rate cuts, while emphasising the need for further action to dampen domestic price pressures. Pill also cautioned against a more inflationary scenario where higher unemployment and reduced job vacancies fail to translate into slower wage growth due to labour market mismatches, stressing the importance of considering a range of possible scenarios in BoE interest rate decisions.
However, in an unscripted conclusion, Pill stated, "I think it's still an open question on whether the timing for a rate cut is now." Pill, considered a centrist on the Monetary Policy Committee, voted in favour of maintaining interest rates at 5.25% last month, aligning with the majority of his colleagues.
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