Corporate Earnings News
Global market indices
Currencies
Cryptocurrencies
Fixed Income
Commodity sector news
Key data to move markets
Global macro updates
Corporate Earnings News
Corporate earnings calendar 15th August - 21st August 2024
Thursday: Walmart, Applied Materials, JD.Com, Deere & Co.
Friday: Flowers Foods, RLX Technology
Monday: Estee Lauder Co., Palo Alto Networks
Tuesday: Medtronic
Wednesday: Zoom Video Communications, Snowflake
Global market indices
US Stock Indices Price Performance
Nasdaq 100 -1.84% MTD +12.96% YTD
Dow Jones Industrial Average -2.04% MTD +6.15% YTD
NYSE -1.13% MTD +9.76% YTD
S&P 500 -1.21% MTD +14.37% YTD
The S&P 500 is +4.92% over the past week, with all of the sectors having positive performances MTD. The Equally Weighted version of the S&P 500 posted a weekly gain of +2.96%, its performance is -2.07% MTD and +6.39% YTD.
The S&P 500 Consumer Staples is the leading sector so far this month, up +2.08% MTD +11.73% YTD, while Consumer Discretionary is the weakest at -6.20% MTD +0.32% YTD.
This week Information Technology outperformed within the S&P 500 with a +8.73% gain, followed by Consumer Discretionary and Health Care at +4.23% and +4.05%, respectively. Conversely, Utilities underperformed at +1.01%, followed by Consumer Staples and Real Estate, +1.49% and +1.84% respectively.
The S&P 500 experienced a modest uptick following the release of recent inflation data, which solidified investor confidence in an impending interest rate cut by the Fed next month.
On Wednesday, the broad-market index increased by 0.4%, bringing its year-to-date gain to 14% and marking its fifth consecutive day of gains - the longest winning streak in over a month. The majority of its major sectors experienced growth, led by Financials, Energy, and Information Technology. The Dow Jones Industrial Average also demonstrated positive momentum, rising 0.6%, or approximately 240 points. The Nasdaq Composite achieved a slight gain.
The VIX continued its downward trajectory, settling at around 16. This follows an unprecedented surge last week that propelled the gauge above 65.
Traders' focus shifted back to inflation during the session, with the consumer-price index for July indicating a continued deceleration in the pace of price increases.
While the exact magnitude of the forthcoming rate cut remains uncertain, according to CME data, traders in interest-rate futures are now assigning a 64.5% probability to a quarter-point cut in September, a notable increase from 47% on Tuesday. Expectations for a larger half-point cut have diminished since last week.
Investors will have another opportunity to assess the state of the US economy on Thursday with the release of Retail sales figures. Consumer spending is the key driver of the US economy, accounting for approximately 68% of US nominal GDP.
In terms of individual stocks, Kellanova shares rose +7.8% on Wednesday - the top performer in the S&P 500 - following Mars' announcement of its intent to acquire the Pringles maker. Shares of Victoria's Secret also climbed +16% after the lingerie retailer appointed Hillary Super, CEO of competitor Savage X Fenty, as its next chief executive.
However, shares of Google parent Alphabet were -2.3%, negatively impacting both the S&P 500 and the Nasdaq Composite. This drop followed reports suggesting that Justice Department officials may seek a court-ordered breakup of the company.
Investors continue to closely monitor corporate earnings and consumer spending trends for indications of economic slowdown. Home Depot recently revised its outlook downwards due to a decrease in homeowner spending, and Walmart's earnings are scheduled for release today before the opening bell.
US stocks
Mega caps: A positive week for the ‘Magnificent Seven’ due to increased recovery in market sentiment. Alphabet +0.90%, Amazon +4.50%, Apple +5.67%, Meta Platforms +7.74%, Microsoft +4.63%, Nvidia +19.38%, and Tesla +5.02%.
US DoJ considers breaking up Alphabet. In light of a landmark court ruling on 5 August by US federal judgeJudge Amit Mehta that declared Alphabet's Google to have monopolised the online search market, the Justice Department is reportedly contemplating various remedial options. These options are reported to include a proposal to break up the tech giant. This would represent Washington's first attempt to dismantle a company for illegal monopolisation since the unsuccessful efforts to break up Microsoft two decades ago.
Less severe options under consideration, according to those familiar with the deliberations, include compelling Google to share more data with its competitors and implementing measures to prevent it from gaining an unfair advantage in the realm of AI products.
Irrespective of the final decision, it is highly probable that the government will seek a ban on the type of exclusive contracts that were central to its case against Google. If the Justice Department proceeds with a breakup plan, the most likely units for divestment are the Android operating system, Google’s web browser Chrome, and potentially Google Ads, the company's platform for selling text advertising.
While Google has stated its intention to appeal the decision, Judge Amit Mehta has instructed both parties to commence preparations for the second phase of the case, which will involve the government's proposals for restoring competition, potentially including a request for a breakup.
Any plan put forth by the US government would need to be approved by Judge Mehta, who would then direct the company to comply. If enforced, a forced breakup of Google would be the most significant dismantling of a US company since AT&T in the 1980s.
Energy stocks had a positive week, as the Energy sector itself was +2.49%, with the sector’s YTD performance at +7.38%. Apa Corp (US) +7.14%, Marathon Petroleum +5.73%, Phillips 66 +3.42%, ExxonMobil +2.83%, ConocoPhillips +2.24%, Chevron +1.59%, Baker Hughes +1.49%, Occidental Petroleum +1.48%, Shell +1.32%, andHalliburton +0.42%.
Occidental announces launch of secondary offering. Occidental Petroleum announced on Monday, 12th August, that CrownRock Holdings is initiating a secondary public offering of over 29.56 million shares of its common stock.
Occidental, which finalised its acquisition of CrownRock earlier this month, clarified that it is not offering any of its own common shares in this offering. CrownRock aims to raise up to $1.7 billion from the sale of Occidental's stake.
Last December Occidental disclosed its agreement to acquire CrownRock and its substantial Permian Basin assets in a cash and stock deal valued at $12.4 billion. In a prospectus filed with the US SEC, Occidental stated that the secondary offering was one of the closing conditions for its acquisition of CrownRock. This secondary offering represents the entirety of the stock component of Occidental's cash-and-stock acquisition of CrownRock.
Materials and Mining stocks had a positive week, as the materials sector was +2.08%, bringing the sector’s YTD performance to +4.04%. Albemarle -7.85%, Freeport-McMoRan +6.05%, Sibanye Stillwater -2.07%, Nucor -2.71%, Mosaic +3.91%, Newmont Corporation +5.91%, CF Industries +9.89%, and Yara International +0.30%.
Celanese lifts force Majeure on Western Hemisphere acetic acid and VAM. On Wednesday 13th August, Celanese officially lifted the force majeure declaration for acetic acid and vinyl acetate monomer (VAM) sold in the Western Hemisphere, citing stabilisation of the underlying supply chain conditions.
Management further commented: "We are proud to have successfully met the product needs of nearly all of our contracted customers during this difficult period, leveraging the strength of our integrated and flexible supply chain model." See report.
Speculation Albemarle considering selling its 49% stake in Greenbushes lithium mine. Although acknowledging widespread scepticism regarding the rumours, on Monday 11th August The Australian reported that Albemarle may be contemplating the sale of its stake to its partner, IGO. It suggests that a potential motivator for such a sale could be attributed to the fact that Greenbushes does not meet the requirements for Inflation Reduction Act benefits due to 25.1% partial Chinese ownership.
European Stock Indices Price Performance
Stoxx 600 -2.72% MTD +5.24% YTD
DAX -3.37% MTD +6.77% YTD
CAC 40 -2.63% MTD -2.78% YTD
IBEX 35 -2.82% MTD +6.44% YTD
FTSE MIB -4.25% MTD +6.51% YTD
FTSE 100 -1.04% MTD +7.08% YTD
This week, the pan-European Stoxx Europe 600 index was +1.64%, closing at 504.10.
Germany's DAX index was +1.54% and closed at 17,885.60. France's CAC 40 index was +0.93%, closing at 7,333.36.
The UK's FTSE 100 index rose to 8,281.04, reflecting a +1.40% for the week.
In Wednesday’s trading session, the Travel & Leisure sector exhibited robust performance, with Flutter Entertainment garnering significant attention due to its strong Q2 results and upwardly revised full-year guidance. Reports further suggest the company's intention to acquire Betnacional for $1 billion and its ongoing discussions regarding a £2 billion offer for Playtech's Snaitech.
TUI also surpassed Q3 operating profit expectations, buoyed by strong summer travel demand, a resurgence in packaged holidays, and a favourable impact from the bankruptcy of its German competitor, FTI. The company reiterated its guidance for a 25% increase in operating profit this year and 10% revenue growth.
In the Financial Services sector, UBS Group shares were up following Q2 EPS of $0.34, exceeding the consensus estimate of $0.15. This positive performance was attributed to sustained momentum in client and transactional activity. JPMorgan assessed UBS's results as strong, highlighting the smooth progress of the Credit Suisse integration, which has yielded gross cost savings, a reduction in non-core assets, and enhanced capital ratios.
Conversely, the Basic Resources sector witnessed a notable decline as base metals prices came under pressure due to a larger-than-anticipated drop in Chinese lending, negatively impacting market sentiment. Concerns were further amplified by a warning from a prominent Chinese steel producer regarding a severe crisis within the industry.
The Food & Beverage sector also experienced weakness, with Carlsberg's H1 results revealing volume declines in Western Europe and a cautious outlook for the Chinese market. However, the group did revise its full-year guidance upwards.
Within the Utilities sector, RWE and E.ON's H1 performance fell slightly short of expectations, although both groups maintained their full-year guidance.
Other Global Stock Indices Price Performance
MSCI World Index -1.38% MTD +11.15% YTD
Hang Seng -1.33% MTD +0.39% YTD
This week, the Hang Seng Index was +1.40%, while the MSCI World Index was +4.45%.
Currencies
EUR +1.73% MTD -0.21% YTD to $1.1011
GBP -0.23% MTD +0.75% YTD to $1.2828
The euro was +0.85%against the USD over the past week, while the British Pound was +1.08% following better than expected inflation news and enhanced expectations of the Fed’s monetary easing path starting in September. The Dollar Index was -0.58% this week, -1.44% MTD, and +1.25% YTD.
The US dollar experienced a broad-based decline against its major peers on Wednesday, allowing the euro to reach a near eight-month high. This development was primarily driven by the release of the US consumer price index, which indicated a deceleration in inflation, reinforcing market expectations of forthcoming interest rate cuts by the Fed.
The euro appreciated by +0.18% against the US dollar, reaching $1.1011. This not only surpassed the peak observed during the recent market volatility but also represented its strongest level since 2nd January. The Dollar Index registered a slight decrease, settling at 102.57.
Sterling, however, failed to capitalise on the dollar's weakness, depreciating by -0.25% to $1.2828. This followed the release of data indicating a less pronounced rise in British consumer price inflation for July than initially anticipated, with services prices - a key indicator closely monitored by the BoE - demonstrating a slower rate of increase.
The pound weakened against the euro, which gained +0.47% to reach 85.87 pence. Financial markets have subsequently adjusted their expectations, now pricing in a 44% probability of a quarter-point interest rate cut by the BoE in September, compared to 36% prior to the release of the inflation data.
The yen was trading at ¥147.26 against the US dollar.
Cryptocurrencies
Bitcoin -8.96% MTD +40.19% YTD to $58.925.00
Ethereum -17.83% MTD +15.57% YTD to $2,663.97
Both cryptocurrencies had a positive week. Bitcoin increased +6.72%, over the week while Ethereum posted +13.11%.
Bitcoin and Ethereum were down on Wednesday following the release of US CPI data and the news that the U.S. government has moved, according to blockchain data by Arkham Intellgence, $600 million worth of Bitcoin, seized from the Silk Road dark web market, to a Coinbase Prime wallet. US-listed Spot Bitcoin ETFs recorded $81 million in net outflows on Wednesday, ending a two-day positive streak according to SoSoValue data, while Ether ETFs had a positive day of inflows totalling $10.77 million.
However, Bitcoin is still benefitting from increased interest by some of the largest global banks and asset managers. Goldman Sachs said in its quarterly disclosure to the Securities and Exchange Commission, known as a 13-F filing, that it had acquired about $418 million in several Spot Bitcoin ETFs. Morgan Stanley disclosed it owned about $190 million in Spot Bitcoin ETFs by the end of Q2. It disclosed that it held more than 5.5 million shares, or $187.79 million worth of the iShares Bitcoin Trust (ticker: IBIT). It also disclosed it owned 26,222 shares of the ARK 21Shares Bitcoin ETF worth about $1.57 million, down slightly from the $2.3 million allocation it showed at the end of the first quarter.
Note: As of 5:00 pm EDT 14 August 2024
Fixed Income
US 10-year yield -19.5 basis points MTD -4.1 basis points YTD to 3.840%.
German 10-year yield -12.0 basis points MTD +17.6 basis points YTD to 2.185%.
UK 10-year yield -14.2 basis points MTD +28.9 basis points YTD to 3.%.
US Treasury 10-year bond yields are -11.4 basis points (bps) down this week.
US Treasury yields experienced a slight decline on Wednesday, subsequent to the Labor Department's Consumer Price Index (CPI) reading, which appeared to further solidify expectations of a Fed interest rate reduction next month.
Initially, both the 10-year and two-year note yields edged higher following the release of the CPI report. However, the 10-year yield ultimately retreated below Tuesday's close by -0.6 basis points.
Conversely, the 2-year note yield, which is typically sensitive to interest rate expectations, rose by +1.2 basis points to 3.954%. The 30-year bond yield, on the other hand, fell by -4.6 basis points to 4.121%.
CME Group's FedWatch Tool indicates a 35.5% chance of a 50 bps interest rate reduction by the Fed at its 17th - 18th September policy meeting and a 64.5% probability of a more modest 25 bps rate cut.
Investors will be looking closely at today’s jobless claims and retail sales, for potential impacts on the Fed’s monetary policy decision framework. Additionally, remarks by Fed Chair Jerome Powell at the annual Jackson Hole Economic Policy Symposium on 22nd - 24th August may offer further insights into the trajectory of future rate adjustments.
The German 10-year yield was -8.6 bps this week, while the UK 10-year yield was -12.6 bps this week. The spread between US 10-year Treasuries and German Bunds currently stands at 165.5 bps, -2.8 bps from last week.
Eurozone bond yields were little changed on Wednesday. Germany's 10-year bond yield fell slightly during Wednesday’s trading session, the 10-year Bund yield was -0.3 bps to 2.185%. The 10-year German yield has fallen sharply from a roughly six-month high of 2.707% in May.
Conversely, the yield on the two-year Schatz, sensitive to interest rate expectations, rose +1.5 bps to 2.354%.
Current market expectations indicate that the ECB may implement rate cuts totaling 70 bps by the end of the year.
Italian bond yields, a benchmark for the eurozone periphery, were -14.2 bps this week to 3.566%. Consequently, the spread between Italian and German 10-year yields narrowed by -5.6 bps to 138.1 bps from 143.7 bps last week.
Commodities
Gold spot +0.53% MTD +18.28% YTD to $2,447.64 per ounce.
Silver spot -4.74% MTD +14.38% YTD to $27.59 per ounce.
West Texas Intermediate crude -1.25% MTD +9.01% YTD to $77.13 a barrel.
Brent crude -1.25% MTD +3.62% YTD to $79.86 a barrel.
Spot gold prices are up +2.05% this week.
Gold prices on Wednesday as the US dollar and Treasury yields experienced a modest decline. Spot gold prices fell -0.71% to $2,447.64 per ounce.
Gold has been supported by growing expectations of US interest rate cuts in September and escalating geopolitical tensions in the Middle East.
Both WTI and Brent are in positive territory this week by +2.20% and +1.93%, respectively, driven by lingering concerns that a Middle East conflict could threaten supply from one of the world’s major regions for crude production.
However, oil prices experienced a decline of more than 1% on Wednesday following an unexpected increase in US crude inventories. Data released by the US Energy Information Administration revealed a 1.4 million barrel rise in inventories, contrary to estimates predicting a 2.2 million barrel decrease. This build marked the first increase after six consecutive weeks of draws.
Further contributing to the downward pressure on oil prices was the International Energy Agency revising its 2025 oil demand growth estimate downwards on Tuesday, citing the adverse impact of a weakened Chinese economy on consumption. This followed a similar revision by OPEC for 2024 demand expectations, also prompted by concerns about the Chinese economy.
Record production amid consolidation: the hidden factors fueling the US oil shale boom. Enhanced operational efficiencies within the leading US shale patch are yielding increased oil production without necessitating higher expenditures, as evidenced by recent output figures. This surge in supply will bolster the global oil market, particularly as OPEC also plans to ease its production cuts later in the year.
Producers are implementing innovative techniques, such as extending wells to lengths of up to three miles, maximising the number of wells on a single drilling pad, and employing simultaneous fracking of multiple wells, leading to a significant boost in production, according to industry experts and company executives.
These efficiency gains have prompted several major producers to revise their full-year shale oil production targets upwards. Chevron, for instance, has increased its full-year Permian output target to an approximate 15% gain, surpassing its earlier forecast of 10%.
Other companies, including Diamondback, APA Corp, Devon Energy, and Permian Resources, have also projected higher-than-expected Permian shale production in the coming months. Occidental Petroleum has raised its outlook for the basin for 2024 by 1,000 barrels per day (bpd), excluding its acquisition of Permian-focused CrownRock.
Devon has highlighted a 12% drilling efficiency gain this year and a 6% improvement in feet per day of well completion year to date, contributing to a 3% increase in its full-year oil output. Permian Resources has also raised its oil production target by 1.5% this year.
Macquarie estimates that US production will expand by approximately 500,000 bpd by the end of this year compared to the end of last year, exceeding US government estimates of an increase of about 300,000 bpd.
Although consolidation among US shale producers was initially expected to slow production growth this year, the advantages of extending wells into adjacent areas have boosted productivity.
Diamondback, which recently acquired Endeavor Energy Resources, has revised its model to anticipate one rig drilling at least 26 wells per year, up from a previous expectation of 24 wells. The company also reported drilling wells approximately 10% faster than at the beginning of the year.
Chevron has been an early adopter of triple-fracking technology, which fracks three wells in rapid succession, reducing costs by over 10% and shortening completion times by 25%. This has contributed to an increase in the number of production days.
Total production from the Permian reached 6.2 million bpd in June, the second-highest level on record, according to US government data. New well production per rig rose to 1,400 bpd, the highest in two and a half years.
Historically, US oil production has surpassed estimates every year since 2009, with the exception of 2020 when the COVID-19 pandemic significantly impacted demand and output.
Falling rig counts have moderated the pace of production growth. The number of horizontal oil rigs operating in the Permian decreased by 20 to 295 in the latest week, according to data from Enverus. This represents a decline of 100 rigs over the past five years.
Note: As of 5:00 pm EDT 14 August 2024
Key data to move markets
EUROPE
Monday: German Bundesbank Monthly Report.
Tuesday: PPI, Core Harmonised Index of Consumer Prices, and Harmonised Index of Consumer Prices.
UK
Thursday: GDP, Industrial production and Manufacturing production.
Friday: Retail Sales.
US
Thursday: Initial and Continuing Jobless Claims, Retail Sales, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Survey, Industrial Production and speeches by St. Louis Fed President Alberto Musalem and Philadelphia Fed President Patrick Harker.
Friday: Building Permits, Housing Starts, Michigan Consumer Sentiment Index, UoM 5 year Consumer Inflation Expecations, and a speech by Chicago Fed President Austan Goolsbee.
Tuesday: A speech by Atlanta Fed President Raphael Bostic.
Wednesday: Existing Home Sales Change and FOMC Minutes.
CHINA
Thursday: Industrial Production and Retail Sales.
JAPAN
Thursday: GDP.
Wednesday: Imports, Exports, Merchandise Trade Balance Total.
Global Macro Updates
July CPI print is the ultimate “no news, is good news”. June's core CPI of 0.17% m/o/m aligned with consensus estimates of 0.2%, while the y/o/y figure of 3.17% matched the 3.2% forecast. The three-month annualised core CPI pace of 1.57% represents the slowest rate since February of 2021, and the six-month annualised pace of 2.84% is the lowest since March of 2021. Shelter costs presented an upside surprise, increasing by 0.2 percentage points m/o/m to 0.4%.
Following the release, Wells Fargo economists expressed their expectation of a 50 bps cut in September, although they acknowledged that the decision is likely contingent upon the August payrolls report (due 6th September) and the August CPI data (due 11th September). Goldman Sachs indicated that the CPI and Producer Price Index (PPI) data suggest a July core Personal Consumption Expenditures (PCE) reading of 0.14%, which would place the three-month annualised pace at 1.97%, below the Fed's 2% target.
However, the impact of the CPI report might be less significant, as the Fed's current primary focus is the state of the labour market. In the current environment, the Fed may be characterised as a labour data-first Fed, not an inflation data-first Fed.
This perspective was further strengthened by remarks from the Atlanta Fed President, Raphael Bostic on Tuesday. He stated, "I’m looking for a little more data" before advocating for a reduction in interest rates, underscoring his desire for certainty that the Fed will not be compelled to reverse course once it initiates rate cuts.
Bostic reiterated his stance, maintained since March, that he would likely be prepared to cut rates "by the end of the year," while also acknowledging that recent inflation readings have been encouraging.
His comments follow the release of weaker-than-expected labour market data, which has fueled concerns that the US central bank may have delayed the commencement of rate cuts for too long. The July jobs report revealed a significant slowdown in hiring and an increase in the unemployment rate to its highest level in nearly three years. Bostic noted that a considerable portion of this increase was attributable to a larger labour supply rather than a decline in demand. He characterised this as a "good problem to have."
UK inflation surprised to the downside. The headline Consumer Price Index (CPI) registered at 2.2% y/o/y, compared to the consensus forecast of 2.3% and the prior reading of 2.0%. Core inflation also eased to 3.3%, against the 3.4% forecast and the previous 3.5%. Services prices came in at 5.2%, lower than the 5.5% estimate and June's 5.7%. This was the first increase in annual inflation since December of 2023. In May, price growth eased to 2% for the first time in three years and held steady in June. It's worth noting that a rise in the headline rate was widely anticipated due to an increase in household gas and electricity prices, but this was offset by a decline in restaurant and hotel prices.
From the perspective of the BoE’s policy focus, the most encouraging aspect of the report is the larger-than-expected drop in services prices. The BoE has projected headline inflation to accelerate to 2.8% by the end of the year, before easing back towards the target by the end of 2025 and falling below target by late 2026.
Annual core inflation, which excludes food and energy, fell to its lowest since September 2021 at 3.3% in July, down from 3.5% in June.
The BoE anticipates an uptick in UK inflation to 2.7% during the latter part of this year, followed by a gradual decline to 2.2% by the close of 2025. This downward trend is projected to continue, reaching 1.7% by 2026 and further easing to 1.5% in 2027.
Softening wage growth and falling services prices have bolstered the view that the BoE will continue cutting rates with the markets now fully pricing in two rate cuts by year-end, a significant shift from the 44 bps priced in on Tuesday. This marks the first time since 5th August that the swaps market is factoring in two cuts. There's a 45% probability assigned to a September rate cut although, with the economy outperforming expectations, the consensus view still foresees a very cautious BoE rate cut cycle. While both wages and services prices are trending favourably, they remain at levels inconsistent with sustainably achieving the inflation target. This scenario might align with a November rate cut, coinciding with the release of updated macroeconomic forecasts in addition to the BoE having the chance to understand the implications on the inflation pathway of any fiscal policy changes that may emerge in the 30 October Budget by the new Labour government.
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