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HomeWorld NewsMarkets with 6th consecutive gain, TSMC 33% YOY growth

Markets with 6th consecutive gain, TSMC 33% YOY growth

China with a mere .2% inflation, CSI 300 down 10%

Markets await CPI data as Powell hints at rate cuts. US stocks hit new highs, China faces low inflation, key earnings reports due

U.S. Economic Data and Trends

Federal Reserve Chair Jerome Powell’s congressional testimony offered limited clues on the timing of potential interest rate cuts, despite persistent inflation concerns. Futures markets have priced in 50 basis points of easing for the remainder of the year, double the Fed’s indications. Ten-year Treasury yields hover just below 4.3%, following a successful auction of three-year notes and ahead of a $39 billion 10-year note auction. U.S. stock markets remain resilient, with the S&P 500 and Nasdaq Composite reaching new highs. The upcoming June consumer price index (CPI) report is expected to maintain this market stability.

Markets Performance in the U.S.

The S&P 500 recorded its sixth consecutive gain, driven primarily by big technology firms. Taiwan Semiconductor Manufacturing Company (TSMC) reported a nearly 33% year-over-year increase in June revenue, boosting its U.S.-listed shares by 1.8%. Nvidia’s stock continues to soar, up 168.5% year-to-date, further propelling the S&P 500 upward.

U.S. Treasury Yields and Expectations

The yield on the 10-year Treasury note slightly decreased to 4.28%, while the two-year yield, more sensitive to Fed actions, edged down to 4.61%. Investors are closely monitoring Thursday’s CPI report, which could significantly impact market movements.

Upcoming Earnings and Economic Reports

The second-quarter earnings season begins with Delta Air Lines and JPMorgan Chase reporting their profits. Expectations are high for the strongest growth in over two years.

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China’s Economic Situation

China’s inflation continues to show weakness, with consumer price growth at a mere 0.2% in June, half of what was anticipated. This marks the fifth consecutive month of minimal inflation, accompanied by ongoing factory gate deflation. Chinese stocks have resumed their decline, with the CSI 300 index down 10% from its five-year high, and the yuan has also depreciated.

New Zealand and UK Monetary Policy

The Reserve Bank of New Zealand hinted at potential monetary easing despite holding rates steady, causing the kiwi dollar to drop 0.7% to a 16-month low against the Australian dollar. In the UK, the Bank of England’s chief economist Huw Pill, a key policymaker, might influence the decision on the first rate cut, which markets predict could occur as early as next month, with a 60% chance of a move on August 1. The pound showed strength against the dollar amidst these speculations.

European Markets

French markets stabilized with stocks and bonds rallying after Moody’s warned that parliamentary gridlock post-election could negatively impact the country’s credit rating. The Stoxx Europe 600 index rose 0.5%.

International Stock Markets

Japan’s Nikkei 225 index rose 0.6%, reaching a new record high, driven by AI-related gains in technology stocks and a weaker yen boosting exporters. Asian markets showed mixed performance, while European indices were generally higher.

Corporate Highlights

  • Microsoft and Apple decided against taking board roles at OpenAI.
  • Honeywell International acquired Air Products and Chemicals Inc.’s LNG process technology business for $1.81 billion.
  • Samsung’s largest labor union initiated an indefinite strike, potentially disrupting production.

Key Events to Watch

  • U.S. CPI and jobless claims reports on Thursday
  • Fed speeches from Raphael Bostic and Alberto Musalem
  • China trade data on Friday
  • U.S. PPI and University of Michigan consumer sentiment reports on Friday
  • Earnings from Citigroup, JPMorgan, and Wells Fargo on Friday

Market Indicators

  • The S&P 500 rose 0.3% in early trading.
  • The Nasdaq 100 increased by 0.4%.
  • The Dow Jones Industrial Average remained mostly unchanged.
  • The Bloomberg Dollar Spot Index was stable, while the euro and British pound gained against the dollar.
  • Bitcoin and ether showed minor fluctuations, with Bitcoin down 0.3% and ether up 1%.

Commodities Markets

  • West Texas Intermediate crude fell by 0.4% to $81.12 per barrel.
  • Spot gold increased by 0.8% to $2,382.67 per ounce.

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