Market Comment – Markets in waiting mode ahead of earnings releases and risk events
Key earnings releases and numerous central bank meetings coming up
US stocks in waiting mode, dollar recovering across the board
Key euro area data today but all eyes are on Wednesday's BoJ meeting
Gold, oil and bitcoin move in parallel
Stocks are mixed ahead of this week’s key eventsUS stock indices were mixed yesterday as the market is preparing for this week’s big events. There is lots of speculation about Wednesday’s Fed meeting but, at this stage, a dovish shift looks unlikely, which means that this week’s US data will do most of the talking. The calendar is mostly filled with second-tier releases today although both the housing sector data and the consumer confidence index carry a lot of weight among market participants.
A dovish shift by the Fed looks unlikely, which means that this week’s US data will do most of the talking
In the meantime, with the current earnings round proving satisfactory, Microsoft is set to announce its Q2 results after today's market close, followed by Meta on Wednesday, and Amazon and Apple on Thursday. The S&P 500 technology sector is preparing for its first negative monthly return since April when the S&P 500 lost around 4% of its value. More traditional sectors, like the Real Estate and Financials sectors, are on course to finish this month in the green.
Euro area in focus todayDespite being overshadowed by the numerous central bank meetings and Friday’s US labour market report, key data will be released this week in the euro area. Starting today, the preliminary GDP print for the second quarter of 2024 is expected to show a decent growth pace even though the situation in Germany remains problematic.
More importantly, the preliminary CPI prints from the German states will trickle in during the day with the German national figure expected around 12.00 GMT. German CPI is seen stable at 2.2% year-on-year increase, thus putting a dent in the possibility of an upside surprise from Wednesday’s euro area aggregate release.
The preliminary CPI prints from the German states will trickle in during the day with the German national figure expected around 12.00 GMT
The euro is trying today to stage a small recovery against both the dollar and the pound. However, the combination of weaker eurozone figures, a balanced Fed and stronger labour market data in the US could open the door to a more protracted correction in euro/dollar towards the 1.0730 area.
Yen is on the back foot ahead of BoJIn the meantime, Wednesday's BoJ meeting is getting lots of press time as speculation for a rate hike is rife. Despite the mixed data lately, the market feels that this is the right time for another step towards policy normalization.
Wednesday's BoJ meeting is getting lots of press time as speculation for a rate hike is rife.
The yen is weakening today against the dollar after a strong correction. This move has been mostly the product of currency interventions by the BoJ as Japan’s new top currency official, Atsushi Mimura, has adopted a more aggressive approach than his predecessor. However, the yen’s new-found strength is dependent on the BoJ's monetary policy stance and hence a failure by the BoJ to appease the market on Wednesday could quickly cause an acute market reaction.
Gold, oil and bitcoin move in parallelThe commodity space remains under pressure as gold is struggling to regain the $2,400 level and WTI oil futures have dropped to a new 50-day low. The ongoing dollar outperformance is hampering both assets with the latest developments in the Middle East proving unable to support them. In the meantime, bitcoin is lower today after trading at the highest level since early June on the back of Donald Trump again sounding pro-crypto at the Bitcoin Conference in Nashville. Profit taking is probably on the cards ahead of this week’s key events.
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