A week in the markets: 26/07/22
European equity markets were relatively muted on Friday, with the FTSE All-Share modestly up +0.2% and the STOXX 600 up +0.3%. However, US equities fell, selling off through the day, led lower by growth sectors after disappointing earnings reports, particularly in social media.
The S&P 500 ended down -0.9%, the Dow Jones Industrial Average down -0.4% and the NASDAQ down -1.9%.
For the week, however, the S&P500 closed up +2.5%, its best weekly performance so far this month.
A Dollar gauge is near the lowest level since early July. Commodities rallied, taking oil to $98 a barrel. But, Bitcoin tumbled to the brink of $21,000.
All eyes are now on the Federal Reserve meeting on Wednesday, with the probability of a 75bps hike now at 81% and a 15% chance of 100bps hike, down from over 90% following the June CPI inflation report.
Markets are bracing not just for the Fed, but also corporate reports from the likes of Apple and Alphabet. Other risks include ongoing disruptions to European gas supplies from Russia, as well as China’s Covid curbs and property woes.
Amazon.com Inc.’s revenue is seen growing at its slowest rate in decades. Chipmakers are lurching from boom times to a potential glut. Gig-economy companies such as Uber Technologies Inc. and DoorDash Inc. could be victims of consumer budget cutting. And the pullback in online advertising is set to weigh on results from Facebook owner Meta Platforms Inc.
In economic news, the focus on Friday was on the July PMI data. In the UK, the PMI was at a 17-month low, but still in expansionary territory, with the Manufacturing index falling to 52.2 (52.8 in June) and Services to 53.3 (from 54.3).
The data also showed some signs that inflationary pressures are easing although still well above long-run averages.
In the Eurozone, the data signalled a modest contraction in July with the Composite PMI falling to 49.4 from 52.0 in June and below consensus expectations at 51.0. The Manufacturing index was 49.6 and the Services index was 50.6.
In the US The Composite PMI was 47.5, well below the 52.3 level in June and also below consensus expectations at 52.4. This was led by the Services index which fell to 47.0, whilst the Manufacturing Index was 52.3.
It is a big week for markets, this week, with probably the busiest five days of results season and a plethora of economic releases including the Fed meeting on Wednesday so a significant amount of time will be spent sifting through company releases to assess management guidance around earnings and expectations for the rest of the year.
Some of the main moves in markets:
Stocks:
- S&P 500 futures fell 0.30% as of 7 am in London. The S&P 500 rose 0.10%
- Nasdaq 100 futures fell 0.40% The Nasdaq 100 fell 0.60%
- Japan’s Topix Index was flat
- South Korea’s Kospi Index rose 0.30%
- Australia’s S&P/ASX 200 Index increased 0.30%
- China’s Shanghai Composite Index rose 0.50%
- Hong Kong’s Hang Seng Index climbed 1.60%
- Euro Stoxx 50 futures were steady
Currencies:
- The Bloomberg Dollar Spot Index was little changed
- The Euro was at $1.0222
- The Japanese Yen rose 0.10% to 136.59 per Dollar
- The offshore Yuan was at 6.7579 per Dollar, down 0.10%
Bonds:
- The yield on 10-year Treasuries was at 2.80%
- Australia’s 10-year yield slid one basis point to 3.35%
Commodities:
- West Texas Intermediate crude was at $98.05 a barrel, up 1.40%
- Gold was at $1,721.27 an ounce, up 0.10%
