Wall Street soared following the US CPI data, with three benchmark indices finishing higher last week. The S&P 500 rose to above 4,500 for the first time since April 2022. While cooling inflation, possible peaking rate hikes, and a tech rally remained the bullish factor of Wall Street, bets on an imminent correction strengthened as some analysts believed a pullback was overdue. But at the same time, short squeeze trades could push the markets higher. This makes upcoming big tech earnings critical for market trends for the rest of the month, as these stocks have dominant weighs on Wall Street. Hence, the focus of this week will be on Tesla and Netflix’s second-quarter earnings to be released after the US markets close on 20 July (APAC time).
In Asia, the Chinese stock market came back on fire, with Hang Seng Index up 5.7% for the week, led by big tech and EV makers. Overall, the bullish sentiment prevailed amid the Chinese government’s measures to end the tech crackdown and further supportive policies to its property sector. A slew of critical economic data will be eyed, including the second-quarter GDP and its 1-year and 5-year Loan Prime Rate decision. Positive outcomes may continue to fuel the regional market rally.
The ASX 200 was buoyed by mining stocks as a softened US dollar, and China’s stimulus measures boosted commodity prices. Wall Street’s rally also added to the local stock’s upside momentum. RBA meeting minutes and the employment data will be in the spotlight locally for further clues into the country’s economic health.
What are we watching?
- US dollar tumbles: The US dollar index slumped 2.3% to be under 100 for the first time since April 2022 amid cooling inflation, bets for a sooner end of the Fed’s rate hike cycle, and darkened US economic outlook.
- Bond yields slide: The Fed’s funds-sensitive bond, the US 2-year Treasury yield, slid to 4.77% from above 5% last week as inflation cools further in the US, suggesting markets are pricing in a sooner rate cut cycle by the Fed.
- Meta’s shares surge: The social platform giant’s stocks hit a fresh 15-month high amid the launch of its Twitter-like app, Threads, which gained 100 million users in the first week.
- Crude oil extends gains: Oil prices post second straight weekly gain amid OPEC+’s indication for further production cuts, a softened US dollar, and China’s expansive stimulus policies. China’s upcoming economic data will be a focus for crude oil’s demand outlook.
- Gold rebounds: Gold rebounded sharply as the USD slumped following lighter-than-expected US inflation data. The precious metal will likely continue the upside movement and re-test the all-time highs.
Economic Calendar (17 July – 21 July)
Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
