The US reporting season is heating up. The People’s Bank of China may cut rates to support the economy

July 18, 2023

At Monday’s stock market close, the Dow Jones Index (US30) increased by 0.22%, while the S&P 500 Index (US500) added 0.39%. The NASDAQ Technology Index (US100) closed positive by 0.93%.

The Business Activity Index of New York State companies fell slightly in July, despite rising orders and easing inflationary pressures. The Federal Reserve Bank of New York’s General Business Conditions Index fell by 1.1 to 5.5 points. A value above zero indicates growth. The median forecast in a survey of economists suggested a drop of 3.5.

Investors are awaiting quarterly results from Bank of America (BAC) and Morgan Stanley (MS) today. Sentiment toward the biggest banks strengthened last week after JPMorgan Chase & Co (JPM) and Wells Fargo (WFC) reported better-than-expected quarterly results, though Citi was among those whose earnings fell short of analysts’ expectations. Tesla (TSLA ) is up more than 3% after starting production of its Cybertruck in Texas, with the electric vehicle maker expected to ship about 2,000 units this year. Tesla’s quarterly report is expected this Wednesday. Ford Motor (F) shares, meanwhile, fell more than -5% after the F-150 Lightning suffered a $10,000 price cut amid increased competition from Rivian Automotive Inc (RIVN) and Tesla Cybertruck. Shares of telecom giant AT&T (T) fell by -6% after banks Citi and JPMorgan downgraded them to “neutral” from “buy” amid concerns that the company and others will have to incur significant costs to remove old copper cables used for telephony and other related purposes, which some say could pose an environmental hazard.

Equity markets in Europe were mostly down on Monday. Germany’s DAX (DE30) decreased by 0.23%, France’s CAC 40 (FR40) lost 1.12% yesterday, Spain’s IBEX 35 (ES35) closed at its opening price, and the UK’s FTSE 100 (UK100) closed down by 0.38%. Sentiment in Europe was affected by data indicating a significant slowdown in economic growth in China, which is the main export market for major European companies. A number of speeches by ECB officials are expected this week. The comments will show what the central bank is thinking ahead of its next policy-setting meeting later this month.

Asian markets were mostly falling yesterday. Japan’s Nikkei 225 (JP225) was down by 0.09% for the day, China’s FTSE China A50 (CHA50) fell by 1.25%, Hong Kong’s Hang Seng (HK50) was not trading yesterday due to Typhoon Talim, and Australia’s S&P/ASX 200 (AU200) ended Monday negative 0.06%. Hong Kong’s Hang Seng Index fell sharply on Tuesday, catching up with the losses of its Asian peers after data showed a significant slowdown in China’s economic growth in the second quarter. Shares of major technology companies also suffered losses after strong gains last week. Baidu Inc (BIDU), Alibaba Group Holding Ltd (BABA), and Tencent Holdings Ltd – China’s BAT trio – lost between 1.8% and 3% drop. The weak economic data also raised the likelihood of additional stimulus measures from Beijing. There is information that the People’s Bank of China (RBA) may cut interest rates further and reduce its bank reserve requirements in the third quarter in an attempt to boost growth.

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The RBA’s June monetary policy report showed that Australia’s central bank decided to leave interest rates unchanged because the policy was clearly restrictive, and there was a risk that a contraction in household finances could lead to a sharp downturn and higher unemployment. However, the bank maintained a warning that some tightening may be needed to contain inflation. The board considered raising the money rate by 25 basis points to 4.35% but then decided to pause

S&P 500 (F)(US500) 4,522.79 +17.37 (+0.39%)

Dow Jones (US30) 34,585.35 +76.32 (+0.22%)

DAX (DE40) 16,068.65 −36.42 (−0.23%)

FTSE 100 (UK100) 7,406.42 −28.15 (−0.38%)

USD Index 99.89 −0.02 (−0.02%)

Important events for today:

– Australia RBA Meeting Minutes (m/m) at 04:30 (GMT+3);
– Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
– US Retail Sales (m/m) at 15:30 (GMT+3);
– US Industrial Production (m/m) at 16:15 (GMT+3).

Article By RoboForex.com

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The US reporting season is heating up. The People’s Bank of China may cut rates to support the economy