Corporate Earnings News
Global market indices
Currencies
Cryptocurrencies
Fixed Income
Commodity sector news
Key data to move markets
Global macro updates
Corporate Earnings News
Corporate earnings calendar 8th August - 14th August 2024
Thursday: Eli Lilly & Co, Viatris, Gilead Sciences, Take-Two Interactive Software, The Trade Desk, Unity Software
Friday: Berkshire Hathaway
Monday: Barrick Gold, Sun Life Financial
Tuesday: Home Depot
Wednesday: Cisco Systems, Cleanspark
Thursday: Walmart, Applied Materials
Global market indices
US Stock Indices Price Performance
Nasdaq 100 -6.63% MTD +7.44% YTD
Dow Jones Industrial Average -4.52% MTD +3.47% YTD
NYSE -4.66% MTD +5.85% YTD
S&P 500 -5.85% MTD +9.01% YTD
The S&P 500 is down -5.85% over the past week, with 8 of the 11 sectors having negative performances MTD. The Equally Weighted version of the S&P 500 posted a weekly loss of -4.88%, its performance is -4.88% MTD and +3.34% YTD.
The S&P 500 Utilities is the leading sector so far this month, up +0.62% MTD +15.53% YTD, while Consumer Discretionary is the weakest at -10.0% MTD -3.75% YTD.
This week Utilities outperformed within the S&P 500 with a +0.62% gain, followed by Consumer Staples and Real Estate sectors at +0.58% and +0.13%, respectively. Conversely, the Consumer Discretionary sector underperformed, followed by Information Technology experiencing a -9.11% decline.
This past week witnessed stock markets going into despair, erasing approximately $6.4 trillion in value on Monday.
Also on Monday, the Cambria Tail Risk ETF, an actively managed ETF designed to hedge against extreme market events, was +4.5%, marking its most significant daily gain since March 2020.
In the options market, the cost of tail-risk hedges that provide payouts in the event of a severe S&P 500 Index decline (specifically, a 30% drop or three standard deviations, often referred to as a ‘Black Swan’ event) also reached its highest level since March 2020.
Another indicator of investor anticipation of market turbulence is the VVIX, a measure of the volatility of the VIX (the CBOE Volatility Index). The VVIX concluded Monday's trading session at its highest point since early 2020.
However, on Tuesday, hedge funds engaging in both bullish and bearish equity strategies actively purchased individual US stocks at the most rapid pace since March. This effectively reversed a months-long trend of selling, according to data compiled by Goldman Sachs' prime brokerage.
Despite initial concerns, the severity of the recent market decline appears less dire when measured from the close of trading immediately preceding last week's Fed’s decision, particularly after Tuesday's rebound. The five-day decline now stands at -3.6%, consistent with similar drawdowns observed over the past five years.
On Wednesday, the S&P 500 experienced a volatile trading session, ultimately closing -0.8%. This followed a significant intraday swing, with the index initially climbing as much as 1.7% in morning trading before retracing its gains, marking the largest intraday reversal in over two years according to Dow Jones Market Data.
The technology-heavy Nasdaq Composite and Dow Jones Industrial Average also exhibited similar patterns, rallying in early trading before finishing the session with declines of 1% and 0.6%, respectively.
These declines tempered the market's recovery from Monday's sharp selloff and reduced the S&P 500's YTD gains to 9%. The technology, healthcare, and consumer discretionary sectors were the primary drivers of the S&P 500's downward movement. Conversely, the energy sector benefited from rising oil prices, while the utilities, financial, and consumer staples sectors also posted gains.
Some companies faced investor disappointment, contributing to the market's overall performance. Walt Disney shares fell 4.5% following the entertainment company's forecast of challenges in its theme-parks business. Airbnb shares plummeted 13% after the short-term rental company issued a warning regarding slowing demand in the US. Shares of Super Micro Computer experienced a significant decline of 20% after the company reported lower-than-expected earnings.
According to LSEG I/B/E/S data, 24Q2 Y/Y earnings are expected to be 13.8%. Excluding the energy sector, the Y/Y earnings estimate is 14.7%. Of the 430 companies in the S&P 500 that have reported earnings to date for 24Q2, 78.4% reported above analyst expectations. This compares to a long-term average of 66%. The 24Q2 Y/Y blended revenue growth estimate is 5.5%. If the energy sector is excluded, the growth rate for the index is 5.2%.
Health Care, at 88.5%, was the sector with most companies reporting above estimates, while Utilities with a surprise factor of 7.8%, is the sector that’s beaten earnings expectations by the highest surprise factor. Within the Consumer Discretionary sector, only 66.7% of companies have reported above estimates. Health Care’s earnings surprise factor is the lowest at 0.4%. The S&P 500 surprise factor is 4.1%. The forward four-quarter price-to-earnings ratio (P/E) for the S&P 500 sits at 20.3x.
US stocks
Mega caps: A terrible week for the ‘Magnificent Seven’ due to ongoing concerns of overinvestment in AI. Alphabet -7.35%, Amazon -12.95%, Apple -5.52%, Meta Platforms +2.97%, Microsoft -4.76%, Nvidia -15.48%, and Tesla -17.37%.
Energy stocks had a negative performance this week, as the Energy sector itself was -5.88%, lessening the sector’s YTD performance to +4.77%. Apa Corp (US) -13.37%, Baker Hughes -11.57%, Halliburton -11.36%, Chevron -11.25%, Phillips 66 -8.65%, Occidental Petroleum -7.74%, Marathon Petroleum -4.33%, ConocoPhillips -3.84%, ExxonMobil -2.45%, and Shell -2.45%.
Materials and Mining stocks had a poor week, as the materials sector was -5.26%, bringing the sector’s YTD performance to +1.91%. Albemarle -15.60%, Freeport-McMoRan -12.97%, Sibanye Stillwater -12.18%, Nucor -10.89%, Mosaic -10.65%, Newmont Corporation -5.44%, CF Industries -4.05%,and Yara International -3.83%.
CF Industries Q2 earnings. On Wednesday, CF Industries Holdings reported Q2 EPS of $2.30, surpassing FactSet's estimate of $1.85. The company's Q2 revenue reached $1.57 billion, exceeding FactSet's projection of $1.52 billion. Adjusted EBITDA for the quarter was $752 million, outperforming FactSet's estimate of $661.6 million.
CF Industries projects a positive near-term global nitrogen supply-demand balance due to import demand from Brazil and India, and favourable energy spreads. North American inventories are below average, with strong demand and higher planted corn acres leading to increased prices for UAN and ammonia.
Over the medium-term, favourable energy cost differentials will benefit North American producers. The long-term outlook indicates a tightening global nitrogen balance, driven by demand outpacing capacity growth, particularly for clean energy applications.
Mosaic Q2 earnings. On Tuesday, 6th August, Mosaic released its second-quarter earnings report. The company reported a gross profit of $394 million, with an adjusted EBITDA margin of 20.7%. Phosphate volume reached 1,696 Kt, while potash volume was 2,346 Kt. Mosaic Fertilizantes volume totaled 2,196 Kt.
In their guidance summary, Mosaic outlined both near- and longer-term objectives. In the near term, the company aims to achieve $20-$30 million in annual savings by mid-2025 through the completion of its contractor reduction phase one. Additionally, they plan to realise $50 million in run rate cost reductions as part of a larger $150 million target, along with a $200 million reduction in Capex this year.
Looking further ahead, Mosaic anticipates limited phosphate exports from China, which should support global phosphate prices. They also project global EV battery adoption for LFP to range between 35%-55%. The company expects significant growth in biological products, leveraging its existing distribution networks.
European Stock Indices Price Performance
Stoxx 600 -4.29% MTD +3.54% YTD
DAX -4.83% MTD +5.15% YTD
CAC 40 -3.52% MTD -3.67% YTD
IBEX 35 -4.21% MTD +4.92% YTD
FTSE MIB -5.72% MTD +4.88% YTD
FTSE 100 -2.40% MTD +5.61% YTD
This week, the pan-European Stoxx Europe 600 index declined by -4.29%, closing at 495.96.
Germany's DAX index was -4.83% and closed at 17,615.15. France's CAC 40 index was -3.52%, closing at 7,266.01.
The UK's FTSE 100 index fell to 8,166.88, reflecting a -4.08% loss for the week.
In Wednesday's trading session, in the Financial sector, Italian lenders demonstrated positive performance, with BPER Banca exceeding Q2 estimates and affirming its 2024 guidance. Although Commerzbank reported a -5% decrease in Q2 net profit, it announced a further share buyback with the first tranche totaling €600M and confirmed its full-year guidance. ABN AMRO also presented a substantial beat in Q2 net income, reaching €642M compared to the consensus of €590M, leading to an upward revision of its full-year guidance.
Within the Autos & Parts sector, Continental outperformed Q2 expectations, although it adjusted its FY24 sales guidance range downward while maintaining an unchanged EBIT margin.
The Health Care sector faced challenges, with Novo Nordisk reporting a Q2 revenue miss on its obesity drug Wegovy and subsequently reducing its annual profit outlook. Evotec also revised its FY guidance, projecting FY revenue between €790M-€820M, representing a low to mid-single-digit percentage growth compared to the prior low double-digit percentage growth. Additionally, Roche is contemplating the divestment of its cancer data specialist, Flatiron Health.
The Media, Food & Beverage, and Travel & Leisure sectors were the session's underperformers.
European Q2 earnings: financials outperform, consumer weakness emerges. European Q2 earnings demonstrate the first positive growth since 2022, with analysts reporting a 3.6% y/o/y increase in EPS based on 70% of companies having reported. This aligns with consensus expectations and signifies a turnaround after five consecutive quarters of negative growth. The financial sector has been a key driver, surpassing pre-season predictions, defying initial expectations. Excluding financials, growth would have remained flat. The consumer discretionary and energy sectors have underperformed.
Analysts now expect +5% EPS growth in Q2, aup from Q1’s -3% decline, primarily fueled by a 4% margin expansion and 1% sales growth. However, concerns regarding consumer weakness, particularly in China and, unexpectedly, in the US, have emerged. Consequently, 40 companies have revised their guidance downwards, double the number in Q1. This has led to a 2% decrease in Q3 consensus EPS since late June, with 2024 and 2025 estimates also declining by 1%.
Despite these concerns, European equities valuation may attract inflows, with equities trading at approximately 12x the 12-month forward PE, significantly cheaper than US equities, and offering a higher dividend yield. Additionally, the region is perceived as less exposed to carry trade unwinds as the ECB and BoE appear to be on a clearer path towards easing monetary policy compared to the Fed.
Investor sentiment shifts towards UK assets, UK equity funds see reduced outflows. According to Calastone data, the pace of outflows for UK-focused equity funds slowed significantly in July, reaching its lowest level in three years. Investors sold a net £207 million of their UK-focused fund holdings, the most favourable outcome for the sector since August 2021 and less than one-third of the average monthly outflow YTD. The most positive day for UK equity funds was 5th July, the day following the election, with a net inflow of £59 million.
This aligns with numerous reports indicating heightened interest in UK assets, along with bullish updates from both investors and the sell-side. A rotation in investment strategies has also contributed. A shift away from expensive US large-cap stocks towards undervalued small- and mid-cap stocks, benefits the UK due to its considerable discount compared to peers.
However, US funds still experienced a net inflow of £1.12 billion, while emerging markets saw a record £424 million inflow. Calastone noted that both of these occurred in the latter half of the month following a sharp correction, suggesting bargain hunting.
Other Global Stock Indices Price Performance
MSCI World Index -5.58% MTD +6.41% YTD
Hang Seng -2.69% MTD -0.99% YTD
This week, the Hang Seng Index decreased by -2.69%, while the MSCI World Index contracted by -5.58%.
Currencies
EUR +0.92% MTD -1.02% YTD to $1.0923
GBP -1.29% MTD -0.32% YTD to $1.2689
The euro was +0.92% against the USD over the past week as investors sold the US dollar, while the British Pound was -1.29% following the Bank of England’s rate cut last week and investors moving out of riskier currencies. The Dollar Index is -0.88% this week, -0.88% MTD, and +1.83% YTD.
On Wednesday, the euro experienced a modest decline of 0.05%, trading at $1.0923, slightly below the eight-month high of $1.101 reached on Monday as the US dollar weakened. Meanwhile, the British pound sterling exhibited a marginal increase of 0.02%, reaching $1.2689 after falling to a five-week low the previous day. It also rose sharply against the yen after a Bank of Japan official played down the chances of near-term rate hikes. The euro was lower against the pound at 85.78 pence on Wednesday, after hitting a three-month high of 86.2 pence on Monday.
The US dollar index rebounded by 0.214% to 103.2 on Wednesday, edging further above the seven-month low of 102.15 observed on Monday.
The Japanese yen depreciated by approximately 2.5%, reaching a session low of ¥147.94 per dollar, following comments made by BoJ Deputy Governor Shinichi Uchida. The dollar ultimately closed up 1.74% against the yen at ¥146.850.
Uchida stated, "Given the current sharp volatility in domestic and overseas financial markets, it is imperative to maintain existing levels of monetary easing for the time being." His remarks led to a rebound in Japanese stocks, effectively offsetting earlier losses and leaving them flat for the week.
The BoJ's hike last week, along with intervention from Tokyo in early July, led investors to bail out of popular carry trades in which traders borrow the yen at low rates to invest in assets that offer higher returns elsewhere.
The yen's decline was widespread on Wednesday, with the Mexican peso, New Zealand dollar, and Australian dollar – all favoured currencies for carry trade investments – appreciating against it.
Rising sterling volatility spurs hedging activity.Bloomberg reported a significant increase in sterling hedging activity due to heightened volatility in the spot rate. Its recent rise to the $1.30 region, followed by a subsequent pullback, has triggered an increase in hedging. Santander UK, Argentex, and Barclays have observed substantial demand from corporate clients to secure exchange rates. Exporters aim to safeguard against further appreciation, while importers seek to lock in current levels.
Investor sentiment remains optimistic about Sterling's potential for strengthening, considering the improved UK economic outlook and the cautious tone of the BoE’s policy statement. Additional factors contributing to Sterling's support include increased appetite for UK assets among overseas investors.
Cryptocurrencies
Bitcoin -26.82% MTD +2.93% YTD to $55,426.00.
Ethereum -14.24% MTD +32.05% YTD to $2360.10.
Both cryptocurrencies had a negative week with significant declines. Bitcoin decreased -26.82%, over the week while Ethereum posted a -14.24% weekly loss.
Bitcoin and Ethereum have been battered since last Friday due to rising risk aversion in global markets resulting from exaggerated concerns around a sudden US slowdown. According to CoinShares data, Bitcoin saw outflows totalling $400m for the week ending 5 August, the first following 5 weeks of inflows while Ethereum saw outflows totalling $146m, bringing the net outflows since the ETF launch in the US to $430m. The sudden drop in cryptocurrency valuations led to more than $1.13 billion in liquidations in the derivatives markets according to crypto data firm Coinglass.
Note: As of 5:00 pm EDT 7 August 2024
Fixed Income
US 10-year yield -8.1 basis points MTD +7.3 basis points YTD to 3.954%.
German 10-year yield -3.4 basis points MTD +26.2 basis points YTD to 2.271%.
UK 10-year yield -1.6basis points MTD +41.5 basis points YTD to 3.954%.
US Treasury 10-year bond yields are -8.1 basis points (bps) down this week.
On Wednesday, yields on shorter-dated US Treasuries fell. The yield on the two-year US Treasury note was -1.9 basis points to 3.968%, after going as low as 3.654% on Monday, the lowest since April of 2023.
The yield on the 10-year US Treasury note increased by +5.7 basis points to 3.954% after reaching 3.667% on Monday, the lowest since June of 2023. The yield on the 30-year bond increased +6.6 basis points to 4.248%.
The government received robust demand for its $58 billion sale of three-year notes on Tuesday, and it anticipates further market interest in its upcoming $25 billion offering of 30-year bonds on Thursday. However, there was weak demand for a $42 billion sale of 10-year notes on Wednesday, which traded at a high yield of 3.96%, 3 basis points above where they traded before the sale. Demand was 2.32 times the amount of debt on offer, the weakest since December 2022.
Traders currently anticipate a 50 bps interest rate reduction by the Fed at its 17th - 18th September policy meeting. However, the CME Group's FedWatch Tool indicates a 39% probability of a more modest 25 bps rate cut.
Sentiment has shifted as markets recover, with investors realising the extreme unlikelihood of an emergency rate cut before September.
Investors will be looking closely at upcoming economic data, including July's consumer price inflation (CPI) figures on 14th August, for potential impacts on monetary policy decisions. Additionally, remarks by Fed Chair Jerome Powell at the annual Jackson Hole Economic Policy Symposium on 22nd - 24th August may offer further insights into the trajectory of future rate adjustments.
The German 10-year yield was -3.4 bps this week, while the UK 10-year yield was -1.6 bps this week. The spread between US 10-year Treasuries and German Bunds currently stands at 168.3 bps, -4.7 bps from last week.
Germany's 10-year bond yield experienced its most significant daily increase in over five weeks on Wednesday. As market volatility subsided, investors shifted away from safe-haven assets, contributing to the yield's rise.
In Wednesday’s trading session, the 10-year Bund yield was +8.4 bps to 2.266%, marking its largest single-day increase since 1st July. On Monday, amidst market turbulence, the 10-year yield had briefly touched its lowest point since early January.
Similarly, the yield on the two-year Schatz, sensitive to interest rate expectations, climbed +4.9 bps to 2.412%. This followed the two-year yield's decline to its lowest level since March 2023 on Monday.
Current market expectations indicate that the ECB may implement rate cuts totaling 70 bps by the end of the year. This contrasts with projections of up to 105 bps in cuts from the Fed.
Further influencing the longer end of the yield curve, the German government successfully issued €2.0 billion in bonds maturing in 2038 and 2041 on Wednesday.
Italian bond yields, a benchmark for the eurozone periphery, were +6.1bps this week to 3.708%. Consequently, the spread between Italian and German 10-year yields widened by +9.5 bps to 143.7 bps from 134.2 bps last week.
Commodities
Gold spot -1.48% MTD +15.91% YTD to $2,381.53 per ounce.
Silver spot -7.77% MTD +10.81% YTD to $26.06 per ounce.
West Texas Intermediate crude -7.81% MTD +1.77% YTD to $75.47 a barrel.
Brent crude -2.83% MTD +1.96% YTD to $78.50 a barrel.
Spot gold prices are down -1.48% this week. Gold has been down due to profit taking and a drop in Central bank purchases. China's central bank, the world’s largest purchaser of gold in 2023 with net purchases of 7.23 million ounces, according to the World Gold Council, held back on buying gold for its reserves for a third straight month in July. China's gold holdings remained unchanged at 72.8 million fine troy ounces at the end of July, consistent with levels observed at the end of May and June. However, the value of these reserves increased to $176.64 billion at the end of July from $169.7 billion at the end of June, reflecting the rise in gold prices.
Gold prices retreated slightly on Wednesday as the US dollar and Treasury yields experienced a modest increase. Spot gold prices dipped -0.33% to $2,381.53 per ounce, having initially risen as much as 0.70% earlier in the trading session.
Gold has been supported by growing expectations of US interest rate cuts in September and escalating geopolitical tensions in the Middle East.
Both WTI and Brent are in negative territory this week by -7.81% and -2.83%, respectively, driven by a larger-than-anticipated weekly decline in US crude inventories and demand concerns.
Oil prices were more than +2% on Wednesday, recovering from recent multi-month lows, as data revealed a larger-than-anticipated decrease in US crude stockpiles.
EIA report: oil market tightens as US crude inventories fall, refinery runs rise. According to the Energy Information Administration (EIA) report on Wednesday, US crude oil stockpiles experienced a more substantial decline than anticipated in the week ending 2nd August, while gasoline and distillate inventories increased due to a rise in refining activity coupled with a decrease in demand.
Crude inventories decreased by 3.7 million barrels, surpassing projections of a 700,000-barrel draw. However, crude stocks at the Cushing, Oklahoma delivery hub observed a 579,000-barrel increase.
The EIA, in its Tuesday forecast, revised its outlook for 2024, anticipating tighter supply and demand balances due to increased oil consumption and lower production expectations.
Refinery crude runs experienced an increase of 252,000 barrels per day (bpd), with utilisation rates rising by 0.4 percentage points to reach 90.5% of total capacity for the week.
Net US crude imports also increased by 552,000 bpd last week. Conversely, exports declined by 1.28 million bpd, totaling 3.64 million bpd.
Gasoline stocks rose by 1.3 million barrels, defeating expectations of a 1 million-barrel draw. Distillate stockpiles, encompassing diesel and heating oil, increased by 900,000 barrels, exceeding forecasts of a 200,000-barrel build.
Furthermore, total gasoline product supplied, an indicator of demand, fell by approximately 283,000 bpd to 8.97 million bpd.
Note: As of 5:00 pm EDT 7 August 2024
Key data to move markets
EUROPE
Friday: German Harmonised Index of Consumer Prices and Italian CPI.
Tuesday: Spanish Harmonised Index of Consumer Prices, German ZEW Current Situation and Economic Sentiment surveys and eurozone ZEW Economic Sentiment survey.
Wednesday: French CPI, eurozone GDP, eurozone Employment Change, and eurozone Industrial Production.
UK
Tuesday: Average Earnings, Claimant Count Change, Employment Change, and ILO Unemployment Rate.
Wednesday: CPI and Core CPI, PPI, and RPI.
US
Thursday: Initial and Continuing Jobless Claims.
Monday: Monthly Budget Report.
Tuesday: PPI and a speech by Atlanta Fed President Raphael Bostic.
Wednesday: CPI and Core CPI.
CHINA
Friday: CPI and PPI.
GLOBAL:
Monday: OPEC Monthly Market Report
Global Macro Updates
China's trade surplus narrows as exports falter, import surge offers limited relief. China's export growth unexpectedly decelerated in July, signalling a moderation in global demand.
Official data released on Wednesday by the customs administration revealed that exports in July rose by 7% y/o/y in dollar terms, falling short of economists' median forecast of a 9.5% gain. Meanwhile, imports exceeded expectations, expanding by 7.2%, thereby narrowing the trade surplus to $84.65 billion from the previous month.
The deceleration in exports suggests a softening of global demand, which has been a crucial pillar of support for China's economy this year as domestic consumers have curtailed spending. This development poses a threat to the growth outlook for the remainder of the year, particularly as the economy experienced its slowest expansion in five quarters during the April-June period.
Exports to Japan, the UK, Russia, and Australia all contracted in July, reversing the expansion observed in the preceding month, while the decline in shipments to Singapore intensified. Furthermore, the persistent fall in export prices since mid-2023 likely contributed to the slowdown in overseas shipments.
This unexpected export slowdown in July suggests that foreign trade, a key driver of recovery in the last quarter, may provide less support to Q3 GDP. The result is particularly concerning given the weakening outlook for the US economy. Coupled with the weakness observed in China's retail sales, the trade data reinforces the view that 2024 growth is likely to fall short of the official 5% target unless more effective stimulus measures are implemented.
While the surge in imports may alleviate some concerns regarding weak domestic demand, the expansion was partly fueled by short-term factors. Semiconductor makers likely rushed to front-load their equipment orders in anticipation of potential tightening of US curbs on chip exports, leading to a 15% y/o/y surge in imports of these products in July. Additionally, imports of crude oil climbed 8% as the government renewed import quotas for companies for the second half of the year.
The outlook for trade could deteriorate further as tensions escalate with Europe and the US over a surge in Chinese exports. China's trade surplus reached a record $99 billion in June, causing concern among its trade partners who are seeking to protect their domestic industries through tariffs. A gauge of new export orders in China's official manufacturing purchasing managers' index indicated a contraction for a third consecutive month in July.
Despite these challenges, China's US dollar exports to the US and European Union each grew by approximately 8% y/o/y in July. Exports to the Association of Southeast Asian Nations surged by 12%, solidifying the region's position as China's largest trading partner by a significant margin, this divergence can highlight the geopolitical element of China’s foreign trade.
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