Company / Analytics

Analytics, 10 July 2022

Week 27 in Brief

North America

All three major U.S. indices rose overnight as two Federal Reserve officials downplayed recession fears and signaled a slower pace of rate hikes after July. On Friday, the Dow Jones Industrial Average (.DJI) fell 46.4 points, or 0.15%, to 31,338.15, the S&P 500 (.SPX) lost 3.24 points, or 0.08%, to 3,899.38 and the Nasdaq Composite (.IXIC) added 13.96 points, or 0.12%, to 11,635.31. For the week, the Nasdaq gained 4.5%, while the S&P and Dow advanced 1.9% and 0.8%, respectively.

Benchmark U.S. Treasury yields rose from five-week lows overnight, reducing the scale of inversion in a key part of the yield curve, and also lowering recession concerns.

How did the major indices perform?

For the week:

What drove the U.S. market?

How did the European markets perform?

How did Asian markets perform?

Bonds and Commodities

Currencies

EUR/USD The euro was pinned at a 20-year low on Friday, licking its wounds at the end of its worst week in two months as investors braced for Europe to tip into a recession, while markets awaited U.S. jobs data to set the next direction for the dollar. The single currency has hit a successive 20-year low this week on signs the eurozone economy will tip into recession. The euro is down more than 2% this week on fears that gas shortages loom in Europe and economic growth will suffer. It hit a two-decade trough of $1.0144 overnight.

GBP/USD Sterling fell against a strengthening dollar as an unfavorable macroeconomic backdrop overshadowed concerns about politics after Prime Minister Boris Johnson announced his resignation. Johnson announced he would stay on until his successor was chosen. Concerns about post-Brexit spats with the European Union also weakened the pound. The pound rose on Thursday after media reports of his imminent resignation earlier in the day and held on to the gains after Johnson said he was quitting. The pound fell 0.8% to $1.1996. It hit its lowest since March 2020 at $1.1877 on July 6.

USD/JPY: The dollar edged lower against the Japanese yen on Friday after former Japanese Prime Minister Shinzo Abe was shot while campaigning for a parliamentary election. Abe, Japan’s longest-serving leader, died on Friday after being shot as he spoke in the western city of Nara. The yen rose as much as 0.5% immediately after the news of the shooting but later ceded most of those gains and by 1047 GMT, it was up 0.1% at 135.89.

Next week

Next week will kick off the start of the corporate earnings season, as a number of the largest U.S. banks and financial services firms are set to report second-quarter earnings later in the week.

JPMorgan Chase, Morgan Stanley, and First Republic Bank will report on Thursday, followed by Wells Fargo, BlackRock, Citigroup, U.S. Bancorp, BNY Mellon, and PNC Bank on Friday. Earnings are also expected from PepsiCo. Delta Air Lines, and UnitedHealth, among others.

June inflation data will be made available this week with the latest update to the Consumer Price Index (CPI) on Wednesday, followed closely by the Producer Price Index (PPI) on Thursday.

On Friday, we can expect the latest updates on retail sales and industrial production tracking the month of June, along with the preliminary July update to the University of Michigan’s Consumer Sentiment Index (MSCI).

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