Company / Analytics

Analytics, 17 July 2022

Week 28 in Brief

North America

Stocks climbed sharply Friday as investors digested data showing U.S. retail sales rose by 1% in June, a slightly stronger number than economists had expected.

Although some of the increase was tied to higher prices of gasoline and food, the market appeared encouraged that the all-important consumer hasn’t succumbed to the strongest inflation in four decades.

How did the major indices perform?

On Friday

What drove the U.S. market?

How did the European markets perform?

In European equities, the STOXX Europe 600 Index (XX: SXXP) closed 1.8% higher Friday, paring its weekly decline to 0.8%. The UK’s FTSE 100 Index (UK: UKX) closed up 1.7% Friday but still fell 0.5% for the week.

EU recession fears are more pronounced than they are in the U.S., especially given the grim energy outlook and the shutting of the Nord Stream 1 pipeline for annual maintenance.

The exchange rate between the euro and the dollar is also now about equal. For the first time since 2002 (in the early years of the euro’s existence) the ratio came close to 1:1; - but could come at a cost of global economic stability. Towards the end of the week, the euro even dropped below parity at $0.9998 and is down almost 12% YTD.

How did Asian markets perform?

In Asia, the Shanghai Composite Index (CN: SHCOMP) fell 1.6% Friday, booking a weekly loss of 3.8%. Hong Kong’s Hang Seng Index HSI00 shed 2.2% Friday and dropped 6.6% for the week.

Japan’s Nikkei 225 (JP: NIK) benchmark ended 0.5% higher Friday for a weekly gain of 1%.

China also reported its economy grew just 0.4% annually in the second quarter, as Beijing’s stringent COVID-19 lockdowns have taken a toll on economic activity. Economists polled by The Wall Street Journal expected a rise of 0.9%. The economy contracted 2.6% in the April to June period from the prior quarter, marking the first quarterly contraction since the first quarter of 2020.

Bonds and Commodities

Currencies

Next week

Next week will be an eventful one dominated by corporate earnings reports, as earnings season continues. Bank of America, Goldman Sachs, IBM, Johnson & Johnson, Lockheed Martin, Netflix, Tesla, United Airlines, AT&T, Snap, and more will report results.

We can also expect important updates on the U.S. housing market, with June housing starts and building permits on Tuesday, followed by existing home sales on Wednesday.

Overseas, the European Central Bank (ECB) is widely expected to raise its benchmark interest rate for the first time since 2011. The U.K. and Japan are set to release their latest inflation figures tracking the month of June, providing an update on global price pressures.

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