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Quarterly Reports Bring Stock Indices To The New Records

US stock indices are trading at historic highs again. Corporate profits are keeping the market from even small corrections. US electric vehicle manufacturer Tesla, which reported after the market closed, finished the second quarter of 2021 with record profits and beat analysts’ expectations. This week, investors are expecting quarterly reports from a number of US companies, including tech giants (Alphabet, Amazon, Apple, Facebook, Microsoft). But the real estate market is in decline. New home sales in the US unexpectedly fell by 6.6% in June to the lowest level since April 2020. A Commerce Department report showed that the average sales price of a new home increased by 6.1% compared with a year earlier. Goldman Sachs experts have lowered their forecasts for the US GDP growth for the third and fourth quarters of this year and expect a significant slowdown in the US economic recovery in 2022. Investors around the world invested more than $900 billion in US funds in the first half of the year, more than was invested in all global funds in the first two quarters of 2021. This shows that the US economy is now a kind of “safe haven” for investors. A Fed meeting will take place tomorrow. The main question will be how well the central bank is doing with rising inflation.

European stock indices slightly decreased on Monday. Germany’s IFO Business Climate Index unexpectedly declined in July amid a rise in coronavirus infections and supply problems. At the end of the week, the ECB will report on inflation. Higher inflation could have a significant impact on Eurozone business optimism in the coming months. European corporate earnings are not as impressive as in the US, but many European companies show good reports despite that. For example, Ryanair Holdings shares gained 4% on Monday’s report and were among the leaders among the components of the Stoxx Europe 600 index.

Oil prices have stabilized and are trading around $71-72 per barrel of WTI. On the one hand, oil markets remain in deficit on the back of increased demand over the summer, which is also supported by the growing pace of vaccination. On the other hand, OPEC+ countries are gradually increasing oil production, and supply is beginning to meet demand gradually. As a result, oil prices may still rise slightly, but analyst firms predict a decline in oil prices after peaking in the third quarter of 2021.

US Treasury bond yields rose during the Asian morning trading on Tuesday, leading to a slight decline in precious metal prices, which have an inverse correlation to government bond yields. Considering the soft monetary policy, gold and silver are a kind of insurance for investors. Still, the dynamics of precious metals’ prices show that investors have stopped considering gold a protective instrument.

Asian stock markets slightly increased on Tuesday, rebounding from a minimum since the beginning of the year. Japan’s Nikkei 225 index increased by 0.58%. China’s CSI 300 blue-chip index added 0.15% and Australia’s ASX 200 increased by 0.5%. The Australian state of Victoria is lifting strict restrictions. On the contrary, New South Wales is tightening restrictions. More than half of Australia’s population is still in isolation. Negotiations between China and the US are at an impasse.

Main market quotes:

  • S&P 500 (F) 4,422.30 +10.51 (+0.24%)
  • Dow Jones 35,144.31 +82.76 (+0.24%)
  • DAX 15,618.98 -50.31 (-0.32%)
  • FTSE 100 7,025.43 -2.15 (-0.03%)
  • USD Index 92.62 -0.29 (-0.31%)

Important events for today:

  • Japan BoJ Haruhiko Kuroda’s Speech at 10:30 (GMT+3);
  • US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
  • US CB Consumer Confidence (m/m) at 17:00 (GMT+3).
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