Weekly market recap

Your weekly global financial market newsletter

  • On Friday, widespread problems with computer systems hit the world, first affecting air travel but then spreading to other areas of infrastructure such as banks and healthcare companies. Although it was first thought to be a hacking attack, the head of Crowdstrike, which supplies security systems to large customers around the world, admitted it was a faulty system update.
  • Microsoft said at the time that in total around 8.5 million Windowws devices were affected, less than one per cent of all Windows PCs.
  • Although only computers running Microsoft's Windows operating system were affected, the company's stock was not significantly affected and its shares fell less than 1% on Friday. Crowdstrike's stock was much more affected, falling by more than 11% on Friday.

Indices

US stocks ended the week mixed again. Unlike the previous week, however, value stocks in particular outperformed growth stocks, thanks to which only the blue chip DJIA index ended in the black among the major indices, closing at a new all-time high on Wednesday. Meanwhile, the broader S&P 500 and the tech-heavy Nasdaq reached their new highs on Tuesday, but on Wednesday, the sell-off began, with the market dragged down mainly by tech titles. They reacted to news that the government is considering using the most severe trade restrictions if companies continue giving China access to advanced semiconductor technology. At the end of the week, the markets were hit by an outage of computer systems running Micorosoft’s operating system, caused by a bug in an update from Crowdstrike.

European stocks lost ground throughout the week and are on their longest losing streak since October 2023, mainly due to rising tensions between the US and China, which are a threat in international trade. The pan-European STOXX Europe 600 Index ended 2.68% lower, Germany’s DAX dropped 3.07%, France’s CAC 40 Index lost 2.46% and the UK’s FTSE 100 Index declined 1.18%.

US30
+0.72%
US100
-3.98%
US500
-1.97%
GER30
-3.07%

Commodities

The price of gold once again surpassed its historical high during the week, rising significantly, especially in the first half of the week, and getting close to the psychological level of $2,500 per troy ounce. However, the high price of the precious metal, coupled with a strengthening dollar, eventually led to a sell-off in the physical gold market, especially in India and China, which are the world’s largest consumers of gold.

US natural gas had another significant weekly decline after falling nearly ten percent. It reached its lowest level since the beginning of May this year, and during the week approached the $2/MMBtu level, which should represent a psychological support level. The main factors that have been pushing the US natural gas price down for some time now are high production and also relatively high inventory levels, combined with the weather, i.e. high temperatures in the South and West of the US, but also lower temperatures in the Midwest, causing volatility and uncertainty in the market. 

Gold
-0.67%
Silver
-5.06%
BRENT
-2.89%
NATGAS
-8.81%

Forex

Despite a poor start to the week, the US dollar posted modest gains against most majors currencies during the week. The dollar hit a four-month low during the week, but strengthened significantly in the second half of the week, mainly due to strong macro data regarding manufacturing activity or the housing market. The strengthening dollar was not hurt by data on initial jobless claims, which rose more than expected, but this was attributed to seasonal effects.

The New Zealand Dollar hit a two-month low during the week, not only due to the strengthening US Dollar, but also due to the expected interest rate cut by the RBNZ, which is expected to come earlier than the US Fed. Inflation in New Zealand fell to 3.3%, the lowest level in three years, and the RBNZ itself indicated that the reduction in inflation will lead to a less restrictive monetary policy.

EUR/USD
-0.23%
USD/JPY
-0.23%
GBP/USD
-0.59%
USD/CAD
+0.69%

Macro

Macro data in the US surprised mostly to the upside last week. Already on Tuesday, retail sales surprised positively. These were flat in June, with a 0.3% decline expected, and the May figure was revised up from 0.1% growth to 0.3% growth. Core retail sales ex autos rose 0.4% on expectations of 0.1% growth. Sales excluding food, autos, fuel and building materials rose 0.9%, the highest reading since April 2023.

Unexpected growth was seen in industrial production, which rose 0.6%, about double the estimated growth. The Philadelphia Fed’s indicator of current regional business conditions then rose to a reading of 38.7, the highest in three years.

Both Housing Starts and Building Permits also rose above expectations in June. The only negative number was Weekly Jobless Claims, which rose to 234,000, the highest reading in nine months.

The European Central Bank left interest rates unchanged as expected and said virtually nothing new on further cuts, stating that it did not want to commit to anything as its decisions will be data dependent. The final inflation data didn’t surprise, with prices rising 0.2% in June and a year-on-year increase of 2.5%.

UK year-on-year inflation remained at 2%, although it was expected to fall to 1.9%. Core inflation excluding energy and food, remained at 3.5%. Compared to the previous month, prices rose by 0.1% in June, following a 0.3% increase in May. Unemployment remained at 4.4% in May.

What to watch out for this week

  • In the US, earnings season is in full swing, and over thirty companies with a market capitalization of over one hundred billion dollars (Alphabet, Tesla and General Electric, among others) will release their numbers. Expectations are high, so we can expect many negative surprises.
  • On Tuesday and Wednesday, data on sales of new and existing homes will be published. In the US as well as in Europe and the UK, the flash S&P Global Purchasing Managers' Indexes will be released on Wednesday. The manufacturing sector in Europe and the UK is expected to contract at a slower pace but still remain below the 50 level. Services should see modest growth. The US, on the other hand, is expected to grow moderately, but both readings should remain above the 50 level.
  • On Thursday, the first estimate of second quarter GDP in the US will be announced. The economy slowed noticeably in the first quarter, but the market expects growth to pick up in the second.
  • Then on Friday, the expected data on the PCE Price Index, personal income and spending, and the University of Michigan's July Consumer Confidence Index, which includes an inflation expectations component, will be released.

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