Stock markets fell mid-week as focus shifted from rate cut expectations towards the earnings season. US equities dropped over stalling trade talks and the increase of uncertainty, and as President Trump taunted China over its slowing GDP data and suggested he could still impose more tariffs at any moment. The President continued to attack the Fed, as he has in the past. Pressing for rate cuts for his amazing economy. As more foreign central banks cut their own rates this week. Interestingly, the lingering trade tensions appear to be a major motivating factor for Fed officials who appear increasingly motivated to cut rates, to the extent that this dovish thinking completely overshadowed the economic data, which for the second straight week came in substantially stronger than consensus estimates. By Thursday, futures markets were pricing is better than a 50% chance the Fed would cut by 50 bps at the end of July, but the Fed tried to walk back these more aggressive expectations on Friday. Early in the week, the Greenback retraced higher prodded by robust US manufacturing and retail sales figures. Gold prices popped back to the highs of the year helped by declining interest rate forecasts and a continued escalation of Iran tensions, while crude oil futures tumbled more than 6% this week despite reports of Iran waylaying at least two oil tankers in the Strait of Hormuz. For the week, the S&P lost 1.2%, the DJIA dipped 0.6%, and the Nasdaq fell 1.2%.

Here is a look of last week’s stock market on a daily basis (red vertical lines split days).

Stock Market and Sector Overview

Here is a break down of the weekly performance in various stock market sectors (top chart):

  • Energy stocks down 2.52%
  • Technology down 0.95%
  • Financials down 0.92%
  • Retail down 2.14%
  • Utilities down 0.33%

Overview of key markets last week (bottom chart):

  • Crude oil down 6.50%
  • S&P500 down 1.39%
  • Silver was up 6.71%
  • Gold up 1.02%
  • US dollar up 0.28%

Weekly Economic News

A quiet week for the most part in terms of US news. This is the week before the big Fed rate announcement so we may not see much high impact news coming though. However we may hear news out of Fed members and Trump prior to the priced-in rate cut decision out of the American Fed.
Monday, BOJ Kuroda speaks, watch the yen.
Tuesday, no high impact data.
Wednesday,  French Flash Services PMI, German Flash Manufacturing PMI, and German Flash Services PMI out of Europe. This will move the Euro. With RBA Gov Lowe speaking out of Australia impacting the Aussie dollar.
Thursday, Main refinancing rate and monetary policy statement & press conference out of the ECB, this is a huge euro mover. The first US event, core durable goods orders.
Friday, the only event of the day and out of the US advanced GDP.
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