Please see this week’s market views from eToro’s global
Starting the Fed three-step
Set for July 26th Fed meeting interest rate peak. Focus to shift to pause length, and timing of cuts. S&P 500 historically +7% between last hike and first cut. Market fighting Fed, seeing aggressive six cuts in 2024 starting in March. A hawkish Powell press conference would stoke growth fear and help long-duration assets, like tech. This is closer to our view. A more dovish stance would hasten rotation to growth-sensitive small cap and commodities and hurt dollar. See Page 4
Tech results in the spotlight
Global markets ground up, from stocks to bonds and commodities. Dow Jones index saw a record-breaking 10-days of gains. Macro news saw UK inflation relief and China currency intervention. Whilst TSLA, NFLX, and TSMC results held back tech, and CFR dragged on luxury. MSFT was boosted by AI subscription plan ahead of big earnings week. See our Q3 Markets Outlook HERE and at twitter @laidler_ben. See Page 2
Pros and cons of the weaker dollar
Double-digit dollar plunge a relief for emerging markets, commodities, and US tech-led earnings, but headwind for open European and Asian markets and crucial US inflation fall. See Page 2
Company profit margins see timely relief
Producer prices fallen faster than consumer prices on both sides of Atlantic, giving timely relief to company profit margins, and helping offset weak top-line sales ‘recession’. See Page 2
The stealth emerging markets rally
China weakness masked gains in rest of EM this year, led by eastern Europe and LatAm. Is deep-value contrarian play on weak dollar, improving tech cycle, and firming China growth. See Page 2
Silver’s tech-led proxy rally
Silver price surged the past year and gold/silver ratio shows further value as solar and battery demand help keep market in deficit. See Page 2
Altcoins back in the spotlight
BTC held near the $30,000 level but focus was on altcoins, from SOL to ADA, which continued to bounce-back from the sharp underperformance after being named as ‘securities’ by SEC. XRP consolidated dramatic gains after partial SEC lawsuit win. ‘FedNow’ instant payments launch seen as a possible crypto competitor. See Page 3
Supply disruption drives ag prices further
Commodities led up by surging ag, with supply disruptions spreading. Grains boosted by Russia withdrawal from Black Sea deal. Cocoa by bad weather in dominant producer Ivory Coast. And rice as India put on export curbs. Natgas boosted by summer heatwave. Top gold producer NEM saw lower output and higher costs. See Page 3
The week ahead: Last Fed hike, peak earnings
1) Central banks in overdrive with last Fed hike (Wed), an ECB raise, and possible BoJ surprise. 2) Decisive earnings week as 50% S&P 500 report, w/ MSFT, GOOG, AMZN. 3) See cooling US, EU, UK, JP, AU PMIs (Mon). 4) Reaction to Spanish election and NASDAQ-100 rebalance. See Page 3
Our key views: A positive markets breather
Markets due a breather after the strong 1H, with weaker seasonality, low volatility, and coming growth slowdown. But fundamentally positive on lower inflation and coming rate cuts. Focus on defensive growth and long duration assets from healthcare to big tech. Cautious growth exposed cyclicals, commodities, and banks. See Page 5
Click here to see the full 5-pager that includes latest market data, the house investment view, and a weekly ‘special’.