Daily Market Analysis

Kazuo Ueda, the Bank of Japan's Governor, effectively adjusted the yield curve control policy, but caution is still needed as inflation remains a challenge. The BoJ expects inflation to hit its target next year, but external inflationary pressures may abate.

This week AMD, Amazon, and Apple will release their earnings reports. These tech giants will determine the future of the US stock market!

On Thursday, the European Central Bank is expected to hike interest rates by a quarter percentage point to 3.75%. After July, the certainty of further rate hikes is unclear, leading to a craving for guidance in financial markets

Recently, gold prices settled by -0.41% at 59309 as the dollar and bond yields rose. However, hopes for a pause in US rate hikes limited the decline after the July meeting of the Federal Reserve. The unexpected drop in new claims for unemployment benefits in the US also contributed to the market sentiment.

Despite the positive outlook, the FBS analysts are cautious about buying the stock heading into earnings. The stock market has already experienced a significant run-up. Thus, a correction may happen this week!

Earnings season is a crucial time for investors and analysts, as it provides insights into how well companies have performed over the past quarter and gives indications of their future earnings. In 2023, expectations for US Q1 earnings were low due to economic challenges and rising interest rates. Surprisingly, many companies beat these low expectations, with 75% of S&P 500 companies surpassing forecasts.

According to EY, profit warnings among UK-listed companies have reached levels last seen during the financial crisis, excluding the pandemic. More than one in six firms issued profit warnings in the past year due to rising borrowing costs and tightened consumer spending, impacting their margins. Insolvencies in June were 27% higher than the previous year and above pre-pandemic levels, with consumer industries like retail and hospitality being hit the hardest.

According to Japanese Finance Minister Shunichi Suzuki, there was "no discussion" about exchange rates during the recent meeting of Group of Seven (G7) finance ministers and central bank chiefs in India. This news comes as the yen weakened to around ¥145 per dollar last month, prompting concerns that the Japanese government may intervene in the currency market to support the yen.

Tesla, Netflix and Goldman Sachs will publish their earnings reports these week. Here is why you should follow.

Gold prices dipped as investors took profits following a near one-month high, but still recorded their biggest weekly gain since April on expectations of a pause in U.S. interest rate hikes. Spot gold was down 0.3% at $1,954.69 per ounce, while U.S. gold futures eased 0.2% to $1,959.30. The dollar index edged up 0.2% but remained close to its lowest level since April 2022.

The Bank of Canada (BoC) is expected to raise interest rates for the second time in a row on Wednesday, reflecting resilient growth, a tight labor market, and persistent underlying inflation…

Today's focus is on the US CPI data, which experts believe will be better than expected. The forecasted US CPI m/m is 0.3%, and y/y is 3.1%, a positive sign for the market as the Fed's inflation target is 2%. Even a strong inflation reading may lead to one more interest rate hike, keeping traders somewhat worried. The reaction of the 2-year Treasury yield and the dollar index will indicate the Fed's next move. With inflation slowing down, the path of least resistance for the US equity market is skewed to the upside.