Author: Consultant

Gold prices rose toward $2,400 per ounce on Monday as tensions in the Middle East showed little sign of abating.

Spot gold edged up 0.2 percent to $2,392.86 per ounce while U.S. gold futures were up 0.4 percent at $2,437.85.

Traders also kept a close eye on the latest developments in the Middle East following a rocket strike in the Israeli-occupied Golan Heights.

The rocket strike killed 12 children and teens in what the military called the deadliest attack on civilians since Oct. 7.

Turkish President Recep Tayyip Erdogan escalated tensions with Israel on Sunday, suggesting the possibility of military action against the Jewish state amid ongoing conflict with the Iranian proxy group Hezbollah.

Meanwhile, after a benign June inflation report, markets are wagering the Federal Reserve will lay the groundwork for a September rate cut at its policy meeting on Wednesday.

Elsewhere, a Bank of Japan policy meeting is due on Wednesday, with markets split over a 10-basis point hike. The central bank may also announce its bond purchase tapering plans.

The Bank of England is expected to cut base rates at Thursday’s meeting but may warn investors not to expect a string of back-to-back interest rate cuts.

The Atlanta Fed released its initial estimate for the third quarter growth based on its GDPNow model on Friday that projected the U.S. economy to grow 2.8 percent in the third quarter.

Official data released on Thursday revealed that the gross domestic product grew a faster-than-expected 2.8 percent in the second quarter after rising 1.4 percent in the first quarter.

Second quarter growth was 0.2 percentage points above the Atlanta Fed’s final GDP model nowcast released on July 24.

The Commerce Department said the GDP growth primarily reflected increases in consumer spending, private inventory investment, and non-residential fixed investment.

The next GDP update is due on Thursday, August 1.

Oil prices fell by more than $1 a barrel on Monday after Israeli officials said they wanted to avoid dragging the Middle East into an all-out war while responding to a deadly rocket strike in the Israeli-occupied Golan Heights over the weekend.

Brent futures for September delivery shed $1.39 to $79.74 a barrel, a 1.7% loss, by 11:17 a.m. EDT (1517 GMT). U.S. crude sank $1.40 to $75.76 per barrel, a 1.8 per cent drop.

Two Israeli officials told Reuters on Monday that Israel wanted to hurt the Iranian-backed Lebanese group Hezbollah, which the country blames for the Saturday attack that killed 12 children and teenagers, without sparking a region-wide conflict.

“That implies that a Gaza ceasefire might not be too far off in the future,” said Bob Yawger, energy futures director at Mizuho in New York.

On Sunday, Israel’s security cabinet authorized Prime Minister Benjamin Netanyahu’s government to decide on the “manner and timing” of a response to the attack at a football field.

Israel vowed retaliation in Lebanon against Iran-backed Hezbollah, which denied responsibility for the attack. Israeli jets hit targets in southern Lebanon on Sunday.

The tensions sparked investor concerns about the potential impact on crude output from the world’s largest oil-producing region, but so far output has not been affected.

“Despite renewed geopolitical tensions in the Middle East, the lack of any supply disruptions limits any positive price reaction,” said UBS analyst Giovanni Staunovo.

“Oil demand concerns, driven by weak Chinese economic data, is another factor not helping oil prices at present.”

Brent and WTI benchmarks lost 1.8% and 3.7% respectively last week on sagging Chinese demand and hopes of a Gaza ceasefire agreement.

Data released this month showed that China’s total fuel oil imports dropped 11% in the first half of 2024, raising concerns about the wider demand outlook in the world’s biggest crude importer.

Prices also fell at the end of last week on news that the huge Dangote oil refinery in Nigeria is reselling cargoes of U.S. and Nigerian crude after technical problems at the plant.

Meanwhile, markets are keeping a watch on oil producer Venezuela after the country’s electoral authority said that President Nicolas Maduro had won a third term with 51% of the vote despite multiple exit polls pointing to an opposition win.

The U.S. had previously said it would “calibrate” its sanctions policy toward Venezuela depending on how the election unfolds in the OPEC member nation.

Monday, July 29

China industrial profits

Earnings include: McDonald’s, Loews, Tilray

Tuesday, July 30

Bank of Japan policy announcement and outlook report (through Wednesday)

Euro area GDP July economic confidence. Germany also releases CPI and France consumer spending

9 am ET: U.S. S&P Corelogic Case-Shiller home price index for May. Consensus is for a rise of 0.3% from April. Also, FHFA house price index

10 am ET: U.S. Conference Board consumer confidence index

10 am ET: U.S. June job openings and labour turnover survey

Earnings include: Air Canada, Allied Properties, Boardwalk REIT, Microsoft, P&G, Merck & Co, AMD, Caterpillar, Pfizer, Airbus Group, Rio Tinto, BP, Starbucks, Canadian Pacific Kansas City, Paypal, Phillips 66, Electronic Arts, Corning, Archer-Daniels-Midland, Pinterest, Live Nation Entertainment, Ovintiv, Match Group, Lundin Mining, Caesars, Spin Master, JetBlue, New Gold, Precision Drilling

Wednesday, July 31

China purchasing managers’ indexes. Japan retail sales and industrial production for June

Euro area July CPI, plus Germany jobs data

815 am ET: U.S. ADP national employment report for July

830 am ET: U.S. employment cost index

830 am ET: Canada May GDP. BMO estimates a monthly rise of 0.1%

10 am ET: U.S. pending home sales for June

2 pm ET: FOMC policy announcement, followed by Chair Jerome Powell’s press briefing at 230 pm.

Earnings include: Agnico Eagle Mines, Capital Power, Kinaxis, NFI Group, North American Construction, TMX Group, Tourmaline Oil, Western Forest Products, Meta Platforms, Mastercard, Qualcomm, HSBC, Boeing, Airbnb, Marriott International, Kraft Heinzl, DuPont De Nemours, eBay, Carvana, CGI, Fortis, Cameco, MGM, Yum China Holdings, Kinross Gold, Alamos Gold, Spirit Aerosystems, Scotts Miracle-Gro

Thursday, Aug 1

China’s Caixin manufacturing PMI; Japan manufacturing PMI

Euro area manufacturing PMI and June jobless rate

ECB Economic Bulletin

7am ET: Bank of England policy announcement and monetary policy report

830 am ET: U.S. initial jobless claims

830 am ET: U.S. productivity and unit labour costs.

930 am ET: S&P global manufacturing PMI

10 am ET: U.S. ISM manufacturing PMI

10 am ET: U.S. construction spending

OPEC+ meeting

Autodata total vehicle sales for July

Earnings include: Apple, AltaGas, Atkinrealis, Amazon, Intel, Bausch Health, Canaccord Genuity, Capstone Mining, ConocoPhillips, Booking, Anheuser Busch, Canadian Natural Resources, TC Energy, Cenovus Energy, Centerra Gold, BCE, Fairfax Financial, Snap, Jamieson Wellnewss, ArcelorMittal, DraftKings, Clorox, Brookfield Infrastructure, Sirius XM, Smith & Nephew, Open Text, Gildan Activewear, Wayfair, TransAlta, Lightspeed Commerce, Canada Goose, Westshore Terminals

Friday Aug, 2

France and Italy industrial production for June

1030 am ET: Bank of Canada market participants survey for the second quarter

830 am ET: U.S. nonfarm payrolls for July. Consensus is for net job gains of 175,000, cooling from June’s 206,000. The unemployment rate is expected to hold steady at 4.1%. Average hourly earnings are expected to rise 0.3% from June, or up 3.7% from a year ago.

10 am ET: U.S. factory orders for June. Consensus is for a monthly increase of 0.5%.

Earnings include: Algoma Central, Atco, Boston Pizza Royalties, Brookfield Business, Exxon Mobil, Chevron, Enbridge, Nintendo, Imperial Oil, Telus, Magna International, Brookfield Renewable, Canadian Utilities, Dorel Industries, Fluor, Telus International

The Nasdaq Composite dropped for a second day Thursday as Wall Street continued its rotation out of technology stocks.

The Nasdaq Composite fell 1.5%, while the S&P 500 declined 0.6%. The Dow Jones Industrial Average rose 130 points. The Russell 2000 gained 1% as investors continued their rotation into small caps.

Investors ditched some of 2024′s winning tech names for a second day, dragging down the S&P 500′s information technology 2%. Communication services dropped 1.3%. Nvidia slumped 6%, while Super Micro Computer declined about 5%. The VanEck Semiconductor ETF shed 3.6%. Megacap stocks Meta Platforms, Microsoft and Alphabet fell 2% each.

Investors also assessed a second-quarter GDP report that showed the economy grow 2.8%, and much more than expected. Economists surveyed by Dow Jones had anticipated growth of 2.1%.

Wednesday’s trading session saw intense declines for the S&P 500 and the Nasdaq Composite, driven by disappointing quarterly reports from Alphabet and Tesla. Both the broad-market index and the tech-heavy benchmark posted their worst session since 2022, while the Dow shed roughly 504 points.

Investors have come to view the recent declines as a sign of an overdue correction in an overbought market, which is now seeing a rotation away from megacap tech into small-cap stocks and more cyclical areas.

Truist’s Keith Lerner believes there is more room to run in this corrective phase, despite a favorable view toward the tech sector.

“This choppier market action of late is consistent with our expectations and is set to continue,” he said in a note to clients. “Our base case is that the longer-term bull market remains intact, but it’s often two steps forward, one step back.”

Ford Motor shares tumbled 16% after the company’s second-quarter earnings came in much lower than analysts expected. Chipotle slipped 3% despite topping earnings and revenue expectations, while ServiceNow popped 11% on stronger-than-expected earnings.

Cryptocurrencies fell one day after a reversal in technology stocks pushed the S&P 500 and Nasdaq Composite to their worst day since 2022.

Bitcoin was lower by 2% at $64,299.18 early Thursday, according to Coin Metrics. Disappointing quarterly earnings from from Alphabet and Tesla late Tuesday weighed on the rest of the tech sector as investors rotated out of high-risk assets, including cryptocurrencies.

“It’s quite clear the setbacks are more about bigger picture macro forces, with global financial markets in turmoil,” said Joel Kruger, market strategist at LMAX Group. “Concerns around the health and outlook for the global economy have intensified amidst softer economic data, downbeat US earnings, and ineffective accommodative central bank moves. Consequently, there has been nowhere to hide, with most major assets across currencies, commodities and stocks relenting to traditional safe havens.”

The market is also still in the throes of an ongoing Mt. Gox repayment schedule that has resulted in a persistent round of bitcoin selling pressure this month, he added.

Meanwhile, ether fell 6% to $3,172.59 as newly-launched ether exchange-trade funds traded for a third day. The Grayscale Ethereum Trust (ETHE), which converted to an ETF, saw $484 million in outflows in the previous session.

“What is happening is the same as when spot bitcoin ETFs were launched back in January,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “Grayscale’s Ethereum trust had been trading at [a] discount for a long time, so traders may have bought some shares of the trust and are now selling spot ETH for arbitrage — this is also what happened for bitcoin when the ETFs started trading.”

https://www.cnbc.com/2024/07/25/crypto-market-today.html

• Real gross domestic product increased at a 2.8% annualized pace in the second quarter, above the 2.1% forecast.
• The personal consumption expenditures price index, a key measure for the Fed, rose 2.6% for the quarter, down from the 3.4% move in Q1. Core PCE prices were up 2.9%, down from 3.7%.
• However, the report also indicated that the personal savings rate continues to decelerate, at 3.5% for the quarter, compared with 3.8% in Q1.
• Initial jobless claims declined by 10,000, while durable goods orders unexpectedly plunged.

https://www.cnbc.com/2024/07/25/us-gdp-q2-2024.html

Grocery and drugstore retailer Loblaw Cos. Ltd. reported its second-quarter profit decreased compared with a year ago.

The parent company of Loblaws and Shoppers Drug Mart says it earned a profit available to common shareholders of $457 million or $1.48 per diluted share for the quarter ended June 15.

The result was down from $508 million or $1.58 per diluted share in the same quarter last year, which Loblaw attributed primarily to charges related to the settlement of class action lawsuits. On Thursday, the grocer announced it and parent company George Weston Ltd. have agreed to pay $500-million to settle a class-action lawsuit regarding their involvement in an alleged bread price-fixing scheme.

Revenue for the quarter totalled $13.95 billion, up from $13.74 billion a year earlier.

Food retail same-stores sales rose by 0.2 per cent, while drug retail same-store sales increased by 1.5 per cent, with front store same-store sales down 2.4 per cent and pharmacy and health-care services same-store sales up 5.4 per cent.

On an adjusted basis, Loblaw says it earned $2.15 per diluted share in its latest quarter, up from an adjusted profit of $1.94 per diluted share a year earlier.