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Stocks Move Higher Against a Strong Macro Backdrop and Commodities Buoyed by Tightening Supply and Robust Demand

🤖 #37: Euro Zone CPI & GDP, Nikkei 225, RBA, Japan Government Bonds, USDAUD, Oil

Disclaimer: this is intended for educational purposes only and is not investment advice. Please do your own due diligence.

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💸 In Today’s Newsletter

1. Market Movers

Highlighting the key events that are moving markets.

Global markets are experiencing a mixed outlook: stocks rise while bond yields fluctuate following central banks' decisions. In the FX space, the US dollar strengthens, and in commodities, Brent crude futures approach a three-month high amid tighter supply and robust US demand.

2. Deep Dive

Charts, Articles and TL;DRs

Chinese equities have been outperforming, but hedge fund and mututal fund positioning is low.

3. Sentiment Analysis

Analysing headline sentiment for the world’s top 7 stocks

Today’s sentiment: Bull

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📰 Market Movers

Stocks:

  • Asian stocks are mixed with the Nikkei 225 0.88% higher today, while US and European futures contracts remained flat.

  • The S&P 500 and Nasdaq Composite saw gains in July, driven by optimism around falling inflation and resilient growth. European stocks also performed well, with the Stoxx 600 adding 1.9% for its second consecutive monthly gain.

  • 81% of companies that have reported earnings have exceeded expectations.

  • Earnings today include BP, HSBC, Caterpillar, Uber, Pfizer, Starbucks and AMD.

Bonds:

  • The Euro Zone reported positive economic data yesterday with headline CPI inflation printing at 5.3% in July, below June’s 5.5%, and GDP growth of 0.3% in the second quarter, higher than forecasted. The growth was led by Ireland's economy, which expanded by 3.3% during the period.

  • In Australia the RBA left its cash rate unchanged at 4.1%, hinting at possible future tightening.

  • Bond prices extended gains following the RBA decision, while Treasuries declined.

  • Yields on benchmark 10-year Japanese government bonds have surged to 0.60%, their highest level since mid-2014, following the Bank of Japan's easing of controls on the JGB market.

FX:

  • The Aussie dollar weakened following the RBA decision to keep rates unchanged and is currently trading at 1.50 USDAUD.

  • The dollar hit a three-week high against the yen, last trading at 143 USDJPY as investors sought clarity on the Bank of Japan's recent adjustment to its yield curve control policy.

Commodities:

  • Brent crude futures, currently at c. $85/barrel, have traded near a three-month high on signs of tightening global supply and strong demand in the US.

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🤿 Deep Dive

In light of Chinese stocks outperforming recently (the CSI 300 index gained 4.5% last week, in its biggest monthly jump since November), here are some charts from The Market Ear to mull over.

Chinese equities are cheap

But hedge fund and mutual fund positioning is low

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🧠 Sentiment Analysis

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