Daily global market review

During today's trading session, the market experienced a mix of reactions as investors responded to a multitude of factors, including a flurry of earnings reports, the Federal Open Market Committee's (FOMC) policy decision, and Federal Reserve Chair Jerome Powell's subsequent remarks. As expected, the FOMC voted unanimously to raise the fed funds rate by 25 basis points, bringing it to 5.25-5.50%. The policy directive also acknowledged an upgrade in economic activity, now described as expanding at a moderate pace, compared to the previous description of expanding at a modest pace.

Investor response to the FOMC's move was relatively muted as the market eagerly awaited Fed Chair Powell's press conference. During the conference, Mr. Powell acknowledged that inflation has moderated somewhat since the middle of last year, but emphasized that achieving the two percent inflation target will take time. The Fed's projections indicate that inflation is not expected to reach two percent until around 2025, and the central bank will continue making decisions meeting by meeting without a strict focus on reaching that target.

The major indices fluctuated in response to Powell's commentary but ultimately closed near their pre-announcement levels. Expectations for a second rate hike by the end of the year remained relatively unchanged, with the probability of such a move at any of the remaining FOMC meetings staying below 40%, as indicated by the CME FedWatch Tool.

In the realm of earnings, influential movers like Microsoft and Alphabet saw mixed reactions from investors. Microsoft reported better-than-expected earnings and revenue but faced some profit-taking activity after issuing slightly below-consensus guidance for fiscal Q1 revenues. On the other hand, Alphabet and Boeing offered some support to the market.

The Invesco S&P 500 Equal Weight ETF (RSP) gained 0.2%, demonstrating the market's resilience, while the market-cap weighted S&P 500 closed relatively flat. Regional bank stocks experienced strength as news of a merger between PacWest Bancorp and Banc of California fueled speculation about further merger activity in the sector. This helped the SPDR S&P Regional Banking ETF (KRE) rise by 4.7%, contributing to the Russell 2000's outperformance among its peers with a gain of 0.7%.

In terms of sectors, the S&P 500 communication services sector was the top performer, driven by Alphabet's positive performance, while the information technology sector saw losses due to Microsoft's decline.

On the economic front, reports revealed a 1.8% drop in the weekly MBA Mortgage Applications Index, with purchase applications decreasing by 3.0% and refinance applications remaining flat from the previous week. New home sales declined by 2.5% month-over-month in June, partly attributed to rising mortgage rates affecting affordability. The weekly EIA crude oil inventories showed a draw of 600,000 barrels following last week's draw of 708,000 barrels.

Looking ahead to Thursday, the market will closely watch a series of economic data releases, including the advance Q2 GDP, weekly initial claims, June durable orders, advance goods trade deficit, advance retail inventories, and advance wholesale inventories. Additionally, the market will receive the June pending home sales and weekly natural gas inventories reports. The performance of various sectors was also noted, with communication services, industrials, financials, real estate, and utilities showing strength, while information technology, materials, consumer discretionary, and energy sectors faced weakness.

In the United States, the Dow increased by 82.05 points, representing a 0.23% rise, reaching 35,520.12. The S&P 500 experienced a slight decline of 0.02%, dropping to 4,566.75, with the NASDAQ also decreasing by 17.27 points, or 0.12%, closing at 14,127.28. In contrast, the VIX saw a significant drop of 4.83%, settling at 13.19. In Canada, the S&P/TSX Composite index had a minor increase of 0.05%, closing at 20,561.64, while the S&P/TSX 60 declined slightly by 0.01% to 1,233.29. Moving to Brazil, the BOVESPA increased by 0.45%, reaching 122,560.38. In Chile, the S&P IPSA experienced a decline of 0.49%, settling at 6,379.84, while in Mexico, the S&P/BMV IPC rose by 0.90% to 54,502.09.

Across Europe, there were mixed trends. The STOXX Europe 50 decreased by 0.90%, concluding at 3,973.55, and the STOXX Europe 600 fell by 0.53% to 465.46. In the United Kingdom, the FTSE 100 saw a slight decrease of 0.19% to 7,676.89, while Italy's FTSE MIB had a minimal increase of 0.05% to 28,980.45. France's CAC 40 experienced a notable decline of 1.35%, closing at 7,315.07.

In Asia, the Nikkei 225 in Japan had a marginal decline of 0.04%, reaching 32,668.34, while Hong Kong's Hang Seng fell by 0.36% to 19,365.14. China's Shanghai Composite decreased by 0.26% to 3,223.03. In Australia, the S&P/ASX 200 rose by 0.85% to 7,402.00, whereas South Korea's KOSPI saw a significant decline of 1.67%, settling at 2,592.36. Taiwan's SE had a minor decrease of 0.21%, reaching 17,162.55.

The Indian equity market displayed a mixed performance with some indices experiencing gains while others remained relatively unchanged. Among the highest gaining indices, the BSE Sensex recorded a 0.53% increase, closing at 66,707.20. The Nifty 50 also saw a notable gain of 0.50%, reaching 19,778.30. Both of these benchmark indices performed well, driven by positive market sentiment and factors like corporate earnings and economic data. On the other hand, the India VIX, which measures market volatility, rose by 2.10%, indicating some uncertainty and cautiousness among investors. While the Nifty Smallcap 100 and Nifty Smallcap 50 posted modest gains of 0.17% and 0.66%, respectively, other small-cap indices like the BSE SmallCap and Nifty Smallcap 250 showed smaller increases of 0.22% and 0.33%.

XPEV: XPeng, Inc. ADR Sponsored Class A, saw its price increase by 4.10, resulting in a percentage change of 26.69%. The trading volume for the stock was 138M.

SNAP: Snap, Inc. Class A experienced a price decrease of 1.78, representing a percentage change of 14.23%. The trading volume for this stock was 137M.

NIO: NIO Inc. Sponsored ADR Class A witnessed a price increase of 1.26, resulting in a percentage change of 10.58%. The trading volume for NIO was 135M.

TSLA: Tesla, Inc. encountered a slight price decrease of 0.93, representing a percentage change of 0.35%. The trading volume for Tesla was 95M.

RIVN: Rivian Automotive, Inc. Class A saw its price increase by 1.80, resulting in a percentage change of 7.10%. The trading volume for this stock was 73M.

T: AT&T Inc. witnessed a price increase of 0.09, representing a percentage change of 0.61%. The trading volume for AT&T was 62M.

GOOGL: Alphabet Inc. Class A experienced a price increase of 7.06, resulting in a percentage change of 5.78%. The trading volume for this stock was 61M.

MSFT: Microsoft Corporation encountered a price decrease of 13.21, representing a percentage change of 3.76%. The trading volume for Microsoft was 58M.

AMZN: Amazon.com, Inc. saw its price decrease by 0.98, resulting in a percentage change of 0.76%. The trading volume for Amazon was 53M.

AMD: Advanced Micro Devices, Inc. witnessed a price decrease of 2.91, representing a percentage change of 2.58%. The trading volume for AMD was 51M.

Regarding cryptocurrencies, the Nasdaq Crypto Index experienced a rise of 1.33%, concluding at 1,724.46. Bitcoin increased by 1.25%, reaching 29,597.00, while Ether rose by 1.37% to 1,883.50. Litecoin had a slight gain of 0.35% to 89.80, and XRP increased by 2.60% to 0.73.

In the bond market, yields experienced changes. The 3 Month Treasury yield rose slightly to 5.275%. Meanwhile, the 2 Year Treasury yield declined to 4.849%, and the 5 Year Treasury yield decreased to 4.115%. The 10 Year Treasury yield also saw a slight decline, closing at 3.867%, while the 30 Year Treasury yield dropped to 3.944%.

Finally, in the currency exchange market, the Euro/US Dollar rate saw a minor increase of 0.30%, reaching 1.1087. The British Pound/US Dollar rate also rose slightly by 0.33% to 1.2942. The US Dollar/Canadian Dollar rate increased by 0.26% to 1.3207, while the US Dollar/Swiss Franc rate declined by 0.46% to 0.8608. The US Dollar/Japanese Yen rate decreased by 0.52%, settling at 140.3380.

The Bloomberg Commodity Index (BCOMTR:IND) saw a slight decrease of 0.64%, closing at 241.19, with a high of 242.50 and a low of 240.84. Similarly, the UBS Bloomberg CMCI (CMCITR:IND) and Reuters/Jefferies CRB (CRYTR:IND) indices both fell by 0.66% and 0.35%, settling at 1,550.52 and 313.54, respectively. The Rogers International Index (RICIGLTR:IND) encountered a decrease of 0.89%, closing at 3,832.00. On the other hand, the S&P GSCI (SPGSCITR:IND) experienced a positive turn, rising by 0.50% and concluding at 3,548.85 (yesterday).

In the energy sector, various commodities witnessed changes as well. WTI Crude Oil (CL1:COM) declined by 0.87%, settling at USD 78.94 per barrel, while Brent Crude (CO1:COM) dropped by 0.85%, closing at USD 82.93 per barrel. RBOB Gasoline (XB1:COM) showed a gain of 1.90%, finishing at 290.74 USd/gal. On the other hand, Natural Gas (NG1:COM) experienced a decrease of 3.22%, reaching USD 2.64/MMBtu, and Heating Oil (HO1:COM) rose by 2.36%, concluding at 284.32 USd/gal.

In the realm of precious and industrial metals, Gold (GC1:COM) gained 0.53%, closing at USD 2,013.40 per troy ounce for the December 2023 contract. Meanwhile, the Gold Spot (XAUUSD:CUR) increased by 0.40%, settling at USD 1,972.85 per troy ounce. Silver (SI1:COM) observed a rise of 1.09%, closing at USD 25.10 per troy ounce, while Copper (HG1:COM) decreased by 0.27%, settling at 390.50 USd/lb. Platinum Spot (XPTUSD:CUR) experienced a decrease of 0.23%, concluding at USD 968.85 per troy ounce.

In the agriculture sector, Corn (C 1:COM) and Wheat (W 1:COM) both faced declines of 2.92% and 5.33%, reaching 548.75 USd/bu. and 719.75 USd/bu., respectively. In contrast, Cocoa (CC1:COM) showed a gain of 2.36%, closing at USD 3,552.00 per metric ton for the September 2023 contract. Cotton #2 (CT1:COM) experienced a rise of 0.99%, concluding at 87.93 USd/lb. Live Cattle (LC1:COM) also witnessed a marginal increase of 0.06%, settling at 179.70 USd/lb. for the October 2023 contract. Throughout the day, these fluctuations in the commodity and energy markets reflected the ever-changing dynamics of the global economy.

Tomorrow, several key economic indicators are scheduled for release.

At 8:30 AM ET, the retail inventories (advance) report will be made public, providing insights into month-over-month changes in inventories. This report is expected to have a low impact on the market. Simultaneously, the durable goods orders data will be published, focusing on various categories like new orders, core capital goods, and ex-transportation figures, which are likely to have a high impact. Following this, the international trade in goods report will shed light on imports, exports, and the trade balance, all having a significant impact on the market. At the same time, GDP data will be released, detailing the quarter-over-quarter annual rate and personal consumption expenditures, making this a highly anticipated report.

Later at 8:30 AM ET, the jobless claims figures will be unveiled, including the initial claims level, the 4-week moving average, and the change in initial claims. This report is expected to have a high impact on the market as it provides critical information on the employment situation. Additionally, the wholesale inventories report will be released, showing the month-over-month changes in inventories.

At 10:00 AM ET, attention will turn to the pending home sales index, indicating the month-over-month changes in home sales, which is likely to have a medium impact on the market. Following this, the EIA Natural Gas Report will be published at 10:30 AM ET, revealing week-over-week data on natural gas inventories, with a medium impact on the market.

Lastly, at 11:00 AM ET, the Kansas City Fed Manufacturing Index will be released, providing insights into the current level of manufacturing activity in the region, with a low impact on the market. Traders and analysts will closely watch these reports to gauge the health of the economy and make informed decisions.

• Fed's Data-Dependent Approach: The Federal Reserve's decision to raise rates by 0.25% and its commitment to a data-dependent approach on future rate hikes indicate that the central bank is closely monitoring economic indicators. If economic data continues to show encouraging signs of inflation moderating and growth remaining stable, the Fed may conclude its tightening cycle and refrain from further rate hikes in the near term.
• Tech Sector Performance: The tech sector's earnings have been a focus, with companies like Alphabet and Microsoft beating estimates but facing varying reactions from investors. Given the significant year-to-date gains in the tech sector, there are high expectations for continued strong performance. However, Microsoft's announcement of more tepid sales growth and a forecasted slowdown in its cloud-computing business suggests some caution. Tech earnings will likely continue to be closely watched, and valuations may be under scrutiny as investors assess whether the sector can sustain its current expansion.
• Consumer Resilience: Consumer resilience is a common theme mentioned in the earnings reports. Companies like Visa have reported stable consumer spending despite moderating inflation, indicating that consumers are maintaining their spending behavior. This resilience in consumer spending may provide some support to the broader market, as it indicates continued economic strength and consumer confidence.
• European Market Impact: European markets were lower, and a surprising drop in U.S. sales from luxury brand LVMH was a focus. This drop in sales from a luxury brand could potentially signal shifts in consumer behavior or spending patterns, and investors may monitor the European market for further signs of economic impact or consumer sentiment changes.