Weekly market update: The headliners arrive

Fears of escalating trade tensions between China and the US led to a sharp sell-off in US technology stocks. At the same time, early corporate results were mixed, with several profit warnings prompting traders to reduce their exposure to risky assets. The quarterly earnings season is set to intensify over the coming sessions, and tech giants are expected to make their presence felt. In the absence of many traders over the summer period, volatility could well rise a notch.

Weekly variations* TORONTO TSX 22690  +0.07% COGECO COMMUNICATION... +15.31% CANOPY GROWTH CORPOR... +10.26% NOVAGOLD RESOURCES I... +8.15% HUDBAY MINERALS INC. -13.35% FIRST QUANTUM MINERA... -13.43% ERO COPPER CORP. -13.50% DOW JONES INDUST... 40287.53  +0.72% NASDAQ 100 19522.62  -3.98% FTSE 100 8155.72  -1.18% GOLD 2398.32$  -0.43% WTI 78.67$  -4.32% EURO / US DOLLAR 1.09$  -0.03%

This week's gainers and losers

Gainers: DR Horton +13.07%: The homebuilder's third-quarter results were very good, beating expectations. The stock soared by 11.5% on Thursday following the announcement of sales of $9.97 billion, up from $9.73 billion for the same period last year. DR Horton held up well in a difficult market environment due to inflation and high mortgage interest rates. Prospects of lower rates should support business in the coming maturities. UnitedHealth +10.52%: The health insurance giant confirmed its full-year targets following robust second-quarter results. Sales reached $98.9 billion, up nearly $6 billion on the previous year. The number of UnitedHealth customers increased by 2.3 million. Earnings and cash flow also satisfied analysts. Earnings per share are expected to be between $15.95 and $16.40, taking into account the sale of South American operations and the estimated impact of the cyber-attack. EPAM Systems +7.96%: The group specializing in digital services and engineering consulting was supported by Jefferies, which confirmed its Buy recommendation, targeting $237. The broker points to an excess of pessimism on the stock, which has lost nearly 70% since its 2021 highs. The outlook remains very good, and valuation has returned to more affordable levels. Growth should be strong, and margins may hold up better than expected. Blackstone +7.17%: The investment company published its second-quarter results. Profits climbed 3% to $1.3 billion. Higher asset sales in the private equity and credit divisions more than offset a decline in the real estate business. The company recorded inflows of around $40 billion. Losers: Charles Schwab -17.64%: The brokerage firm reported disappointing Q2 results. On the one hand, sales rose by just 4%, compared with the 6% expected by analysts. Secondly, quarterly profit fell slightly year-on-year, from $1.49 billion to $1.47 billion. This was due to the impact of the Federal Reserve's continued high interest rates, which were reflected in the interest it pays on customer deposits and on its own borrowings. However, Schwab is maintaining its sales growth target of 2%, following last year's 9% fall. Domino's Pizza -17.76%: Although the global pizza chain reported quarterly results above expectations, it has lowered its previous forecast of an increase of 1,100 stores per year between 2024 and 2028, to an estimated range of between 825 and 925 units. The company's aim is to remain cautious in an unfavorable economic climate. It has also announced store closures in France and Japan. AMD -16.54%: The Biden administration could tighten trade restrictions towards China with the “Foreign Direct Product Rule”, affecting semiconductor companies like AMD, that have a big chunk of their sales in China. This prospect has already impacted the sector, with notable declines: Nvidia (-6.93%), Broadcom (-4.8%), TSMC (-3.37%) and Qualcomm (-1%). CrowdStrike Holdings -17.87%: The cybersecurity group found itself in the spotlight of the US technology sector this week, but for all the wrong reasons. It caused a major computer failure affecting several sectors, including air transport, banking and the media. The outage was caused by a faulty update to Microsoft's Windows system. As a result, CrowdStrike recorded one of the biggest drop in its share price in America, taking its partner Microsoft with it. Although the outage may damage its reputation in the short term, the company believes that it should not affect demand for its solutions or its market share to the benefit of competitors. Southern Copper Corporation -9.46%: The copper producer is facing massive protests in Peru following the resumption of construction of a mine in the country. The project, estimated at $1.4 billion, had been suspended for years due to opposition from members of the Tambo Valley community on environmental grounds. Despite the opposition, the group says construction of the mine is due to start in 2027. It is expected to produce around 120,000 tonnes of copper per year.

Commodities

Energy : The wait-and-see attitude is visible on the oil markets, torn between concerns over the dynamics of Chinese demand and the anticipation of further monetary easing in the United States. China released mixed economic data this week. Its GDP grew by 4.7% in the second quarter, while economists were expecting growth of 5.1%. This was enough to raise a whole series of questions about Beijing's economic health. In other news, crude inventories continue to melt in the United States, the Houthis remain active in disrupting shipping traffic in the Red Sea, and forest fires threaten production sites in Canada. On the price front, Brent is trading at around USD 85.2, while US WTI is trading at around USD 81.20. Metals : Industrial metal prices are continuing to fall. The mood on the LME remains heavy due to the short-term outlook for demand, which remains strongly linked to the state of health of Chinese industry. On the price front, copper dropped by almost 3% this week to USD 9386 per tonne (spot price). Aluminum (USD 2,335), zinc (USD 2,809) and nickel (USD 1,423) followed suit, while in precious metals, gold hit a new high of USD 2,483, but is poised to close the week around equilibrium at USD 2,420. Agricultural products: In Chicago, corn prices continue to trend downwards due to favorable weather conditions for crops in the United States, synonymous with abundant supply. A bushel of corn is still trading at around 400 cents, while wheat is losing ground at 535 cents.

Macroeconomics

Atmosphere : While the financial community now seems to agree on a first rate cut in September, equity markets have found nothing better to do than nosedive. Admittedly, the weakness of the technology segment is benefiting other segments (including small and mid-caps), but the variations are sufficiently large to worry many. What's more, seasonality isn't helping. Since 1950, the market has tended to consolidate from the second half of the year onwards, before resuming its upward march from early August until the end of September. History may not repeat itself, but it can be a valuable guide in these troubled times. In the meantime, the US 10-year yield has just tested intermediate support at 4.14% (bottom of descending channel), which could trigger a few intermediate rebounds before further easing. In Europe, the ECB left rates unchanged, as expected, after easing in June. Attention now turns to the outcome of the September meeting. Finally, the plenum of the Chinese Communist Party failed to produce any announcements worthy of impressing the market. Crypto: Bitcoin is up again this week (+5.5%), now flirting with the $65,000 mark. The influx of money into Bitcoin Spot ETFs in the United States largely explains this movement. More than $800 million in net inflows have been recorded in these exchange products since Monday, roughly the same amount as last week. In addition, Donald Trump, who is in the running for the US presidential election, is increasingly supportive of the development of cryptocurrencies in the US, contributing to investor enthusiasm for the industry. The other main crypto-currencies followed the same trend as bitcoin: Ether (ETH) up 5.2% to $3,417, Solana (SOL) up 12% to $165, and Binance Coin (BNB) up 6% to $580.

The headliners arrive The last ten days of July are historically among the busiest for quarterly corporate results. Next week, Alphabet, Amazon and Tesla in the USA, and LVMH, TotalEnergies, Nestlé and SAP in Europe, will all be reporting. In all, we have counted 450 publications from companies with market capitalizations of over $5 billion on Western markets over the next five sessions! Data aficionados will be looking to the flash PMI indicators for the major economies in July (Wednesday), as well as the first estimate of US GDP in Q2 (Thursday). The week ends with the US Core PCE inflation data on Friday. Have a great weekend!

Things to read this week

Trump and Bitcoin: A strategic turning point on the campaign trail - Crypto Recap Despite injuries sustained in the recent assassination attempt, former US President Donald Trump is scheduled to speak at a Bitcoin conference in Nashville on... Read more Strategy: Is China becoming unattractive again with Trump and Vance? The Chinese market has been suffering for the past two months, following further disappointments about the country's economic dynamics. The Democratic camp has... Read more CrowdStrike breaks world record for blue screens CrowdStrike is reportedly at the center of a major computer glitch affecting Microsoft and a host of its customers worldwide. Numerous applications have ground... Read more

*The weekly movements of indexes and stocks displayed on the dashboard are related to the period ranging from the open on Monday to the sending time of this newsletter on Friday. The weekly movements of commodities, precious metals and currencies displayed on the dashboard are related to a 7-day rolling period from Friday to Friday, until the sending time of this newsletter. These assets continue to quote on weekends.