Market Update – July 20 – Stocks rallied; USD down

USDIndex continued last week’s slip and tested 106.80, before recovering. US Stocks continued to rally overnight, after European and US markets posted broad gains yesterday (NASDAQ +3.11%) amid strong earnings and the expected resumption of Russian gas supply to Europe helped lift risk-on sentiment and ease fears of a recession, while the dollar UK CPI inflation lifted to 9.4% y/y in June from 9.1% y/y in the previous month. Core inflation eased slightly, but at 5.8% y/y still remains far, far above target. German PPI inflation eased slightly.

Earnings: Netflix shares jumped after its beat earnings; lost fewer subscribers than expected and says cheaper ad tier is coming in early 2023. Boeing rises on deal to sell jets to 777 Partners, Johnson & Johnson and IBM fall on dollar impact warning, Halliburton, Hasbro &Trust rise after profit beat. Johnson & Johnson beat analysts’ estimates on strength at its pharmaceuticals unit, even as the company cut its full-year adjusted profit forecast due to a stronger dollar. Twitter Inc. and Elon Musk will go to trial in October over whether the billionaire must complete his $44 billion acquisition of the social media company, a Delaware judge ruled on Tuesday. Amazon.com filed a lawsuit against the leaders of more than 10,000 Facebook groups, it accused of publishing fake reviews on the e-commerce site, the company announced on Tuesday.

  • USDIndex was mired at two-week lows to 106.52. It has fallen 2-handles in two days from a 20+ year high of 108.54 last Thursday.
  • EquitiesUSA500 climbed 2.76%, USA100 surged 3.11% followed by a 2.43% jump in the USA30. JPN225 gained 2.7%, the ASX 1.7% and the Hang Seng and CSI lifted 300 1.6% and 0.2%, respectively.
  • Yields 10-year yield higher, into close at 2.986%, trades at 2.96% now.
  • Oil down ro 98.70 & Gold steady at $1707.
  • FX MarketsEURUSD has since climbed to 1.0233 ahead of Thursday’s ECB meeting. USDJPY has corrected to 137.52. Cable at 1.2008.

Today: Canadian CPI. Earnings – Tesla, ASML Holding, Abbott Laboratories etc. For Europe the day of reckoning will come tomorrow when the ECB meeting co-incides with the day the Nordstream 1 pipeline is supposed to re-opening after scheduled maintenance work. If Russia doesn’t re-open and the ECB announcement disappoints Eurozone stocks and the EUR are likely to sell off in tandem with Eurozone peripherals.

Biggest FX Mover @ (06:30 GMT) US100 (+3.10%). Spiked to 12,356. Next resistance 12,600& 12,945. MAs aligned turn lower in 1-hour chart, MACD histogram & signal line hold higher, RSI 66 but falling.

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Andria Pichidi

Market Analyst

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