Global equity markets recovered to register gains after an initial decline this week. US equities continued to rise for the fourth consecutive week. with the S&P 500 and Nasdaq indices touching record highs. Earlier the equity markets had lagged due to inflation data and apprehensions of Fed Chair Jerome Powell being dismissed, which was later refuted by President Trump. The markets were later encouraged by positive economic data and strong corporate outcomes from the previous quarter. 

Japan goes to a closely run elections this weekend, where Prime Minister Shigeru Ishiba’s ruling coalition is at risk of losing its majority. Tensions in the middle east reemerged this week, after unclaimed drones attacked oilfields in Iraq. Russia also escalated the Ukraine conflict with drones and missile strikes targeting key infrastructure, including energy. President Trump threatened further sanctions on Russia and its trading partners to bring the warring countries to the negotiating table.

Global Updates
  • The MSCI All Country World Index rose slightly after an initial decline earlier in the week. International securities tracked U.S. markets through the week, registering gains by the end of the week. Japan was the exception, registering a decline due to electoral uncertainty. 
  • Japan’s 10-year bond yield rose to 1.595%, the highest since 2008, ahead of the national elections in Japan. Investors are apprehensive of the tax cuts promised by the opposition and the country’s fiscal health. The yields later declined following the news of a decline in headline inflation marginally cooling to 3.3% driven by the easing in inflation in rice prices. 
  • Swiss engineering firm ABB has reported a 37% surge in new orders from the U.S. The AI driven demand for its products led to a 9% jump in operating income to $1.7 billion and a 8% rise in revenues to $8.9 billion. 
  • Swiss pharmaceutical company Novartis posted a larger-than-expected 26% growth in its net income to $4.02 billion in the second quarter. The company also raised its full-year guidance and announced a $10 billion  share buyback program. 
  • Stellantis will be discontinuing its hydrogen fuel cell technology program and hydrogen fueled cars launch due to capital required and lack of consumer interest. 
  • Britain’s Financial Conduct Authority has fined Barclays $ 56 million for its failure to regulate and block money laundering operations.  
  • Taiwan Semiconductor Manufacturing Company posted a 61% jump in second-quarter profits to a record EPS of 15.36 New Taiwan Dollars (NT$) on revenue of NT$ 933.8 billion. TSMC now estimates a third quarter revenue between $31.8 billion to $33 billion.
  • China reported a higher-than-expected 5.2% GDP growth over the second quarter spurred by technology, EVs, services and growth in consumption. However, the economy continues to be vulnerable to the property sector’s struggles with new home prices dropping in June, at the fastest rate this year.  China is increasingly hopeful of export growth with a U.S. trade deal on the horizon. 
  • China has threatened to scuttle BlackRock’s Panama ports deal with C.K. Hutchison if state owned Chinese shipping company Cosco is not made a party to the takeover deal.
  • Conflict risk to oil supplies from the middle east reemerged after drones were used to attack oil fields in Iraq, halving the regions supplies. This followed the Houthi attack on cargo ships last week. Iran backed militias are suspected for leading the as yet unclaimed attacks. These events have reversed the downward trend in oil prices earlier this week due to increased oil supplies.
  • Lithium prices jumped internationally after Chinese company Zangge halted mining operations in Qinghai. China also imposed export controls on lithium battery exports to protect the technology.
U.S. Equity
  • The S&P 500 and Nasdaq touched record highs in the fourth consecutive week of equities posting gains. Investors were enthused by the higher-than-expected retail sales growth of 0.6% in June, following the slowdown in April and May. The decline in unemployment claims was also a positive influence. Earlier this week, inflation data showed a rise in consumer price inflation to 2.7% in June. Core inflation also rose to 2.9%. This was attributed to rising gas, groceries, power and medical prices.  
  • The U.S. Department of Labor reported 7,000 less jobless claims in the week ending July 12th, the fifth week of decline in jobless claims, to 221,000 claims. The better-than-expected data improved market sentiments. 
  • The Genius Act, which encompasses the cryptocurrency regulatory framework has been passed by the U.S. House of Representatives and awaits the President’s signature. 
  • Jet-engine manufacturer, GE Aerospace raised its full-year guidance following a better-than-expected 21% jump in its second quarter revenue to $11.02 billion, generating an EPS of $1.66.
  • PepsiCo. posted a higher-than-expected sales revenue of $22.73 billion with an EPS of $2.12 for the quarter ending June 30th. The company reaffirmed its full-year outlook following the results.
  • Johnson  & Johnson stock gained after the company reported a 5.8% growth in sales revenue to $23.74 billion, generating an EPS of $2.77. The company raised its full-year sales guidance to the $93.2 to $93.6 billion range. 
  • BlackRock reported a record $12.5 trillion in assets under management by the firm.
  • Nvidia stock gained after the company announced a resumption in the supply of H20 AI chips to China. Super Micro Computer and AMD also benefitted from the spillover effects of this decision.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index declined this week.
  • The U.S. 10-year Treasury yield rose to 4.439% and the yield on the 2-year note was slightly lower at 3.892% over the week. 
  • The U.S. Dollar Index rose slightly to 98.43 this week bolstered by encouraging economic data.

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