Global Markets Steady as Investors Eye Earnings and Economic Data
World markets stabilize post-Biden exit from U.S. presidential race. Investors shift focus to corporate earnings and economic indicators, with tech giants' reports in spotlight.
Global financial markets have stabilized as investors shift their attention from Joe Biden's withdrawal from the U.S. presidential race to upcoming corporate earnings reports and economic data. The pan-European STOXX index, which tracks 600 companies across 17 European countries, showed a slight increase of 0.1%, while U.S. futures experienced a minor dip of 0.2%.
Michael Brown, a senior strategist at Pepperstone, noted:
"Markets appear to be in a bit of a holding pattern this morning having now digested the weekend news flow of Biden quitting the presidential race."
The U.S. dollar remained steady against a basket of currencies, while the Japanese yen strengthened by 0.6% against the dollar. This movement comes as pressure mounts on the Bank of Japan to consider rate hikes in its upcoming meeting on July 31, 2024.
Asian markets showed resilience, with Taiwan's benchmark index rebounding by over 2% after five consecutive sessions of losses. This recovery aligns with the broader rebound in chipmaking shares, particularly affecting Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker.
Investors are now focusing on upcoming earnings reports, especially from tech giants Tesla and Alphabet. These companies, part of the "Magnificent Seven" group of influential tech stocks, are expected to set the tone for the tech sector's performance. The tech sector is projected to increase year-over-year earnings by 17%, while the communication services sector is anticipated to see a 22% rise in profits.
Economic data will also play a crucial role in shaping market sentiment. The U.S. gross domestic product (GDP) for the second quarter is forecast to show annualized growth of 2%, with the Atlanta Fed GDPNow indicator suggesting potential upside risk with a 2.7% estimate. Additionally, the core personal consumption expenditures (PCE) index, the Federal Reserve's preferred inflation measure, is expected to indicate a slight decrease in annual inflation to 2.5%.
In the cryptocurrency market, Bitcoin experienced a 1.8% decline, trading at $66,920. This movement comes amid speculation about potential regulatory approaches under different U.S. administrations.
As markets navigate these various factors, investors remain vigilant, balancing political developments with economic indicators and corporate performance to guide their investment decisions.
