Daily Digest:
w/c 15 July - Financials earnings reports kick off the week, then we get Netflix results Thursday. US Retail Sales is the standout macro data this week on Tuesday. We also get the latest ECB interest rate decision on Thursday.

Stock Indices Erratic Rebound After Fed, ECB, Apple, US Employment and Regional Bank Rollercoaster


Macroeconomic/ geopolitical developments

  • The theme of last week was the 0.25% interest rate hikes from three major central banks.
  • The Reserve Bank of Australia (RBA) did it unexpectedly, with a surprise 25bps rate hike, when consensus was that they were done hiking. This questions the prospect of previously anticipated RBA rate cuts in 2023.
  • The Fed hiked by 0.25% Wednesday which was fully expected, though interest rate markets are calling the bluff of the Fed, as they stayed firm on fighting inflation, with markets pricing in possible rate cuts as soon as July.
  • The ECB also hiked by 0.25% on Thursday as widely expected and although forward guidance remains hawkish, markets are now beginning to see cracks in the hawkish position.
  • Apple posted solid results Thursday, with positive numbers for iPhone sales. 
  • Friday saw the release of a strong US Employment report, showing incredible resilience after expectations that the labour market is beginning to loosen. The headline jobs number in the report has now beaten expectations for 13 months in a row.
  • A drone attack on the Kremlin has heightened geopolitical risks.

Global financial market developments

  • The major US stock averages were erratic, with a plunge through last week, then a firm rebound Friday, retaining intermediate-term bullish forces. 
  • European indices saw notable losses too, and strong recoveries, in some instances to new multi-month highs.
  • US and European Bond yields were choppy through the Fed and ECB interest rate decisions, but retained a lower yield bias.
  • The US Dollar Index rebounded then reversed lower close to a new multi-month low.
  • Gold pushed higher to a multi-month high and closing in on all-time highs.
  • Oil sold off and rebounded from a multi-week low.

Key this week

  • Geopolitical: A UK holiday Monday, markets there are closed.
  • Central Bank Watch: Bank of England is in focus Thursday, a 25bps rate hike is expected.
  • Macroeconomic data: Wednesday brings the critical data for the week, US CPI.
DateKey Macroeconomic Events
08/05/23Nothing of note, UK holiday with markets closed
09/05/23Australian Consumer Confidence, Chinese trade data
10/05/23US CPI
11/05/23Chinese CPI inflation, Bank of England monetary policy, US Weekly Jobless Claims, US PPI
12/05/23UK GDP (Q1 prelim), UK Industrial Production, US Michigan Sentiment (prelim)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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