Weekly News 2023/07/17-2023/07/21

 U.S. stocks closed mixed on Friday. The Dow rose 2.51 points, or 0.01%, to 35227.69; the Nasdaq fell 30.50 points, or 0.22%, to 14032.81; the S&P 500 rose 1.47 points, or 0.03%, to 4536.34. For the week, the Dow rose 2.08%, the S&P 500 rose 0.69%, and the Nasdaq rose 0.57%. The Dow notched its tenth straight session of gains, its longest winning streak since August 2017. Earnings reports for US stocks were mixed. Investors are concerned about the impact of the Nasdaq adjustment on the stock market.

U.S. stock earnings are still the focus of the market. U.S. earnings reports so far have been mixed. Seventy-three percent of S&P 500 companies that have reported have beaten analysts' expectations, but that is below the most recent three-year average of 80%.

Barclays analyst Emmanuel Cau said on Friday: “Overall, the results at the beginning of the second quarter seem to be enough to send the stock market higher now. Next week, companies accounting for 50% of the total market capitalization of the US stock market will release earnings reports, and these earnings reports will better reflect the overall performance status.”

On Friday, U.S. stock traders paid attention to the impact of the Nasdaq's weight adjustment event. A special adjustment to the Nasdaq 100 Index will take effect next Monday, a move aimed at reducing the dominance of technology stocks. Passive investors may use the last window to adjust their portfolios to match the benchmark index before the special adjustment takes effect next Monday. The optimism of retail investors in US stocks soared to a 27-month high, and funds poured into technology stocks.

 On Friday, the shell company Digital World Acquisition Corporation (NASDAQ: DWAC), which is seeking to merge with Trump's media group, announced that it had reached a $18 million settlement with the US SEC on fraud charges, and its stock price soared 50.30%. It is illegal for such companies to solicit specific merger targets before actually filing the IPO paperwork. The settlement stipulates that DWAC must pay an $18 million civil penalty if it merges with TMTG and takes it public, but the SEC agrees to waive that penalty if the merger doesn‘t happen by the Jan. 1, 2025, deadline and DWAC returns investors’ funds.

On Friday, Advanced Micro Devices, Inc.(NASDAQ: AMD) CEO Su Zifeng said in an interview with the media that in addition to TSMC, AMD will also consider other foundry manufacturers to produce chips designed by AMD to ensure the flexibility of the supply chain.

After the market closed on Friday, as the Delaware court rejected AMC Theaters (NYSE: AMC) attempt to convert AMC Theaters Preferred Stock (APE) into AMC common stock, AMC Theaters shares rose nearly 70% after hours, while APE fell more than 20%. Assuming the plan is successful, the additional issuance of new shares will dilute the stakes of AMC common stockholders.

According to a report by the US financial media MarketWatch on Friday, in JPMorgan Chases (NYSE: JPM) cross-asset reporting product Cross Asset Spotlight, it has begun to use generative AI to write summaries for human analyst reports, and these AI summaries are accompanied by links to the original reports. In a disclaimer for the research note, analysts at JPMorgan said the use of artificial intelligence was partly driven by the need for investors to sift through a plethora of content in an ever-changing market.

 Bitcoin fell 4.66 percent to $29,755 for the week. The world's largest cryptocurrency by market cap has traded below $30,000 for most of the week. Ethereum fell 5.38% this week to $1,885.

The U.S. Securities and Exchange Commission (SEC) has so far accepted eight spot bitcoin ETF applications, the first from BlackRock on July 13 and the second from asset manager Valkyrie on Monday, amid continued institutional interest in bitcoin ETFs.

Lucas Kiely, chief investment officer at digital asset platform Yield App, told Forkast: “Institutional interest continues to be the driving force behind Bitcoins stability, as large corporations and financial institutions continue to invest in Bitcoin, while the SEC accepts more Bitcoin ETF applications for review.”

“The ETF is designed to open up the Bitcoin market, and the entire underlying cryptocurrency market, to a large number of global investors who have not previously considered buying Bitcoin or other cryptocurrencies. It is increasingly clear that governments prefer regulation over banning cryptocurrencies, and Ripples ruling is a relief for the U.S. crypto industry.”

“Investors and the crypto community are calling this the start of a new bullish cycle. $30,000 is Bitcoin‘s major support level, so keeping Bitcoin above that level plays a key role in Bitcoin’s continued bullishness. This is also a psychological level, and a break below this level will trigger panic selling in the market,” Kenjayev wrote in a statement shared with Forkast.

As Friday, the global cryptocurrency market cap was $1.2 trillion according to CoinMarketCap. Bitcoin has a market cap of $578 billion, or 48.3 percent of the market, while Ethereum has a market cap of $226 billion, or 18.9 percent.

 Gold prices fell on Friday, moving further away from a two-month high hit in the previous session, as the dollar strengthened and investors remained cautious ahead of next week's Federal Reserve meeting. However, spot gold rose for the third consecutive week, but the U.S. dollar index rose again after two weeks, limiting the rise in gold prices. The Fed is almost certain to raise interest rates by 25 basis points at its monetary policy meeting next week. Investors are paying attention to Fed Chairman Powell's speech after the meeting to judge how long the Fed will keep interest rates high.

The dollar index rose 0.2 percent, hitting its highest level in more than a week, after upbeat U.S. jobless claims data last week. A rising dollar makes gold more expensive for holders of other currencies; Daniel Pavilonis, senior market strategist at RJO Futures, said, “Typically, we see weakness in the gold market ahead of an interest rate decision.”

Ricardo Evangelista, senior analyst at ActivTrades, said: “Gold seems to have found a new support level at $1,950, and it seems unlikely that prices will fall below this level in the short term. As the interest rate hike cycle of other major central banks has not yet concluded, the dollar may remain under pressure, which may benefit gold prices. However, US interest rates are unlikely to start falling in the short to medium term, which somewhat limits the upside of gold prices.”

Gold rose to its highest level in about two months on Thursday on hopes that the Federal Reserve will raise interest rates by 25 basis points on July 26 and that it will be the last.

 NYMEX crude oil futures rose 0.74% to $76.21 a barrel; ICE Brent crude futures rose 0.71% to $80.08 a barrel. Both cities rose nearly 1% for the week. Supply could be further hit as evidence mounts of supply shortages in the coming months and rising tensions between Russia and Ukraine. The market expects the Fed's tightening cycle to end sooner, while tightening supplies further lent support to market sentiment.

Recent U.S. data, including weaker-than-expected inflation and slowing job growth, has supported prices, convincing many investors and analysts that the Federal Reserve expects a quarter-point rate hike next week to be the last of the current tightening cycle. Fed Chairman Powell predicted in June that there would be at least two more interest rate hikes of 25 basis points each in the second half of the year.

In early July, Saudi Arabia said it would extend a voluntary production cut of 1 million barrels per day until August, while Russia said it would cut exports by 500,000 barrels per day in August. The latest data from the U.S. Energy Information Administration (EIA) showed that U.S. crude inventories fell last week, supported by higher crude exports and higher refinery utilization rates.

Price Futures Group analyst Phil Flynn said: “The oil market is slowly digesting the imminent tightening of supply, and oil prices are set to rise for the fourth consecutive week. Global supply is starting to tighten and may accelerate sharply in the next few weeks. The increased risk of war will also affect prices.”

On the daily line, NYMEX crude oil stands firmly above $74.91, which is the 23.6% Fibonacci retracement of the upward range from $67.05 to $77.33.

 The yen fell against the dollar on Friday, with the Bank of Japan leaning toward keeping its key yield-curve control policy unchanged next week, ahead of the Federal Reserve and European Central Bank meetings next week. BOJ policymakers prefer to scrutinize more data to ensure wages and inflation continue to rise before deciding whether to adjust policy.

Inflation has consistently exceeded the BOJ's target for more than a year, and markets have been speculating that the central bank could adjust its yield-curve control policy as early as its July 27-28 meeting.

Data earlier on Friday showed Japan's core inflation rate rose to 3.3%, in line with median market forecasts and still above the Bank of Japan's 2% target.

The Federal Reserve and the European Central Bank will also meet next week, and both are expected to hike rates by 25 basis points. Investors will focus on Fed Chairman Jerome Powell's speech after the announcement of the interest rate decision next Wednesday for clues on whether the Fed may continue to raise interest rates.

“We may see one last rate hike in this cycle, but any dovish shift seems remote,” said DWS U.S. economist Christian Scherrmann.

The U.S. dollar index, which tracks the greenback against six major currencies, was up 0.30% at 101.06, up 1.14% for the week, its biggest weekly gain in two months. EUR/USD fell 0.05% to $1.1123.

Sterling fell for a sixth day against the dollar, its longest losing streak since September last year, and was last down 0.07% at $1.2859 in New York.

On Friday, the pound briefly rallied after data showed British consumer spending was stronger than expected in June. Sterling fell 1.75% this week, its biggest weekly drop since early February.

OnePro Special Analyst

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