Weekly market update : Earnings and data

07/30/2021 | 11:31am
July 30
Weekly market update
intro Despite accommodative comments from the Federal Reserve and good corporate releases on both sides of the Atlantic, the financial markets took a breather this week, weighed down by sell-offs in Asia and persistent health concerns.

On the other hand, Asian stock markets have been in turmoil for the past week, due to the new surge in the number of contaminations in Japan and the restrictions imposed by China on technology and education stocks. The Nikkei recorded a weekly loss of 1%, the Hang Seng fell by 5% and the Shanghai composite lost 4.3%.

In the Eurozone, the CAC40 is doing well, with a weekly gain of 1.1%. Its German counterpart, the Dax, lost 0.4%, while the Footsie was broadly stable, as was the SMI.

On the other hand, the mood in Uncle Sam's country was upbeat, with record highs during the week. The Dow Jones rose 0.1%, the S&P500 was stable while the Nasdaq100 lost 0.9%.

The Hang Seng retreats


The sharp decline in US inventories and the weakening dollar have supported oil prices this week. Like stock market indices, this is a time for risk taking, with investors putting the spread of the Delta variant and its possible impact on demand on the back burner. Brent crude is trading at USD 75 per barrel while WTI is trading at USD 73.5.

Gold has recovered, but without making any sparks fly as rising inflation pushes US real bond yields to new lows (-0.47% for the US 10-year). The precious metal is thus trading at USD 1830. Silver is also rebounding to USD 25.5 per ounce.

Copper, aluminum, nickel, tin, all of these metals are back on the rise. The visible pressure on prices is the result of the growing risk on supplies while demand remains strong, due to the economic recovery.
Equity markets

Align Technology is a manufacturer of 3D digital scanners and the Invisalign clear aligners used in orthodontics, based in San Jose, California.

Its shares soared 7.8 % in the past five days after it posted second-quarter results that topped analyst expectations.

It posted profits of $199.7 million, or $2.51 per share, on sales of $1 billion for the three months ended June 30, 2021. It booked earnings of $40.6 million, bouncing back from a loss at the same time last year.

These results were driven by strength in both adult and teen market segments and across customer channels and regions, especially from the Americas and EMEA regions.

Align Technologies projects its full-year revenues to total between $3.85 billion and $3.95 billion.

Since January 1, the stock gained 26.7 %.

Align Technology


The markets were relatively stable over the week, except in Asia where many companies stalled, largely due to China's regulatory crackdown on its tech giants. Volumes are generally lower, and there are large daily variations up and down. Asian stocks fell sharply at the beginning of the week and then rebounded, but did not return to their initial levels.

On Wednesday, the Fed announced that it will keep rates unchanged even if inflation is stronger and more sustainable than expected. For its part, the IMF updated its world economic outlook. It is optimistic and announces a growth of 6% in 2021 and 4.9% in 2022 (0.5 points higher than expected, due to the vaccination that could allow the economy to recover more quickly). In the US, quarterly GDP grew by 6.5% after a 6.4% increase in the previous quarter. This figure was disappointing as it was well below analysts' expectations (8.5%), but the markets reacted little to this announcement. The consumer price index rose by 6.4%, above expectations.

Here are some other important points of the week: the ongoing floods in China are fueling price inflation on industrial metals, Bitcoin continued its rise initiated last week to reach a high of around $40,900, before taking a breather and returning to around $38,870 at the time of writing this newsletter.


Earnings and data

Aside from a few tech giants whose results disappointed investors (Paypal, Amazon, Shopify), earnings reports were mostly good, reassuring markets about the current high valuations and future prospects. Next week will also be busy: the Manufacturing PMI for the major developed countries will be released on Monday, followed by European producer prices on Tuesday, and services PMIs on Wednesday. While in the East, tensions across Chinese markets are being felt, most global indices look set to stabilize.
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