Equities have notched up yet another positive week with the SPX now closing above 4400. We are seeing some divergence come through here though, with European equities failing to match US gains over the last month and Japanese equities closing out the week lower with the mixed sentiment around the currently underway Tokyo Olympics.
The US yield curve has moved lower as well and so have yields across DM and EM with the notable exceptions of Brazil and Mexico. Crude has bounced back with WTI at 72 again and the spread against Brent compressing to USD 2 per barrel. Natural gas has seen some considerable gains in the last week (from a low base) as electricity demand picks up. In the Metals space, Gold and Copper and better bid while Silver and Iron ore are lesser so at the moment.Bitcoin seems to be headlining the news cycle in Asia this morning after being talked up by popular figures like Musk and Cathie Wood over the weekend at the B-word conference. It jumped up to levels just shy of 40k before pulling back and Ethereum moved up to the 2300 level as well. This should bode well for Corporate earnings calls this week for those bullish on crypto. The headliners on earnings this week will be big Tech with Apple, Amazon, Facebook, Microsoft and Alphabet expected to add about 30% combined to their revenues (around USD 70 bn). This would follow the stellar bank earnings from earlier and also set up earnings from European banks this week - expected to be broadly positive.The other big event will be the Fed Rate decision - where the language and non-verbal cues will be scrutinized for any hint of tapering coming in sooner than expected in the face of higher inflation. No move on the rates proper is likely to happen. We also have GDP and Inflation data across the Americas and Europe which should help discern the fundamental picture better.China's latest target on the regulatory front has unexpectedly been the Edtech space - they declared that the USD 100 bn industry would no longer be able to go public, accept overseas investment or even seek profits in any way. This would undoubtedly hit the early-stage investors in the space, including Softbank (which is already reeling from the Didi blow) and Temasek. Protests in Europe against lockdowns over the weekend will likely set the mood in that session later on today.
July 26, 2021
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