This week ahead || Jun 26th - Jun 30th 2023
Inflation, consumer confidence, Nike: What to know this week
Federal Reserve Chair Jay Powell's comments suggesting more interest rate hikes caused a decline in the major indices last week. This week, investors will focus on the Fed's next moves, inflation data, consumer confidence checks, and earnings results from Nike, Carnival, Walgreens, and Rite Aid. The Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation indicator, will be released on Friday. Powell highlighted "core" PCE as stubborn. Housing data, including new home sales and the S&P CoreLogic Case-Shiller U.S. National Home Price index, will be reported. Nike's earnings will provide insights into wholesale retail inventories. Markets are searching for new catalysts as the AI-driven rally in tech stocks slows. Some investors believe the recent pullback was overdue, and there are differing opinions on its significance. Fundstrat's Tom Lee remains optimistic, expecting inflation to cool and the economy to enter an expansion phase.
Russia back in investors' focus after weekend mutiny
Investors are closely monitoring the aftermath of the aborted mutiny in Russia, with expectations of a move towards safe-haven assets such as U.S. government bonds and the dollar when markets open. The withdrawal of Russian mercenaries from Rostov has raised questions about President Putin's grip on power, and investors are concerned about the potential impact on safe-haven assets and commodity prices, considering Russia's significance as an energy and grains supplier. Uncertainty surrounding leadership in Russia could lead to a flight to safety, with investors seeking assets like Treasuries, gold, and the Japanese yen. While markets may not react strongly to the de-escalation, the weakening of Putin's position suggests further developments and potential effects on the U.S. dollar, interest rates, and emerging markets.
Gloom Returns to China Markets as Stimulus Trade Fizzles Out
The Hang Seng China Enterprises Index and the CSI 300 Index of Chinese shares have experienced significant declines, marking the steepest weekly drop since March. The yuan has also weakened, prompting concerns of further declines. The lack of major policy support from Chinese authorities amidst a slowing economy has dampened sentiment. While measures to stimulate the economy have been implemented, market reactions have been muted, as traders remain skeptical about their effectiveness in addressing issues such as high debt levels, weak global demand, and unstable policy shifts. However, some strategists see the current negativity as already priced in and highlight the potential for a trading bounce in Chinese stocks. The focus will be on the economic outlook and corporate earnings until the possibility of further stimulus emerges.
This week in EVs: Tesla Supercharger network picks up more momentum
Rivian, a US electric automotive startup, has announced its adoption of Tesla's North American Charging Standard (NACS), allowing Rivian drivers to access Tesla's Supercharger network in the US and Canada. This follows similar deals between Tesla and Michigan-based automakers Ford and General Motors. Privately owned EV charger manufacturer BTC Power also revealed its plans to adopt the NACS for its chargers starting next year. Analysts and investors are eagerly awaiting the next wave of companies adopting the Tesla standard, with Stellantis and Hyundai among those considering the move. In other news, Chinese EV stocks such as Nio, Li Auto, and Xpeng Inc experienced a boost in trading after China extended a tax exemption policy for new energy vehicles, while Ford secured a historic subsidy of up to $9.2 billion from the US Energy Department to build three battery plants, aiming to boost EV production and compete with Chinese manufacturing. However, Ford also reportedly plans to initiate layoffs in the coming weeks.