A man rests outside the New York Stock Exchange (NYSE) on July 12, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
This report comes from today’s CNBC Daily Open, our new, international market newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, wherever they are. Like you see? You can subscribe HERE.
Waiting for income
US stocks made small gains on Monday, but trading volume was lower than usual as investors braced for second-quarter earnings. Asia-Pacific markets fell on Tuesday. Hong Kong’s Hang Seng Index fell more than 2%, weighed down by losses in real estate and technology.
Undermining China’s economy?
China’s economy is “on the verge of deflation,” said Hong Hao, chief economist at Grow Investment Group, pointing to the country’s falling prices. Meanwhile, China’s lackluster gross domestic product numbers, released yesterday, prompted Wall Street to cut their expectations for China’s annual growth to 5%.
Maximum oil demand
India imported 2.2 million barrels of Russian oil per day in June. But that could peak India’s demand for Russian oil, at least for the rest of the year, said Viktor Katona, lead crude oil analyst at Kpler. Since Russia invaded Ukraine in February last year and instituted oil price caps, India has become one of the main importers of Russian oil.
Merge bonanza
Warren Buffett’s Berkshire Hathaway reduced its stake in Activision Blizzard from 6.7% last year to 1.9% yesterday, according to a securities filing released Monday. The news comes as Microsoft nears completion of its $68.7 billion acquisition of Activision. Buffett previously revealed that Berkshire added to Activision’s initial stake in a bet that the deal would close and cause the shares to rise.
[PRO] Future of bitcoin
Bitcoin is up 80% this year. Last month, it broke — and stayed above — the $30,000 threshold for the first time in months, amid institutional interest like BlackRock filing a spot bitcoin ETF. Here’s where analysts think bitcoin will go next.
Investors were cautiously optimistic yesterday.
Major US indexes rose. The Dow Jones Industrial Average advanced 0.22% to hit its highest close this year. The S&P 500 gained 0.39% and the Nasdaq Composite rose 0.93%.
It should be noted, however, that the trading volume is muted. The SPDR S&P 500 exchange-traded fund, which tracks the overall index, traded 52.4 million shares, below the 30-day average of 79.1 million.
The slow pace of trade makes sense. Major companies are due to release their earnings reports, starting with Bank of America and Morgan Stanley on Tuesday as well as Goldman Sachs, Netflix and Tesla on Wednesday.
Investors are bracing for the reports – and they’re not expecting good news. Analysts expected second-quarter earnings on the S&P 500 to be more than 7% lower than a year ago, according to FactSet data.
But the good news is that last quarter’s earnings may have been the floor. And things are looking up, not only for the markets, but for the economy. The long-awaited US recession? Many analysts now think it’s not too late – maybe it won’t show up.
With consumer and producer price indexes cooling more than expected, “bringing inflation to an acceptable level will not require a recession,” wrote Goldman Sachs chief economist Jan Hatzius, who cut his projection of a recession from 25% to 20%.
JPMorgan Chase’s chief global market strategist Marko Kolanovic doubts a soft landing. But even he noted that “the stability of the US and global expansion should remain in place,” causing the bank to “lower the near-term risks of recession.”
And Ed Yardeni thinks the recession — even if it’s “a persistent recession,” meaning different sectors of the economy are taking turns contracting — is behind us. However, “right now … we’re in a rolling recovery,” Yardeni said.
As earnings reports are released, don’t look at companies’ numbers from last quarter. Keep an eye on their projections for the rest of the year. We can still see signs of hope that economic growth will continue.