Recap –
US stock prices were mixed last week. The S&P 500 fell 1.9%, the Nasdaq dropped by 3.6% and the Dow Jones increased 0.7%. Early in the week Jerome Powell spoke and outlined that the Fed does not have to wait until inflation reaches its target rate of 2% before cutting interest rates; increasing expectations of a rate cut in September. On Tuesday US Retail sales data came in above expectations. The dollar fell early in the week before finishing higher. Gold prices hit an all-time high on Wednesday before ending the week lower. Commodity prices were negatively impacted by lower than expected Chinese growth figures. Platinum prices and Palladium prices both hit one month lows. Natural gas prices hit another two month low on Wednesday but pared some losses at the end of the week. In geopolitics, speculation about whether President Biden will drop out of the Presidential race and noises coming from both camps regarding China and Taiwan roiled the markets. Friday’s global bug in Microsoft devices caused flight delays and shop and bank closures capping a difficult week for some stocks.
This Week–
Over the weekend Israel struck Yemen for the first time, hitting oil storage facilities, in response to an earlier Houthi drone attack on Tel Aviv. President Biden’s announcement on Sunday that his intention is to serve the rest of his term but to drop out of the Presidential race came as a slight surprise for markets early in the week. On Tuesday Tesla missed earnings expectations but had better than expected revenue. Alphabet (Google) meanwhile bettered earnings expectations. This week on Thursday US GDP data and Friday’s inflation linked Core PCE Price Index data are likely to cause most volatility on the market.
Stocks –
Facebook’s stock price fell by 4% by the end of the week, recording a seven week low on Thursday. The pullback in Facebook’s price was part of a broader decline which saw traders rotating away from tech stocks and towards industrials. The AI linked stock has a number of important events including its earnings results on July 31st. There is some speculation that the company might announce a stock split at the earnings call. On July 29th Meta CEO Zuckerberg is due to discuss AI with NVIDIA CEO Huang at the SIGGRAPH conference.
RIVIAN
Rivian stock price traded lower by 2.7% last week, after hitting a six month high in the previous week. The electric vehicle producer announced deliveries of 13,790 vehicles in the second quarter, better than the previous quarter’s numbers. The largest shareholder in the company is Amazon, which owns 16.6% of the company, for which the EV producer will create 100,000 vehicles for use by 2030. On August 6th Rivian will reveal its earnings results.
Commodities
Crude Oil
Crude Oil prices declined by 2.9%, falling below the $79 level by the end of the week and recording a one-month low. Poorer Chinese economic data sparked fears that Chinese oil demand might decline in the coming weeks were capped on Friday after hopes grew that Israel and Hamas could sign a ceasefire agreement. Positive US inventories data midweek may have underpinned prices until Friday’s sharp fall.
Gold
Gold prices decreased 0.3% by Friday’s close but hit a record high of just over $2483 midweek. The precious metal rose after dovish comments from Fed Chair Powell who signaled that interest rate cuts are likely to occur even if inflation does not decline to 2%. CME Group’s Fedwatch tool has priced in a 93% of a 25 basis point rate cut in September and a 60% chance of another rate cut in November.
Cocoa
Cocoa prices dropped by 6.4% to record a one week low. This week cocoa prices were under pressure after forecaster Maxar Technologies stated that rain this week in the cocoa growing regions of West Africa were beneficial for crop growth. However, the European Cocoa Association announced that cocoa grindings rose by 4.1%, suggesting that demand is rising for cocoa in the European market.
USD/CAD
The USD/CAD rose sharply by close of business on Friday to record an almost three week high. An increase in demand for the safe haven dollar pushed the pair higher, while Canadian Retail Sales came in lower than expected on Friday. Next week both the Fed and the Bank of Canada (BoC) will meet to decide on interest rates. The Fed is likely to keep rates unchanged. The BoC might decide to cut rates.