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Stock Market July 26: is the party over? US GDP exceeds expectations but the Nasdaq falls again and the Magnificent 7 disappoint

There are many reasons for the boom in the stock markets these days, but the detonator is above all the company quarterly reports which, from high tech to luxury, have so far disappointed expectations. Yesterday Milan was the black jersey of Europe

Stock Market July 26: is the party over? US GDP exceeds expectations but the Nasdaq falls again and the Magnificent 7 disappoint

The party is over? Almost suddenly, on Thursday, sales jumped Wall Street, thanks to the disappointing results of Alphabet and, above all, Tesla which lost 12% on Wednesday, the worst stock on the Nasdaq. But the decline hits a rapidly growing economy, "the best in the world", he underlines US President Joe Biden. The bull run of recent months, triggered by the boom inArtificial intelligence, is not a flash in the pan, but a phenomenon to be interpreted in a particular context. The index Magnificent Seven it lost 5,9%, slipping to one-month lows. All components waiting for a rebound are in red.

Stock market July 26: Wall Street and the arrival on the scene of Kamala Harris

From a chart point of view, the trend of the Nasdaq Composite (17.181) would only be compromised in the event of a drop below 15.400 points, so there is still room for profit taking. There is therefore an obligation to understand the determinants of this hole, also for political analysis purposes, given that the change of course coincided with the arrival on the scene of Kamala Harris capable of undermining the verb anti-tax Dear to Donald Trump. Biden's budget project focuses on taxation of companies and the wealthy, touching on the taboo of successions. The response of the Republicans in Congress, waiting for Trump, is a déjà vu of unlikely or overestimated “savings”.

The political interpretation of the decline, however, is not very convincing. Also because yesterday the decline diminished in the afternoon; The US GDP grew by +2,8% in the second quarter from 1,4% previously; a figure linked to the accumulation of inventories and the recovery of personal consumption but which should provide some relief to stressed markets, showing that the second quarter was generally solid. However, we note that the economy appears to be in decline and this could cause continued volatility in the coming months.

The feeling is that the stock exchanges are set to pay, among other things, the slowdown in the labor market (unemployment falling to 3,4 from 4,1%).

Stock market July 26: numbers and concerns

The numbers confirm the concerns. After a day of general setback for theAsia (in Tokyo the Nikkei 225 had lost 1,11%) and also for theEurope (as evidenced by the 1,12% decline in the Eurozone benchmark Eurostoxx 50), the negative trend was more than confirmed at Wall Street, in the wake of a real sell-off for tech. It is no coincidence that the Nasdaq Composite plummeted on Wednesday, marking the worst performance of the three main New York indices, a sharp decline of 3,64% (654,94 points), and consolidating below the threshold of 18.000 points (on Thursday it closed at -0,93 percent). The worst stock on the Nasdaq on Wednesday was Tesla, which collapsed by 12,33% at the close (Nvidia had instead closed down by 6,80%).

It didn't go any better in Europe. TO Paris sharply declining yesterday the luxury giant Kering (-7,17%). Also on Wednesday, with the market closed, the company announced a drop in revenue of 11% to 9,018 billion euros in the first half of the year. Sales of Gucci (-20% to 4,085 billion) and Yves Saint Laurent (-9% to 1,44 billion) fell. Kering's recurring operating profit fell by 42% to 1,58 billion and the company now expects a 2024% decline in this indicator in the second half of 30 as well. Also back on Cac 40 Renault (-8,22%). The group closed the first half of the year with stable revenues at 26,958 billion euros (+0,4%) and sharply declining margins: operating profit went from 2,09 billion to 1,898 billion and net profit collapsed from 2,093 billion to 1,293 billion euros

A Frankfurt Infineon's declines were notable (-6,15%) as it suffered the impact of the data and the cut in STM's guidance in addition to the negative sentiment brought to tech by the collapse of the Nasdaq on Wednesday. Also backlogged car titles such as Volkswagen (-2,27%). Finally, among others, it is worth noting the decline in Nestlé in Zurich (-3,59%): the food giant recorded sales of 45 billion francs down by 2,7%.

Stock Market July 26: links between Japanese savers and our markets

Finally Italy, again black sheep of the price lists despite the resistance of the bankers led by Unicredit. stellantis closes the semester with revenue down 14% and net profit down 48%, but confirms annual forecasts and predicts over 20 new models for 2024. St Microelectronics revises revenue estimates downwards. Saipem is growing, with net profit almost tripling and revenues increasing by 20%.

Finally,Asia. The Nikkei 225 fell 3,28% on Wednesday morning, according to consensus Reuters estimates that at the meeting on 30-31 July the Tokyo central institute will confirm interest rates in the range of 0% -0,10% reached in March, but the outcome of the meeting appears far from obvious, due to above all uncertainty about consumption prospects.

But, explain Alessandro Fugnoli, there is a close link between Japanese savers and the performance of our markets. No one can predict the behavior of Japanese investors or how long it will take for their positions to close. The premise is the idea that America is slowing down and that the long-awaited cycle of lower rates is really about to begin: the yield differential with respect to Japanese bonds changes, making it increasingly less convenient to stay on Treasuries.

What we know is that the shutdown has begun and is destabilizing many financial assets. We also know that there is close coordination between the US and Japanese Treasury on this issue. However, an increase in volatility will be inevitable.

Partially contrasted finally the Chinese squares. Bad Hong Kong waiting for a cyclone: ​​the Hang Seng in fact marks a decline of around 1,60%. In Sydney, the S&P/ASX 1,29 fell by 200% at the close, while in Seoul the Kospi dropped by around 1,70%. South Korea's GDP rose 2,3% annually in the second quarter of 2024, slowing from the 3,3% final reading of the first (2,1% increase in the final quarter of last year), On a sequential basis, Korea's economy in the South, however, it recorded a decline of 0,2% compared to the 1,3% progress of the first quarter.

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