This week was mixed for the financial markets as investors
received key economic data and quarterly results. This article will look at the
biggest news that made the week.
European Central Bank
The ECB delivered its interest rates decision yesterday.
This was a highly-anticipated decision because of the recent trends in the
central banks decisions. As expected, the central bank left interest rates
unchanged. The officials also guided on a rate cut that will likely come in the
September meeting. They also said that there will likely be a return of
quantitative easing. This decision came after a series of weak economic numbers
from the EU. On Tuesday, the PMI data showed that the manufacturing sector was
weakening. Further, survey data from Germany showed that the manufacturing
sector was in a freefall.
Corporate Earnings
This was the busiest week for investors this month as more
than 50% of companies in the S&P 500 index released their quarterly earnings.
This is after 15% of them released their earnings in the previous week. Among
the biggest losers were Boeing, Caterpillar, Ford, and Tesla, which reported
worse-than-expected numbers. Boeing announced that it could cancel the 737-max
plane of the problems persist. Caterpillar attributed the weakness to high
material costs and the weak demand in China. Tesla reported a wider loss than
had been expected while Ford missed the consensus estimates. Among the
best-performers were Chipotle, Google, Facebook, and Starbucks. These companies
announced better results than was expected. In the coming week, the earnings
season will continue, with companies like Apple, Akamai, and Johnson Controls
expected to release.
Crude Oil
This week, the price of crude oil continued to soar after
data from the US showed that the inventories were continuing to decline. On
Tuesday, data from the American Petroleum Institute (API) showed that the US
inventories declined by more than 10.96 million barrels. This was a huge jump
from the previous week’s 1.4 million. A day later, data from the EIA showed
that the inventories declined by more than 10.83 million barrels. US stocks
have been declining as the summer driving season continues.
Turkish Central Bank
On Wednesday, the Turkish central bank delivered the biggest
rate cut in the country’s history. The bank dropped the one-week repo rate from
the previous 24% to 19.75%. The overnight borrowing rate was slashed from 22.5%
to 18.25% while the overnight lending rate dropped from 25.5% to 21.25%.
Surprisingly, the Turkish Lira soared after the rate cut, which is against the
convectional wisdom.
Other Data
The market received a number of key economic data from
around the world. On Tuesday, the existing home sales data declined to 5.27 million
from the previous 5.36 million. This was a 1.7% decline. On Wednesday, the
trade surplus from New Zealand rose after imports and exports declined. The
German manufacturing PMI declined to 43.1 while the composite PMI data from the
European Union declined to 51.5. In the US, the new home sales rose by 7% in
June to 646k. On Thursday, the Ifo business surveys from Germany showed
continued weaknesses. Today, the US will release the first reading of the GDP
data.
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