Stocks Up, Earnings Season Ends Strong

　　

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Stocks on Wall Street experienced a modest rise on Monday, kickstarting a busy earnings week and concluding a winning month. The Dow Jones Industrial Average climbed 0.28% to close at 35,559.53, while the S&P 500 and Nasdaq Composite registered slight gains of 0.15% and 0.21%, respectively. July’s positive performance was notable, with the S&P 500 recording its fifth consecutive positive month for the first time since August 2021, and the Nasdaq Composite marking its fifth straight winning month since April 2021. This bullish trend was attributed to investors’ growing optimism about a soft landing scenario, supported by strong economic data indicating ongoing labor market strength and cooling inflation. Better-than-expected second-quarter earnings also contributed to the market’s rally throughout the month.

Looking ahead, market participants are closely monitoring the earnings reports of tech giants Amazon and Apple, as their performance could significantly impact the market’s trajectory. Positive guidance from these companies may propel the bull market further and sustain momentum into the fall. Alongside earnings, investor focus remains on the upcoming jobs report, with economists projecting the U.S. economy to have added 200,000 jobs in July, following a 209,000 increase in nonfarm payrolls in June. These factors, along with the Federal Reserve’s recent rate hike, will continue to influence investors’ decisions and shape the market’s direction as the earnings season nears its end.

Data by Bloomberg

On Monday, the overall stock market showed a modest increase of 0.15% across all sectors. Energy stocks saw the most significant gain, surging by 2.00%, followed by real estate with a rise of 0.70%. The consumer discretionary and materials sectors also performed well, each recording gains of 0.56% and 0.52%, respectively. Financials and industrials showed moderate growth with increases of 0.44% and 0.23%, while information technology and utilities experienced more modest gains at 0.13% and 0.03%, respectively. On the other hand, communication services and consumer staples sectors experienced slight declines, both decreasing by -0.03% and -0.46%, respectively. The health care sector saw the most significant decrease, falling by -0.79%.

Major Pair Movement

On Monday, the dollar slightly declined against the euro and sterling, as these currencies rebounded from July lows following below-forecast U.S. core PCE and ECI data, which suggested a lower likelihood of further rate hikes by the Federal Reserve. Despite Chair Jerome Powell’s emphasis on data dependence, rate cuts are deemed unlikely this year. The yen weakened for a second day against most other currencies, driven by yen longs taken before the Bank of Japan’s (BoJ) meeting, where the policy shift underwhelmed expectations. The BoJ’s purchase of 10-year Japanese Government Bonds (JGBs) at 60bps, closer to its prior 50bp cap than the new hard cap at 100bps, led to renewed quantitative easing and favored the yen as a funding currency.

In the foreign exchange market, USD/JPY, EUR/JPY, GBP/JPY, and AUD/JPY all rose, while USD/CNH fell slightly as investors remained cautious about China’s renewed growth prospects. Bond yields, including Bunds, gilts, and Treasury yields, initially rose due to JGB yields’ post-BoJ meeting surge, but they later drifted lower as the month-end and key U.S. data approached.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
AUD	Cash Rate	12:30	4.35%
AUD	RBA Rate Statement	12:30
USD	ISM Manufacturing PMI	22:00	46.9
USD	JOLTS Job Openings	22:00	9.61M

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