Friday's Market Update (July 14, 2023)

15 Jul 2023 by rate3

On Friday, NASDAQ (o:14166, c:14113) increased 3.5% on the opening, putting it on track for its best week since March 17, despite a latter day dip. BTC (o:31126, c:30115) corrected sharply on traders rushing to fixate their profits.

Details
The University of Michigan consumer sentiment rose to 72.6 in July, the highest since Sept 2021. Current conditions and expectations improved, largely due to slowing inflation and stable labor market. Inflation expectations edged up to 3.4% and 3.1% for 1 year and 5 years.

Comment: The increase in consumer sentiment could boost economic growth in the US. Consumers are more likely to spend money when they are feeling confident about the economy. The increase in consumer sentiment could also lead to higher inflation. If consumers are more willing to spend money, businesses may raise prices in order to keep up with demand. The increase in consumer sentiment could also lead to higher interest rates. The Federal Reserve may need to raise interest rates in order to keep inflation under control. Overall, the increase in consumer sentiment in July is a positive sign for the US economy. However, there are still some concerns about inflation, which could weigh on consumer confidence in the future.

Notable Macroeconomic Updates:
Ukraine: Country's trade deficit widened in May 2023. Imports rose 35%, led by machinery, chemical prods. Exports up 7.6%, led by food, base metals. Deal with Russia to guarantee safe corridors could help.

Comments: The widening of Ukraine's trade deficit is a sign that the country's economy is still struggling. The war with Russia has disrupted trade and caused economic hardship for Ukraine. The country is heavily dependent on imports, and the rising cost of imports is putting a strain on the economy.

Brazil: Country's retail sales fell 1% in May, the first contraction in 6 months. The decline was driven by weakness in clothing, furniture, and electronics stores. However, sales of fuel and pharmaceuticals rose. Year-on-year, retail sales fell 1%, the first contraction in 10 months.

Comment: The decline in retail sales is a negative sign for the Brazilian economy. It suggests that consumers are feeling less confident and are spending less money. This could lead to a slowdown in economic growth in the coming months. However, it is important to note that the decline in retail sales was not uniform across all sectors. Sales of essential items, such as fuel and pharmaceuticals, rose in May 2023. This suggests that the Brazilian economy is not in a recession, but it is slowing down. The central bank of Brazil is expected to cut interest rates in the coming months in an attempt to stimulate economic growth. This could help to boost retail sales in the second half of 2023.

Next Week
Here are some of the key economic data releases to watch next week:

US earnings: Major US companies will report earnings next week, including Bank of America, Morgan Stanley, Goldman Sachs, IBM, Netflix, Tesla, and Johnson & Johnson. These reports will provide investors with an update on the state of the US economy and corporate profits.
US retail sales: Retail sales data for June will be released on Tuesday, July 18. This report will be closely watched for signs of consumer spending, which is a major driver of economic growth.
US industrial production: Industrial production data for June will be released on Tuesday, July 18. This report will show how manufacturing and other industrial activity has been performing in recent months.
US housing data: Housing data for June will be released on Wednesday, July 19. This report will include data on existing home sales, housing starts, and building permits. Housing data is a leading indicator of economic activity, so it will be closely watched for signs of a slowdown in the housing market.
China economic data: China will release data on Q2 GDP growth, retail sales, industrial production, and fixed asset investments on Monday, July 17. This data will provide an update on the state of the Chinese economy, which is the world's second largest economy.
Inflation data: Inflation data for the United Kingdom, Canada, Japan, New Zealand, and South Africa will be released next week. This data will show how inflation has been trending in these countries. Inflation is a major concern for central banks, so this data will be closely watched for signs of rising inflation.
Monetary policy decisions: The central banks of Turkey and South Africa will make decisions regarding monetary policy next week. These decisions will be closely watched for signs of how these central banks are responding to rising inflation.
Unemployment rate: Australia will release the unemployment rate for June on Thursday, July 20. This report will show how the labor market has been performing in recent months.
These are just some of the key economic data releases to watch next week. Investors will be closely watching these reports for signs of how the global economy is performing and how central banks are responding to rising inflation.

Bulls and bears are currently engaged in a tug-of-war, with each side trying to gain the upper hand. Bulls are hoping that technical indicators will continue to point to higher prices, while bears are concerned about the macroeconomic outlook and the possibility of further rate hikes from the Fed.

It is difficult to say who will ultimately prevail in this contest. The market could go either way, and it is likely to remain volatile in the near term.