Last Week's Recap
The US Market - SPX was near record highs
The stock market rallied to extend gains last week, largely on Friday as Fed chief Jerome Powell signaled rate cuts would start soon. The S&P 500 was back within striking distance of all-time highs set last month.
Powell confirmed that the pivot to rate-cutting is on track for the September 18 meeting, saying, "The time has come for policy to adjust."
However, Powell did not provide specific information on when, or by how big any cuts to the borrowing cost would be. He also dropped his characterization of the labor market as "still strong," and made clear that the Fed wants to avoid any additional labor market cooling.
Market participants are pricing a 25-basis-point rate cut in September, as well as a full percentage point cut until the end of this year, according to the CME FedWatch Tool.
The US Sectors & Stocks - Small-cap jumped
10 of the 11 S&P 500 sectors ended with a positive week. The best-performing group was real estate, which gained 3.6%. The basic asical materials also had a great week, up more than 2.5%. Only the energy sector was in negative territory, with Brent oil pulling back.
Technology stocks rallied with particular strength as investors grew hopeful that a lower-rate environment would benefit tech group. Small-cap stocks also gained on this outlook, with the Russell 2000 advancing more than 3%.
Regional Bank stocks rose on Friday in the wake of Fed Chair Jerome Powell’s speech, saying U.S. officials are on the verge of lowering interest rates. The S&P Regional Banking ETF (KRE) performed better still, climbing 5%, pushing its year-to-date performance to 10%.
Amd (AMD) plans to buy computer hardware design firm ZT Systems for $4.9 billion in a move to better compete with artificial intelligence systems powerhouse Nvidia (NVDA). AMD stock was up more than 4%.
Eli Lilly (LLY) rose record high on Thursday after saying its weight-loss drug, tirzepatide, reduced The company tested its drug patients with prediabetes and obesity. After three years, patients were 94% less likely to have progressed to type 2 diabetes than the placebo group.
Snowflake (SNOW) earnings fell 18%, but topped expectations, while revenue grew 29% to $868 billion, also beating. The data analytics software maker guided fractionally higher on Q3 product revenue. But shares plunged on fears that Snowflake lags in artificial intelligence products.
Cava Group (CAVA) reported an earnings decline, but comfortably beat views as revenue jumped 35% to $231.4 million. Cava raised its outlook slightly for same-restaurant sales growth and adjusted EBITDA. CAVA shares jumped 23% to a fresh high.
Palo Alto Networks (PANW) rose 5% as the company said its next-generation annual recurring revenue from cloud computing products jumped 43% to $4.22 billion, topping estimates of $4.1 billion.
Hong Kong Market - HSI set a third consecutive weekly gain
Hong Kong stocks recorded a third consecutive weekly gain with the Hang Seng Index (HSI) gained 1%.
Alibaba (9988.HK/BABA) upgraded its Hong Kong listing to primary status, a move that is expected to attract huge investments from mainland China.
NetEase (9999.HK/NTES) reported its earnings below expectations, leading to a 7% drop in its stock price over the week. Q2 revenue grew by 6% year-over-year, falling short of expectations, while net profit attributable to shareholders declined by 13% year-over-year.
Baidu (9888.HK/BIDU) fell by 2% over the week following the release of its second-quarter earnings, which showed revenue remaining nearly flat year-over-year and slightly below market expectations. However, net profit grew by 5%, exceeding expectations. Still, the core advertising business weakened, with online revenue down 2% year-over-year.
Xiaomi Group (01810.HK) released what it called its "best quarterly report in history," with nearly all figures exceeding market expectations. Notably, its automotive business generated first-quarter revenue of 6.4 billion yuan, with a gross profit margin of 15.4%, and 27,000 vehicles delivered in the quarter. Xiaomi's stock rose nearly 9% over the week.
Singapore Market - STI was up 1.1%
Singapore stocks rose slightly this week, with the STI up 1.1%, on easing recession fears and Singapore July core inflation 2.5% y/y, lowest in more than two years.
Singapore’s core inflation slowed more than expected in July, while headline inflation maintained the same pace as in the previous month. July’s headline inflation was 2.4%, the same rate as in June and just a nudge lower than the median forecast of 2.5% by private-sector economists polled by Bloomberg. Core inflation, which excludes accommodation and private transport, was 2.5%.
Shares of in-flight caterer and ground handler $Sats(S58.SI)$ jumped 12.6% this week, as it swung back into the black for the first quarter of fiscal year 2025 on higher revenue.
Australian Market - ASX continued to rally
It was a close-run thing but the Australian share market recorded its first fall after ten positive sessions on Friday. However, the benchmark index ASX200 advanced 0.5% or 42.7 points to 8013.8 points for the week, as investors cheered stronger-than-expected results from software player WiseTech, which finished the week up 28.1 per cent on a valuation of $40.2 billion.
Another strong performer was burrito franchise chain Guzman y Gomez (ASX: GYG) with its shares hitting a record post float high of $35 before closing up 3.5% for a still strong close of $34.71.
The Week Ahead
Macro Factors - All eyes on Nvidia
Wall Street rebounded from August lows will be put to the test this week with a highly anticipated earnings release from AI leader Nvidia (NVDA) after the bell on Wednesday.
On Friday, the July PCE could serve as further confirmation that the Fed is well on its way to its 2% inflation objective. Economists polled by FactSet anticipate PCE to show increases of 0.2% month on month and 2.6% from the year-earlier period. On a "core" basis — which excludes the volatile categories of food and energy — it is expected at 2.7% year on year.
McCulley, the former chief economist at PIMCO, believes the August jobs report, due out on Sept. 6, will be “hugely important.” If the report isn’t positive, he expects the odds of a 50-basis-point cut to increase at the September FOMC meeting.
Earnings
Wall Street is bullish heading into Nvidia’s earnings results, figuring any hiccups to its next generation AI chips does little to dim the earnings potential of a company that essentially has a monopoly on the market. Updates on any potential delays for Nvidia's new Blackwell chip will be in particular focus.
Earnings from Salesforce (CRM), Best Buy (BBY), Dell (DELL), and Lululemon (LULU) will also be in focus.
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