To The Moon

Last Week's Recap

The US Market - All three major U.S. Indexes suffered big losses

• All three major U.S. Indexes struggled last week after a Fitch downgrade weighed on investor sentiment and spurred a sell-off. Investors braced for more possible downside surprises after disappointing earnings from Apple.

• The S&P 500 and the Nasdaq ended the week down by more than 2% each, notched their worst weeks since March, while the Dow fell more than 1%.

• The 10-year Treasury yield has raised in recent sessions had pressured risk assets. It fell back on Friday, still closing at a multimonth high of 4.04%.

• Investors also received more clues into the state of the labor market with Friday’s payrolls report. The data showed 187,000 jobs added in July, less than the 200,000 expected by economists polled by Dow Jones. The unemployment rate also ticked lower to 3.5% from 3.6%.

The US Sectors & Stocks - AAPL logged its worst weekly loss in 9 months

• Only the energy sector of the S&P 500 sectors was in green last week, rising 2.4%, registering the biggest gain out of the 11 broad-based index sectors. Marathon Petroleum(MPC), Pioneer Natural Resources(PXD) and APA Corp(APA) have gained more than 4% each. Other top gainers include Halliburton(HAL) and Exxon Mobil(XOM), up 2% each.

• Apple (AAPL) stock was a big contributor to the market's tough week. The tech titan lost 7% for the week, its worst weekly loss in nine months. Apple beat analyst expectations for quarterly earnings on Thursday, but comments from management on forward guidance left some analysts uneasy. AAPL stock gapped below the 50-day line on Friday following earnings, with its market cap back below $3 trillion.

• A partial counterweight to Apple for the S&P 500 and Nasdaq was Amazon (AMZN). Its shares rose 5.6% for the week, as Amazon’s recent better-than-expected quarterly results has left analysts optimistic.

• Warren Buffett's Berkshire Hathaway (BRK.B) reported a 7% gain in operating profit Saturday morning, with with revenue up 21% to $92.5 billion. Berkshire stock buybacks slowed to $1.4 billion in Q2 vs. $4.4 billion in Q1. The conglomerate's cash pile jumped to $147.38 billion from Q1's $130.62 billion.

• Semiconductor stocks fell as AMD and Qualcomm released messy results. AMD‘s revenue and adjusted EPS declined on a year-over-year basis as excess inventory in consumer electronics continues to weigh on AMD. Qualcomm forecast a lighter-than-expected quarter, as it continued drawing down inventory because of weak smartphone demand.

Hong Kong Market - HSI slipped 1.89%

• Hong Kong stocks slipped for the week, as investors digested a Morgan Stanley downgrade for Chinese stocks. The Hang Seng Index lost 1.89% to close at 19,539.46, while the Tech Index rallied 0.69%.

• The property sector extended its rebound as officials of the People’s Bank of China (PBOC), the country’s central bank, met with representatives from eight private firms including Longfor and CIFI, according to a statement on Thursday. The central bank said it would increase funding support for private companies’ bond issuance and meet the reasonable financing needs of developers.

Australian Market - ASX 200 posted first weekly loss in four

• The S&P/ASX 200 was down 1.3% to close at 7325.4 points, after three consecutive weeks of gains.

• Australia's central bank on Tuesday held interest rates at 4.1% for a second straight month, saying past increases were working to cool demand, but retained a warning that some more tightening might be needed to curb inflation.

• The Reserve Bank of Australia said in its quarterly monetary policy statement that “growth in economic activity in Australia is forecast to remain subdued over the rest of the year, as cost-of-living pressures and the rise in interest rates continue to weigh on domestic demand.”

Singapore Market - STI ended the week lower

• Singapore stocks ended the week lower, tracking losses on Wall Street. The benchmark Straits Times Index (STI) lost 2.26% to close at 3,292.39.

• Singapore market will be closed on Wednesday, August 9, 2023 for National Day.

The Week Ahead

Macro Factors - Inflation takes center stage in the week

• New inflation data set for release on Thursday could help Wall Street regain its footing. Economists polled by FactSet are expecting the consumer price index rose 3.3% in July on a year-over-year basis. And the core CPI, which excludes volatile food and energy prices, to increase 4.8%. his compares with gains for 3.0% and 4.8%, respectively, in June. The CPI is at its lowest level since March of 2021, helping to fuel much of this year’s stock market rally.

• If the reports show inflationary pressures are trending toward the Federal Reserve’s 2% goal, the market could take it as a signal that the Fed is getting close to wrapping up its rate-hiking campaign that began last year.

• Still, market participants expect the Fed has one more rate hike left for its September meeting. CFRA’S Sam Stovall expects the central bank will hike once more to ensure it does have inflation firmly under control, and avoid repeating the mistakes of the 1970s.

Earnings

• Earnings reports this season for the quarter ended in June have continued to surprise some Wall Street analysts as the expected slowdown in profits proves less than feared. Thus far, 84% of S&P 500 companies have reported earnings, with 79% topping earnings expectations and 64% beating revenue estimates, according to Refinitiv.

• A smattering of results will roll out in the week ahead including from major firms like the Walt Disney (DIS), which reports Wednesday. A peek into those results could give insight to the consumer, given Disney’s exposure to travel, leisure and hospitality. Other consumer-facing companies such as casino stock Wynn Resorts will be posting results Wednesday.

• China giant Alibaba(BABA) will report its latest earnings on Thursday. According to Bloomberg, analysts expected that Alibaba’s revenue in the second quarter (the first quarter of fiscal year 2024) will be 223.24 billion yuan, a year-on-year increase of 9.4%, and its adjusted net profit will be 38.4 billion yuan, a year-on-year increase of 79%.

• Li Auto(LI) will report earnings on Tuesday. According to Bloomberg, analysts expected that Li Auto’s revenue in the second will be 27.2 billion yuan, a year-on-year increase of 211%, and its adjusted net profit will be 13.47 billion yuan.