To The Moon

Last Week's Recap

The US Market - The small caps index jumped 6%

• The stock market had a big rotation last week, away from megacaps and toward small caps. The Russell 2000 Index jumped 6% for the week, as investors see a so-called soft landing for the broader economy giving a boost to smaller companies.

• The Dow closed above 40,000 on Friday, on the back of gains in Home Depot and Caterpillar as investors started to embrace some stocks outside of the technology bull market leaders this week.

• The S&P 500 and Nasdaq posted their worst day on Thursday since late April as investors sold their Big Tech winners in a major market sell-off, pushing Nvidia and Tesla lower by 5.6% and 8.44%, respectively.

• A soft CPI reading put Fed chief Jerome Powell's latest testimony in a more-dovish light, raising the odds of a September rate cut.

• Donald Trump is significantly more likely to win the 2024 presidential election after an apparent attempt to assassinate him on Saturday.

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The US Sectors & Stocks - META lost 7.6% for the week

• The communication services sector was the only loss one in S&P 500 sectors, as a market rotation. While interest rate-sensitive sectors such as regional banks, real estate and utilities won the week.

• The big banks fell on Friday after reporting mixed results as JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) topped profit and revenue forecasts, but missed on a key metric. JPM shares were 1.2% lower even as the bank‘s net interest income (NII) rose 4%, but fell short of the 6.5% growth expected. C dipped 1.8% after it reported a 2.9% decrease in NII, just short of estimates for $13.5 billion, and guided a modest year-over-year decline in 2024 core NII. WFC tumbled 6% after the bank sees 2024 NII falling 7% to 9% and raised its noninterest expense outlook by $1.4 billion.

• Tesla (TSLA) tumbled Thursday, snapping a huge 11-day run after Bloomberg reported the EV giant is pushing out its "robotaxi" reveal event from Aug. 8 to October, allowing more time to build prototypes. For the week, the shares fell 1.3%.

• Meta Platforms (META) saw a big decline of 7.6% for the week. Meta announced Friday that it would remove restrictions placed on former President Donald Trump’s Facebook and Instagram accounts ahead of the Republican National Convention next week. Before, Trump threatened Mark Zuckerberg with prison if he's elected.

• TSMC (TSM) beat sales estimates for the month of June, boding well for its full second-quarter results due July 18. TSMC said its monthly sales rose 33% year over year in local currency to the equivalent of $6.42 billion, topping views for $5.73 billion.

• Delta Air Lines (DAL) earnings fell 12% while revenue climbed 5% to $15.4 billion, both slightly missing. Delta, which hiked its quarterly dividend 50%, guided lower on Q3 EPS. Shares fell solidly, with other airline stocks falling.

• Costco Wholesale (COST) will hike membership fees, which account for the bulk of the retailer's net income, for the first time since 2017. The base membership fee in the U.S. and Canada will rise by $5, to $65 a year, as of Sept. 1. The higher-end Executive Membership will climb $10, to $130 a year. But shares fell solidly on the news.

• Eli Lilly (LLY) will pay $3.2 billion for Morphic Holding (MORF), which has a lead drug candidate for both ulcerative colitis and Crohn's disease. LLY rose for a 12th straight week, hitting a fresh high.

• Homebuilder ETF logged the best weekly performance since late 2022. The SPDR S&P Homebuilders ETF (XHB) jumped 10.8% for the week. LGI Homes and Green Brick Partners led the fund higher with rallies of around 20% each on the week.

Hong Kong Market - HSI surged 2.77%

• Hong Kong stocks capped a second week of gains, as cooling US inflation bolstered expectations that the Federal Reserve will make an interest-rate cut at its September meeting, adding to the lure of non-US dollar-denominated assets.

• The Hang Seng Index surged 2.77% to 18,293.38, the highest weekly gain in two months. CSRC took additional steps to limit short selling and rein in computer-driven quant trading in a bid to revive confidence.

• China’s overseas shipments increase 8.6% from a year ago, the customs office said on Friday, beating the consensus estimate of 8% growth.

4. Baidu (9888.HK) surged more than 15% during the week. Baidu's robotaxis "Apollo Go" is gaining popularity and it is expected to be profitable in 2025.

Singapore Market - STI was up 2.5%

• The Singapore stock market added 2.5% for the week led by increases in the prices of interest rate-sensitive real estate investment trusts (Reits) and property stocks.

• The Singapore securities have been enjoying a surge of activity of late, never more so than on July 12, when the transaction value hit $1.86 billion – the highest since May 31, 2024.

• Singapore’s economy grew 2.9% year on year in the second quarter of 2024, comparable to the revised growth rate of 3% in the previous quarter.

Australian Market - ASX closed at a record price

• Australia’s share market ended the week on a strongly positive note, hitting a fresh record high and establishing Commonwealth Bank as our biggest company.

• The ASX 200 index finished the week up a solid 1.2% to a record 7959.3 points. Commonwealth Bank (ASX: CBA) continued its record-breaking run, closing at an amazing $131.64 per share with a market capitalisation of $221 billion.

• Australian property shares rose strongly with the real estate index up. There were also plenty of positive moves in other interest rate sensitive sectors, including healthcare, consumer discretionary and also gold miners.

The Week Ahead

Macro Factors - The Republican National Convention will highlight

• The second-quarter earnings season is ramping up at an important moment for markets. Around 50 S&P 500 companies are scheduled to report in the week ahead.

• The Republican National Convention is set to be held this week in Milwaukee, which will see Trump formally named the Republican nominee for president. Trump survived an assassination attempt at a rally in Pennsylvania on Saturday. Business leaders were quick to react to the day's events, condemning political violence and praising the former president's "courage under literal fire."

• Economic reports to watch this week will include the Census Bureau's retail sales data for June on Tuesday, the Federal Reserve's latest beige book on Wednesday, and the Conference Board's Leading Economic Index for June on Thursday.

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Earnings

• Expectations for this reporting period are high. FactSet data shows analysts expect S&P 500 earnings rose 8.8% in the second quarter from the year-earlier period. If that’s the case, it would mark the strongest earnings growth going back to the first quarter of 2022 — when profits rose by 9.4%.

• Netflix (NFLX) will be the first Big Tech company to report quarterly earnings during the current reporting period, with the streaming giant set to release results after the close on Thursday.

• And with the AI trade continuing to dominate on Wall Street, investors will pay close attention to results from ASML (ASML) and Taiwan Semiconductor Manufacturing Company (TSM), set for release Wednesday and Thursday, respectively.

• Elsewhere on the earnings calendar, reports from Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC) will wrap up results from Wall Street's biggest banks, while Dow members Johnson & Johnson (JNJ), American Express (AXP), UnitedHealth (UNH), and Travelers (TRV) are all expected to report.