Is the stock market still recovering now?
The stock market continues to recover, ignoring the risks of re-imposing lockdown restrictions due to the worsening epidemiological situation in the United States and several other countries. The growth of risky assets is supported by expectations of additional measures of economic support in the USA and EU. Cross-party negotiations on a new package of economic stimulus will start in the United States this week, and the EU will hold a summit, at which the formation of a recovery fund will be discussed.
The dollar continues to lose ground amid low demand for safe-haven assets. Last week, the Fed announced that its balance sheet expanded, however, the expansion was due to the purchase of treasury bonds and mortgage-backed securities. The demand for repo operations and currency swaps remains low, which indicates a declining demand for the dollar.
The ECB decided not to change its monetary policy, leaving the interest rate at 0%, the deposit rate at -0.5%, and the number of asset purchases at 1.35 trillion euros, which provided moderate support to the single currency.
Main events of the current week
- On Tuesday, data on retail sales in Canada will be presented and minutes of the Reserve Bank of Australia meeting will be published.
- On Wednesday, data on retail sales in Australia, consumer price index in Canada, existing-home sales in the USA, and crude oil inventories will be released.
- Statistics on jobless claims in the United States will be published on Thursday.
- On Friday, data on retail sales in the UK, German manufacturing PMI, UK manufacturing and services PMI and US new home sales will be presented.
Corporate earnings reports
Coca-Cola will release its second-quarter financial results on Tuesday before the market open. The company faced a significant drop in demand for its products during the COVID-19 pandemic due to the cancellation of public events and restaurant closures.
Robotic surgical systems maker Intuitive Surgical will report on Tuesday after market close. The company has a number of advantages, such as a dominant market position, growing recurring revenue, and significant cash reserves. In addition, the company received a $ 420 million contract from the US Department of Defense in May.
Tesla will release its quarterly report on Wednesday after the market close. Tesla shares price have more than quadrupled this year due to better-than-expected second-quarter vehicle deliveries. The growth was also boosted by expectations of new factories being built in the USA and China and the prospect of inclusion of the company’s shares in the S&P 500 stock market index.
Microsoft will release the report on Wednesday after the market close. The company’s market capitalization recently crossed the $ 1.5 trillion mark. The main driver of the company’s revenue growth is cloud services, the demand for which has increased during the pandemic.
Intel will report on Thursday after the market close. Intel is facing a number of adverse factors such as the expected downturn in the PC market, losing market share to competitor AMD, and rejection of Intel processors by Apple.
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