This week was mixed for the financial markets as investors received key economic data and quarterly results. This article will look at the biggest news that made the week.
European Central Bank
The ECB delivered its interest rates decision yesterday. This was a highly-anticipated decision because of the recent trends in the central banks decisions. As expected, the central bank left interest rates unchanged. The officials also guided on a rate cut that will likely come in the September meeting. They also said that there will likely be a return of quantitative easing. This decision came after a series of weak economic numbers from the EU. On Tuesday, the PMI data showed that the manufacturing sector was weakening. Further, survey data from Germany showed that the manufacturing sector was in a freefall.
This was the busiest week for investors this month as more than 50% of companies in the S&P 500 index released their quarterly earnings. This is after 15% of them released their earnings in the previous week. Among the biggest losers were Boeing, Caterpillar, Ford, and Tesla, which reported worse-than-expected numbers. Boeing announced that it could cancel the 737-max plane of the problems persist. Caterpillar attributed the weakness to high material costs and the weak demand in China. Tesla reported a wider loss than had been expected while Ford missed the consensus estimates. Among the best-performers were Chipotle, Google, Facebook, and Starbucks. These companies announced better results than was expected. In the coming week, the earnings season will continue, with companies like Apple, Akamai, and Johnson Controls expected to release.
This week, the price of crude oil continued to soar after data from the US showed that the inventories were continuing to decline. On Tuesday, data from the American Petroleum Institute (API) showed that the US inventories declined by more than 10.96 million barrels. This was a huge jump from the previous week’s 1.4 million. A day later, data from the EIA showed that the inventories declined by more than 10.83 million barrels. US stocks have been declining as the summer driving season continues.
Turkish Central Bank
On Wednesday, the Turkish central bank delivered the biggest rate cut in the country’s history. The bank dropped the one-week repo rate from the previous 24% to 19.75%. The overnight borrowing rate was slashed from 22.5% to 18.25% while the overnight lending rate dropped from 25.5% to 21.25%. Surprisingly, the Turkish Lira soared after the rate cut, which is against the convectional wisdom.
The market received a number of key economic data from around the world. On Tuesday, the existing home sales data declined to 5.27 million from the previous 5.36 million. This was a 1.7% decline. On Wednesday, the trade surplus from New Zealand rose after imports and exports declined. The German manufacturing PMI declined to 43.1 while the composite PMI data from the European Union declined to 51.5. In the US, the new home sales rose by 7% in June to 646k. On Thursday, the Ifo business surveys from Germany showed continued weaknesses. Today, the US will release the first reading of the GDP data.