This week, most global investors and traders focused on corporate earnings as American companies started to release their second quarter. Already, about 10% of companies in the S&P 500 have released their earnings. The big US banks like Citi, Goldman Sachs, JP Morgan, and Morgan Stanley released data that were mostly in line with expectations. Other main companies that released their earnings were the likes of Johnson & Johnson, Netflix, and International Business Machines (IBM). Netflix was particularly in focus after the company announced that it had lost more than 130k subscribers following the recent price hikes. The company added 2.7 million members in the quarter, which was lower than the expected 5.3 million. In the coming week, more than 50% of all companies in the S&P 500 will release their earnings.
Early this week, Iranian foreign minister, Javad Zarif and Mike Pompeo said that Iran was ready to negotiate with the United States, This brought some relief to the market, and the price of crude oil declined accordingly. With the negotiations, investors assumed that there could be sanctions relief and Iran would start exporting more crude oil. However, as the week went on, things changed. First, Iran announced that it was not ready to negotiate with the US about its missile program. Second, Iran announced that it had captured a Panamanian tanker and yesterday, the US announced that it had dropped an Iranian drone. Iran swiftly announced that it would retaliate against America’s action. Therefore, these tensions are expected to continue, which may lead to higher crude oil prices.
China GDP Data
As the world’s second-biggest economy in the world, Chinese economic growth is of great importance to the market. On Monday, the country released data that showed that the economy grew by 6.2%, which was the slowest it has been in more than 27 years. This happened as the impacts of the trade war with US is continuing and like the rest of the world is weakening. This weakening is particularly in Europe and in some emerging market economies.
Other Economic Data
Throughout the week, there were key economic data from around the world. On Tuesday, New Zealand released its CPI data while the UK released its employment numbers. The US released the retail sales data and the import and export price index numbers. On Wednesday, Singapore released its exports and imports data. The non-oil exports and imports declined by a larger margin than was expected. The UK, European Union, and Canada released their CPI numbers and the US released its housing starts numbers. Yesterday, Australia released its employment numbers while the UK released its retail sales data. The Philadelphia Fed Manufacturing index came in at 21.8, higher than the expected 5.0.
United Kingdom Politics
In the United Kingdom, the parliament backed a parliamentary manoeuvre that aimed at stopping a no-deal Brexit. This vote was passed in anticipation that Boris Johnson would become the next premier. Johnson has signalled that he will be willing to leave the EU without a deal if parliament fails to pass a vote on his deal. This made the sterling the best performing developed currency in the world.