Weekly News Recap 15 – 19 July 2024

News for 15 July 2024

Gold Tests Support Level

Last week, gold prices weakened, closing at $2,411/oz. This decline was due to the U.S. Producer Price Index (PPI) coming in higher than expected at 0.2%, which led to profit-taking in gold.

On July 15th at 7:30 PM, the U.S. is set to announce the New York Manufacturing Index, which is forecasted at -5.5.

U.S. Commercial Bank Stocks See Revenue Increase Despite Pressure from Higher Provisions in 2Q24

Last week, earnings reports for U.S. commercial bank stocks, including JPMorgan (JPM), Wells Fargo & Co (WFC), and Citigroup (C), were released. The earnings per share (EPS) for 2Q24 exceeded expectations at $4.4, $1.33, and $1.52 respectively, driven by increased fee income and investment banking revenues.

However, the market reacted negatively to the news. JPMorgan’s stock fell by 1.2% despite reporting higher quarterly profits supported by increased investment banking fees. Wells Fargo & Co’s stock dropped by 6% after its quarterly net interest income projections came in lower than expected. Citigroup’s stock declined by 1.8%, even though it reported increased investment banking revenues, due to the rising trend in provisions. JPMorgan increased its provisions by $3.05 billion, up 5% year-over-year (YoY) and 62% quarter-over-quarter (QoQ). Similarly, Wells Fargo increased its provisions to $1.24 billion, up 32% QoQ and Citigroup’s provisions rose to $2.35 billion, up 34% YoY.

News for 16 July 2024

Gold Rebounds After Economic Data Contracts

On July 15th, gold prices rose, closing at $2,422/oz. This increase was due to the New York Manufacturing Index contracting more than expected at -6.6. As a safe-haven asset, gold saw increased buying interest following the economic contraction.

On July 16th at 7:30 PM, the U.S. retail sales figures are set to be announced, with a forecast of -0.3%.

Trump Expected to Win Over Biden After Assassination Attempt

The assassination attempt on Donald Trump is expected to lead to his victory over Biden in the upcoming presidential election in November. This would allow Trump to pursue aggressive trade policies, further tax cuts, and widespread deregulation.

On July 15th, Jerome Powell gave a speech at the Economic Club of Washington, D.C., stating that the Fed will not wait until inflation reaches the 2% target before starting to lower interest rates. He also expressed confidence that the U.S. economy will not face a severe downturn following its rapid expansion.

Goldman Sachs shares surged 2.6% after the bank reported second-quarter earnings of $8.62 per share, exceeding analysts’ expectations of $8.34 per share, with revenue at $12.73 billion.

News for 17 July 2024

Gold Continues Strong Momentum

On July 16th, gold prices rose, closing at $2,469/oz. This increase was driven by market anticipation of an earlier-than-expected interest rate cut, leading to a more relaxed market environment that supported gold prices.

On July 17th at 7:30 PM, the U.S. building permits data is scheduled to be released, with a forecast of 1.40 million. Later, at 8:35 PM, Fed member Christopher Waller is set to give a speech.

UnitedHealth Group (UNH) Stock Rises – Following Strong Growth in Health Tech Services

On July 16, UNH reported its 2Q24 earnings, with revenue increasing to $98.9 billion, up 6% YoY. This aligns with an increase in operating profit to $7.9 billion, down 2.4% YoY. The reason for this is the revenue from the Optum Health business (health services through technology), which amounted to $62.9 billion, up 12% YoY, representing 64% of total revenue.

Regarding the business in Brazil, the company is preparing to sell all operations, which is expected to impact earnings per share by approximately $1.28, with the impact already being gradually recognized. The effect on the next quarter will be reduced.

The company’s outlook is expected to continue recovering in 3Q24 after recognizing the impact of the sale of operations in Brazil. Optum Health remains a key driver supporting revenue growth, and the Cyberattack sector is expected to grow strongly. The price target for 2024 is set at $580.

News for 18 July 2024

Gold Forms Doji – Watch for Profit-Taking Pressure

On July 17th, gold prices weakened, closing at $2,458/oz. This decline was due to some investors beginning to take profits, putting pressure on gold prices.

On July 18th at 7:30 PM, the U.S. weekly initial jobless claims are set to be announced, with a forecast of 229,000. Additionally, the Philadelphia Fed Manufacturing Index is expected to be 2.7.

Russell 2000 Index Drops 1% After Rising for 5 Consecutive Days

Concerns over the trade dispute between the U.S. and China have led the Russell 2000 Index, which tracks small-cap stocks, to decline by 1% after rising for five consecutive trading days. This drop comes amid hopes that the Federal Reserve will lower interest rates in its September meeting.

Dow Jones Hits New High for the 3rd Consecutive Day

The Dow Jones Index closed at a new high for the third consecutive day, driven by strong gains in UnitedHealth Group (UNH), a major U.S. healthcare company, and Johnson & Johnson (JNJ). Both companies reported earnings that exceeded expectations.

Tech Stocks Decline Across the Board

Stocks of the “Magnificent Seven” high-market-cap technology companies all saw declines. NVIDIA dropped by 6.6%, Apple by 2.5%, Microsoft by 1.3%, Alphabet Inc. by 1.5%, Amazon by 2.6%, Tesla by 3.1%, and Meta Platforms by 5.7%. This downturn followed Trump’s statement suggesting that Taiwan should financially support the U.S. as a countermeasure against Chinese threats.

TSMC Reports Strong 2Q24 Earnings with Growth Both YoY and QoQ

Taiwan Semiconductor Manufacturing Company (TSMC) reported robust 2Q24 earnings, with revenue rising to NT$674 billion, up 33% year-over-year (YoY) and 10% quarter-over-quarter (QoQ). This growth was accompanied by an increase in operating margin to 42.5%, exceeding the guidance range of 40-42%. Earnings per share (EPS) rose to NT$9.56, marking a 36% YoY and 10% QoQ increase, driven by strong sales of 5nm and 3nm chips. Future revenue from 3nm chips is expected to grow significantly.

For 3Q24, the company has provided guidance of revenue between US$22.4 billion and US$23.2 billion, with gross margin potentially reaching 53.5% to 55.5%.

The 3nm chips are anticipated to improve performance by about 10-15% and reduce energy consumption by 20-25% compared to 5nm chips, which will further boost future gross margins.

News for 19 July 2024

Gold Weakens According to Plan

On July 18th, gold prices weakened, closing at $2,445/oz. This decline was due to the U.S. Philadelphia Fed Manufacturing Index coming in higher than expected at 13.9, coupled with a rebound in the U.S. Dollar Index, which closed at 104.18, putting pressure on gold prices.

On July 19th at 9:40 PM, a statement from a Fed member is expected. The decline in gold prices is anticipated to remain stable.