Weekly News Recap 8 – 12 July 2024

News for 8 July 2024

Gold Prices Surge as U.S. Unemployment Rate Falls Faster Than Expected

Last week, gold prices rose sharply, closing at $2,391 per ounce. This increase was driven by the U.S. unemployment rate, which came in higher than anticipated and exceeded the Federal Reserve’s annual estimate for 2024 of 4.1%. Additionally, the dollar index weakened, breaking the support level at 105.00 and closing at 104.87. The weaker dollar further boosted gold prices.

Preview of Tesla’s 2Q24 Shows Rapid Recovery – TSLA Stock Rebounds Strongly

Tesla’s stock price has erased all its losses for the year and surged by 27% this week. This rise is attributed to better-than-expected EV deliveries for the second quarter of 2024. Although deliveries were still down by 4.8% year-over-year, the decline was less severe than in the first quarter. This has given investors a reason to hold a positive outlook for the second half of the year.

Tesla is scheduled to report its 2Q24 financial results after the market closes on July 23.

Preview of PepsiCo’s 2Q24 – Signs of Continued Recovery Both YoY and QoQ

PepsiCo’s (PEP) 2Q24 earnings are expected to show an increase in revenue to $22.6 billion, up 1% year-over-year (YoY) and 24% quarter-over-quarter (QoQ). Earnings per share (EPS) are projected to be $2.16, marking a 3% YoY and 34% QoQ increase. This growth is attributed to seasonal consumption recovery, as Q1 typically has the lowest revenue and profit, with a gradual recovery starting from Q2. Q4 is expected to be the peak for both revenue and profit within the year. The gross profit margin (%GP) is expected to stabilize at around 55.0%, while the average gross profit margin over the past four quarters has been 54.5%.

PEP stock is currently priced at $164, down 4% year-to-date (YTD), resulting in a price-to-earnings (P/E) ratio of about 24.5, which is lower than the 4-year historical average of around 27. This suggests that the stock is undervalued, and with the company entering its seasonal peak, it presents a potentially attractive investment opportunity.

News for 9 July 2024

Gold Weakens as Dollar Index Rises

On July 8, gold prices weakened, closing at $2,359 per ounce. This decline was due to the dollar index rebounding from 104.87 to 105.01. The stronger dollar put pressure on gold prices.

Additionally, on July 9 at 9:00 PM, Jerome Powell, the Chairman of the Federal Reserve, is scheduled to make a statement before the U.S. Senate.

Samsung’s 2Q24 Earnings Expected to Show Strong Growth – Boosted by Surging Chip Prices

Samsung Electronics has forecasted a significant increase in its 2Q24 operating profit, surging more than 15 times, driven by the expansion of AI processing which has led to a rise in chip prices. The company’s 2Q24 revenue is expected to reach 74 trillion won, up 23% year-over-year (YoY), with operating profit expected to hit 10.4 trillion won (7.5 billion USD), marking a 1,452% YoY increase.

Observers note that the increased prices for DRAM and NAND chips have contributed to the company’s better-than-expected performance. Samsung is scheduled to report its 2Q24 earnings later this month.

News for 10 July 2024

Gold Rebounds

On July 9, gold prices rose slightly, closing at $2,364 per ounce. This increase was attributed to the Federal Reserve’s statement to the Senate, emphasizing their goal to reduce U.S. inflation to 2.0% before gradually lowering interest rates in the future.

Additionally, on July 10 at 9:00 PM, the Federal Reserve is scheduled to make a statement to the U.S. House of Representatives, which is expected to be similar to the one given to the Senate.

NVDA Rises 2.5%

Nvidia shares surged 2.5%, closing at $131.38 after analysts at KeyBanc raised their price target for the stock to $180. The increase in Nvidia’s stock is another factor supporting the S&P 500 and Nasdaq indices.

U.S. Bank Stocks Rise Ahead – Awaiting 2Q24 Earnings Reports

U.S. commercial bank stocks have risen as investors await 2Q24 earnings reports. JPMorgan (JPM) is expected to report earnings per share (EPS) of $4.14, down 12% YoY and 5% QoQ. Wells Fargo (WFC) is projected to see its EPS increase to $1.29, up 3% YoY and 8% QoQ. Citigroup (C) anticipates an EPS of $1.39, up 5% YoY but down 12% QoQ. Notably, C and WFC are expected to stand out in their earnings performance.

On July 9, shares of JPMorgan and Wells Fargo jumped over 1%, while Citigroup surged 2.8%, ahead of the earnings reports for all three banks scheduled for Friday, July 12.

News for 11 July 2024

Gold Holds Steady at High Levels, Awaiting U.S. Inflation Data Tonight (July 11)

On July 10, gold prices rose slightly, closing at $2,371 per ounce. This increase was driven by Jerome Powell’s remarks to the U.S. House of Representatives, stating that the Fed would not wait for inflation to reach the 2% target before beginning to lower interest rates. This eased market tensions, boosting gold prices.

On July 11 at 7:30 PM, the U.S. June inflation index is set to be announced, with expectations at 3.1%.

However, it is assessed that gold still has supportive fundamental factors in its favor.

World Gold Council Reports Increased Inflows into Gold ETFs in 2Q24

The World Gold Council (WGC) revealed that exchange-traded funds (ETFs) investing in gold globally saw inflows for the second consecutive month in June. This was driven by increased purchases of gold ETFs by funds listed in Europe and Asia.

In its research, the WGC noted that gold ETFs experienced inflows of $1.4 billion, equivalent to the purchase of 17.5 metric tons of gold in June.

The rising gold prices and recent inflows have increased the total assets under management of gold ETFs to $233.3 billion. However, the accumulated gold holdings of 3,105.5 tons remain close to their lowest levels since 2020.

News for 12 July 2024

Gold Forms Triple Top as U.S. Inflation Shrinks

On July 11, gold prices rose to a peak of $2,424 per ounce, driven by lower-than-expected U.S. inflation for June, which came in at 3.0%. Additionally, the dollar index weakened to 104.50, further supporting gold prices.

On July 12 at 7:30 PM, the U.S. Producer Price Index (PPI) is set to be announced, with expectations at 0.1%.

Increased Inflows into the Russell 2000 Index

On July 11, inflows into the Russell 2000 index increased, which tracks small-cap companies sensitive to interest rates. The index rose 3.6%, closing at its highest level since March 2022. This surge was driven by investor optimism that the Federal Reserve’s potential interest rate cuts would support the earnings of smaller companies.

As a result, large technology stocks faced profit-taking pressure. NVIDIA (NVDA) fell 5.57%, Apple (AAPL) dropped 2.3%, Meta Platforms (META) declined 4.1%, Alphabet (GOOGL) decreased by 2.8%, and Netflix (NFLX) fell 3.67%.