Market update : get ready for next week

Last week brought several interesting macro news items:

• The US consumer price index (CPI) was the most notable news, with 9.1% year-on-year (YoY) inflation (see below)
• Earlier this month, the German CPI reached 7.60% (vs 7.90% one month ago), while the French CPI only reached 5.80%
• China's gross domestic product (GDP) growth for the second quarter (Q2) of 2022 was only 0.4%, missing the analyst consensus of 1%
• Inversion of the US 10-2 year yield spread around -0.20%, which is often seen as a potential indicator of a coming recession

Following these news, several market participants were afraid of a potential 1% rate hike at the July Federal Reserve (Fed) meeting.

However, this possibility was dismissed, especially after Fed St. Louis' Jim Bullard calmed the market by indicating that a 75 basis points (bps) hike would be more likely.

What to expect for this week?

From a macro perspective, we have two central bank announcements:

• The European Central Bank (ECB) is expected to raise rates to 0.25%, the first time since 2011
• While nearly all economists surveyed by Reuters expect a 25 bps rate hike, 54% also believe that the ECB should raise rates by 0.50% given historically high inflation in the Eurozone (see below)
• The Bank of Japan (BoJ) should maintain its unique dovish stance and keep interest rates unchanged at -0.10%

As these central bank announcements are fairly expected by the market, they should not have much of an impact.

On the corporate side, earnings season continues this week, however the largest market cap companies will release their results next week.

Get ready for next week

Next week will be a major event for investors, due to the announcement of several very important news.

From a macro perspective:

• The Fed will announce its decision on 27 July, with an expected 75 bps hike
• Fed guidance will also be interesting, as Jerome Powell had previously stated that a pause in the current tightening cycle would only occur after a significant decline in inflation
• The publication of the US GDP on July 28 and the Eurozone GDP on 29 July will be closely watched by market participants, especially given the recession fears

Regarding the earning results:

• Apple, Amazon, Microsoft, Meta and Alphabet will release their results
• These publications could have a significant impact on the market, either positively or negatively given their huge market cap

You find below a summary of the most important publications of the coming week :

Conclusion

Next week will be crucial for investors, as some wonder if the bottom of this bear market is near.

The main question will be whether all the bad news has been priced in, allowing for a market rebound, or whether more dark clouds are on the horizon.