Weekly Market Update

A Week of Mixed Market Movements: Small Caps Rise as Tech Wavers

July 31, 2024

Last week saw markets treading cautiously as investors digested a flurry of earnings reports and economic data. In the US, equities struggled to stay in the green for most of the week, with the Nasdaq, S&P 500 and Dow all ending lower. The Russell 2000 index of small-cap stocks, however, managed to outperform, rising nearly 3% for the week and sparking talk of a potential rotation away from mega-cap tech names.

On the earnings front, results were mixed. United Parcel Service saw weaker-than-expected revenue and pared back its outlook. General Motors also struggled, with investors focusing on eroding market share in China despite strong domestic demand. However, some companies delivered strong results. Lockheed Martin and GE Aerospace both saw their shares jump after raising profit outlooks and reporting robust demand. Spotify also surged after posting its second consecutive quarterly profit. 

The main focus, though, was on the tech giants known as the "Magnificent Seven." While headline numbers from Alphabet and Tesla beat expectations, their forward guidance spooked investors. Tesla's shares slid 12% after the company reported a delayed robo-taxi rollout, sparking a broader rout in the tech sector.

Economic data also presented a mixed picture. The US economy grew a robust 2.8% in Q2, well above expectations, allaying some recession fears. However, signs of weakness persisted with durable goods orders falling sharply in June and personal income and spending both declining. Core PCE inflation, the Fed's preferred measure, ticked up slightly to 2.6% but in line with expectations, and the "core-core" reading stripped of imputed costs decelerated. All in all, a US soft-landing is still in sight.

In contrast to the US, data out of Europe was more uniformly bleak. Flash PMIs for July showed a notable slowdown, especially in Germany where both manufacturing and services slipped into contraction territory. The German Ifo Business Climate index also deteriorated, reflecting worsening sentiment.

On the policy front, the Bank of Canada cut rates as expected, though it remains unclear how many more cuts are in store this year. Speculation is mounting that the Fed may follow suit in September given the economic crosscurrents, with some like ex-NY Fed President Dudley arguing they should move as early as this week to get ahead of a potential downturn.

Looking ahead, the coming week is packed with key events that could sway markets:

- Central bank decisions from the Fed, Bank of Japan and Bank of England. The Fed is expected to hold steady this meeting but solidify expectations of a September cut. The BOJ may finally adjust policy given political pressure and evidence inflation is taking hold.

- A slew of key economic releases including US jobs data, ISM manufacturing, and inflation prints here in Australia. These indicators will be closely parsed for signs of labour market cooling and disinflation.

- Another big week of earnings featuring Apple, Amazon, Meta and Microsoft. After last week's disappointments, investors will be keen to see if the tech rout spreads or if these market leaders can reassure their future prospects.

US jobs report surprises on the upside

August 2, 2024
Markets were fairly buoyant for most of the week before a very strong US jobs report upon Friday doused investor hopes that the Fed might pause its interesting rate hiking cycle.
Read More

Is inflation still bubbling under the surface?

August 2, 2024
Markets started the week on the back foot but rallied into the end of the week after what many called a ‘soft’ CPI print. Year on year inflation came in at 8.5%, below the 9.1% from the month before and slightly below the 8.7% that had been expected.
Read More

Inflation - looking through the noise part 1 - the US

August 2, 2024
Read More

US dips down while Australia dances to a different tune

August 2, 2024
Markets were down last week and, as we all have come to expect, speculation around inflation was the lightning rod that fed into interest rate expectations and then onto US tech stocks especially.
Read More

If China is reaching the end of a debt driven growth model and what comes next?

August 2, 2024
Andrew Hunt on the strength of and prospects for the Chinese economy and his take on the property market.
Read More

Fed ready to do whatever it takes

August 2, 2024
Last week there was much speculation about whether Fed Chair Jerome Powell’s annual Jackson Hole speech would be a market moving event or not, and it turned out it was, for equity markets at least.
Read More

We've got a bad case of FOMO, but it's not what you think

August 2, 2024
With valuation still being the lightening rod for when markets react to external forces, the most expensive things tend to move the most. What does this mean for global asset allocators, and what is InvestSense’s position?
Read More

Markets ended up on the back foot after an unexpected U-turn by Fed Chair Jerome Powell on inflation. Or was it so unexpected?

August 2, 2024
Markets ended up on the back foot after an unexpected U-turn by Fed Chair Jerome Powell on inflation. The large local miners and banks fared much better but Australian market was dragged down by quite big reactions to news from a handful of stocks.
Read More

The Santa Rally, Finally

August 2, 2024
After a volatile start to the month the traditional Santa Rally kicked in during the penultimate week of the year in the lead up to Christmas Day (and has continued overseas in the overseas markets that have been trading since then).
Read More

2021 In Review

August 2, 2024
It turned out to be another banner year for markets, the third straight one in a row, taking most markets, and especially US markets, to all time highs.
Read More

Tech stocks on the back foot, interest rate expectations rise

August 2, 2024
It turned out to be another banner year for markets, the third straight one in a row, taking most markets, and especially US markets, to all time highs.
Read More

Interest rates expectations continue to set the tone

August 2, 2024
Markets were more settled last week, but interest rate expectations continued to set the tone with the US market proving especially sensitive.
Read More

Markets slid again last week, with a concentrated sell off in US tech

August 2, 2024
Markets slid again last week but the selling was concentrated in US tech, most of which is down 10% or so this year. Much of last week’s selling occurred in the last 2 sessions of the week.
Read More

Recession fears build, yet equity markets end the week higher

August 2, 2024
Fears of a US recession later this year gathered pace last week and the US equity market jumped by almost 7% and the Nasdaq was up some 9%.
Read More

Inflation - Flash Update

August 2, 2024
In light of the recent inflation data coming out of the US, we dive in to why the market is so upset about a 0.1% increase in prices, and what this means from an Australian investor's perspective.
Read More

Interest rate sensitivity persists into the new year

August 2, 2024
During the last few weeks, the prospect of rising interest rate expectations continued to grip markets, as the soft landing/rapid disinflation thesis was tested.
Read More

Strong start to the year continues despite recession concerns

August 2, 2024
As the world’s elite gathered in a snowless Davos, markets focused on much more immediate concerns, starting with the continuing wave of layoffs in corporate America. Amazon, Microsoft, Alphabet (Google’s parent company), Salesforce and Goldman Sachs, among others, took turns to announce staff cuts. It would appear boardrooms and CEOs are lending some credence to the possibility of a recession in 2023.
Read More

Equities turbulent but resilient as interest rates rise

August 2, 2024
Last week the S&P 500 traded in a 3% range, having done a 2% round trip on Thursday, followed by a 3% fall on Friday after the inflation data release and then another almost 2% round trip yesterday. Emerging markets were the worst performing, down 4% for the week. Taking a step back though, most equity markets haven’t given back that much of their gains from January, while Europe and the Nasdaq remain up 10% for the year.
Read More

Helping your clients assess the climate impact of their Portfolio

August 2, 2024
Nathan Fradley explains how the ethosesg technology can help you assess and design an ethical portfolio that aligns to an investor’s personal values.
Read More

Carbon credits and investing – is it the outcome we expect?

August 2, 2024
ETFs that invest in carbon credits are now available. Why should we assume that their price will go up over time? And does buying a carbon credit ETF actually contribute positively to emissions reduction? Will it actually generate the outcome investors are expecting? This article explores the issues around investing in carbon credits.
Read More

Better World makes a difference with investment in renewables

August 2, 2024
There are many direct assets and funds that contribute positively to climate action within the InvestSense Better World Portfolios. Meridian Energy is one of the stand-out direct assets in the portfolio with a climate energy focus.
Read More

Bad news equals good news

August 2, 2024
In recent years professional investors have got increasingly used to the fact that good news is bad news for markets because higher interest rates are likely to be necessary, and of course vice-versa. However, last week the effect was stronger than ever and stocks rallied mid-week amidst reports of widespread lay-offs and expectations of a weak US jobs report.
Read More

‘Buy the dip’ opportunism start surfacing

August 2, 2024
The US market finally market caught a bid last week. Early in the week the market was down few percent after an earnings miss by ad dependent social media platform Snap (of Snapchat fame) combined with weak guidance raised more doubts about the economy and economic resilience of tech companies.
Read More

US momentarily dips into official bear market territory

August 2, 2024
The seventh negative week in a row for the US sent it briefly into official bear market territory before it recovered slightly late on Friday. The world’s largest stocks (Apple, Microsoft Amazon and Google) are all down 25%.
Read More

How Mark Lewin saved 13 hours a week with Managed Accounts

August 2, 2024
Mark Lewin was a financial planner, but is now the Director of Back Office Heros. In his planning business he gained significant efficiencies by recommending and implementing managed accounts for his clients. He tells us how...
Read More
Icon of a letter

InvestSense insights, delivered straight to your inbox.

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news