Welcome to the Weekly Market Update!
In this edition, we bring you the latest highlights and insights from the world of finance. We will cover the week’s top stories, provide market analysis, highlight economic developments, discuss upcoming events to watch, and present technical analysis. Let’s delve into the key information you need to stay informed and make informed financial decisions.
Top Stories of the Week
- Tesla’s Profitability Declines: Despite posting record revenue of $24.93 billion, surpassing the forecast of $24.73 billion, Tesla’s gross margins fell to 18.2% from 25% due to a series of price cuts. The EV maker faces challenges in maintaining profitability amid competitive market dynamics.
- Netflix’s Sales and Forecasts Disappoint: Netflix added 5.9 million users, surpassing estimates, but its sales of $8.19 billion fell short of forecasts. Moreover, the Q3 revenue guidance also missed estimates, leading to a setback for the streaming giant.
- Gold Reaches a 2-Month High: Benefiting from bets on central banks nearing peak interest rates and a weaker USD, gold prices surged to a two-month high, attracting investor interest in the precious metal.
- Apple Develops Its Own ChatGPT: The tech giant, Apple, made a groundbreaking announcement that it is working on its large AI language model and chatbot named Apple GPT. This move showcases Apple’s commitment to enhancing its AI capabilities.
- Microsoft Hits All-Time High: After announcing its pricing for AI services, Microsoft’s stock reached an all-time high. The company plans to charge $30 monthly for generative AI features, positioning itself at the higher end of generative AI services.
Market Analysis
- UK Inflation Eases, Rate Hike Expectations Adjusted: UK inflation dropped to 7.9% YoY, its lowest in 15 months, down from 8.7% YoY in May. This surprised the markets, and rate hike expectations for August have been adjusted. Instead of a 50 bps increase, now a 25 bps hike is expected. Peak rate expectations fell to 6%. The pound declined to $1.29. While UK inflation is higher than the US and Europe, the economy’s weakness raises doubts about further rate hikes beyond 5%. Expectations of rates 1% higher than the US and 2% higher than Europe may be exaggerated.
Economic Highlights
- China’s GDP forecast was downwardly revised. Major investment banks such as Goldman Sachs, UBS, and Citigroup have all revised lower China’s GDP outlook. This revision indicates concerns about the Chinese economy’s growth trajectory. As China is a major player in the global economy, any adjustments in its GDP forecast can have significant implications for international markets and investor sentiment. It will be crucial to monitor how these revised forecasts may impact economic policies and market dynamics in China and globally.
Upcoming Events to Watch
- Fed Rate Decision (Wed, 26th July): Market expects 25 bps hike; uncertainty on tightening cycle amid labor market and inflation concerns.
- ECB Rate Decision (Thu, 27th July): Expected 25 bps hike; economy slows, inflation cools, investors seek hints on further moves.
- Microsoft Earnings (Tue, 25th July): Record-high stock, AI subscription potential, updates on Activision Blizzard acquisition will be in focus.
- Meta Earnings (Wed, 26th July): Projected $29.5B-$32B revenue, focus on digital ads, AI; no immediate Threads profit plans.
- European Bank Earnings: UBS, Barclays, Deutsche Bank, Standard Chartered, Lloyds report Q2 results; mixed outlook amid deal-making drought.
Technical Analysis
We have analyzed the most popular trading pairs and assets, including EUR/USD, GBP/USD, Gold, and US500. Our aim is to provide you with an insightful analysis of their trends and support/resistance levels, which will help you make informed decisions.
EUR/USD
The currency pair EUR/USD is currently experiencing a strong upward trend, consistently forming higher highs and higher lows. It has remained above the 50 SMA and recently broke out to new highs. Although the price has since consolidated within a narrow range around 1.12, it may potentially reach 1.138 and then 1.15 in the future. If the price does drop, the previous long-term resistance at 1.11 may act as a support level and provide stability for the currency pair.
GBP/USD
GBP/USD is trending upwards, consistently forming higher lows and higher highs, and remains above the 50 SMA. The market structure indicates a bullish outlook on higher time frames like the weekly and daily charts. However, there was a significant correction as the price dropped below the important 1.30 level. The previous resistance at 1.283 now serves as support, followed by 1.27. As the price increases, potential resistance levels to watch are 1.30 and the prior high at 1.316.
XAU/USD
XAU/USD is moving upwards, forming higher highs and higher lows above the 50 SMA. However, the recent bearish pressure is challenging the bullish trend. Gold’s price found support at the broken 50 SMA during a re-test and is now testing important resistance around 1970-1980. The price previously struggled to break above the 1980 level, bouncing between the range of 1980 and 1939 in recent weeks.
XUS500
XUS500 is moving up, forming higher highs and higher lows above the 50 SMA. The S&P 500 showed remarkable strength. There are important events ahead, including 3 central bank interest rate decisions and other key fundamentals. The price is experiencing a low volatility uptrend, with 4500 serving as near-term support. The uptrend should stay intact as long as it remains above the last swing low at 4370, even if a larger correction is due.
Thank you for reading! Wishing you successful trades ahead!
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