The Week That Was

Global equities moved higher on the back of resilient earnings but were broadly flat in Euro terms as a US intervention to support the Yen weighed on the dollar. The S&P 500 was up 1.06%, buoyed by a strong rally in Amazon +17% post strong earnings, which also validated the AI investment story resulting in a rebound in Alphabet +12%; however, Apple did move -7.2% lower on disappointing outlook. European equities ended the week +0.7% with the Auto and Construction sectors particularly strong.

Global Commodities fell 3.3% in Euro terms with Brent Oil Futures falling 8.7% to $90 a barrel on easing tensions in the Middle East and Gaza in particular. Global Bonds fell 0.8% in Euro terms as yields at the long end moved higher particularly in the US as investors sought to marry Fed inflation concerns with a lack of policy action at its FOMC meeting.

Summary Economic Releases

The Week Ahead

Asia Pacific markets moved marginally lower this morning despite a tech-driven rally in the US overnight. Sentiment was weighed down by a rebound in Brent crude futures, which climbed back towards $85 a barrel after Iran said it was nearing an agreement with Oman on a new route through the Strait of Hormuz, but denied reports of broader negotiations with the US. The Yen also weakened, but only modestly, as the US and Japan have committed to further currency interventions if necessary. This move also saw the Euro largely hold its recent gains against the greenback at 1.15.

Earnings season is likely to remain the key driver of market performance in the week ahead, with more than 15% of S&P 500 constituents scheduled to report. Investor focus will centre on the strength of US consumer spending, with McDonald’s results offering insight into discretionary demand, while Flutter’s results should provide an update on the impact of the World Cup on betting markets and prediction markets. The discovery pipeline and the weight-loss drug pricing environment will also be in focus when Novo Nordisk and Eli Lilly report. Corporate earnings in the US have so far exceeded expectations, with blended Q2 earnings growth running at 47%, marking the strongest pace of growth since the post-pandemic recovery in 2021.

Closer to home, there is a raft of reports with Glanbia expected to continue its solid volume momentum, underpinned by the Optimum Nutrition brand, and Diageo, whose sales are expected to decline by between 2% and 3% YoY. FBD and Allianz in the insurance sector are expected to show solid growth, and for Allianz, commentary on the impact from the European wildfires will be watched closely. Overall, European earnings growth is tracking at a healthy 14% YoY for the quarter.

From an economic perspective, Eurozone retail sales are set to climb 1.0% YoY for June, although this represents its lowest read since April as higher inflation continues to weigh on consumer sentiment. Wednesday is likely to bring confirmation that US services activity climbed to its highest level since February last month, buoyed by the 250th anniversary of US independence and the World Cup. The latter provided a temporary boost to US hiring trends over the spring, and this reversal is likely to show up in Tuesday’s JOLTS Job Openings data.

Non-Farm Payrolls on Friday will be the key market-moving macro data point, and whilst a slight rebound is expected in the month of July, a deceleration in the trend of job gains will likely support the Fed’s decision to stay on hold.

Opportunities this week:

• Barclays (Overweight, PT 592p, 15% Upside) – Recap on H1 results and recent PT (Price Target) upgrade.
• GSK (Overweight, PT 2420p, 26.7% Upside) – Recap on H1 results and recent upgrade to PT and rating.
• Diageo (Overweight, PT £21.90, +32% Upside) – Lookahead to FY26 results.

Written by John Mullane, CIO, Cantor Fitzgerald Ireland

This is an extract from the Weekly Markets Report by Cantor Fitzgerald Ireland. For more detail on individual securities, or to discuss how we can support your investment needs, please get in touch.