The Week That Was

Global equities ended the week modestly higher in euro terms as resilient corporate profits largely neutralised the impact of the oil spike on investor sentiment. The S&P 500 was broadly flat in euro terms; however, tech bellwether Alphabet declined by 7.8% and Tesla by 17.8% as investors focused on falling free cashflow levels.

European equities climbed 0.5%, led by the Basic Resources and Energy sector as Brent rose 11%, closing the week at just under $100 a barrel. This rally pushed Global Commodities up 3.3% in euro terms; however, optimism around peace talks did see energy prices give back some of those gains on Friday. Global Bonds ended the week marginally lower as expectations of US Fed tightening rose over the course of the week.

Summary Economic Releases

The Week Ahead

Asian equities moved modestly higher this morning on the back of easing tensions in the Middle East and investor optimism tied to the IPO of Chinese chipmaker CXMT. The stock rallied 500% on its debut, resulting in it achieving a stock market valuation higher than Tencent. Brent retraced to $91 a barrel and the USD weakened modestly against its G10 currency pairs as investors grew optimistic on peace talks following Thursday’s halt in hostilities.

Earnings season is again set to be the dominant driver of price action in a week in which many market bellwethers are due to report on both sides of the Atlantic. Thus far, 85% of those S&P 500 companies have exceeded expectations, with Europe also skewing to beats but not at the same quantum. In the US, investors will focus on expected solid headline growth for CRH and more on second-half expectations for Smurfit Westrock, as better pricing feeds through.

Investor appetite for AI spending will be tested when Microsoft, Meta and Amazon report. In Europe, LVMH, Barclays, Uniphar, Kerry and Shell are among the main companies reporting. Investors will also focus on developments with Irish Continental Group, following management putting forward a take-private offer late last week. Also this morning, we had confirmation from DCC that it is recommending the Equity Capital Partners’ takeover offer.

From an economic perspective, Tuesday’s Conference Board data is expected to show a modest improvement in US consumer confidence during July, despite higher oil prices. These prices will also be in focus for the FOMC on Wednesday; however, recent softer inflation readings should keep the Fed in a holding pattern.

Data on Thursday should highlight the divergence between the US and Eurozone economies, with US GDP expected to grow by 2.3% year-on-year in Q2, supported by AI-related investment and consumer resilience, while Eurozone growth is forecast at just 0.2%. The Bank of England is also expected to leave rates unchanged on Thursday, although rising energy prices could lead to a more hawkish tone. Those higher energy costs are also likely to keep Eurozone headline inflation above target for a fifth consecutive month when released on Friday, reinforcing the case for an ECB rate hike in September.

Opportunities this week:

• AIB (Neutral PT €11.00, 1.7% upside) – Look ahead to H1 results and PT and recommendation change.
• CRH (Overweight PT $140, c. 40% upside) – Look ahead to Q2 results and PT change.
• IRES (Overweight PT €1.32, +17.8% upside) – Look ahead to HY 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.