⤵️ UK Inflation Falls
✅ Euro Holds Strong above 1.1200 Mark Against the US Dollar
⬇️ European Stocks Continue to Rise on Thursday
⭕️ Surprising Upside in German Producer Prices
⚡️ Euro Gains Ground Against the Dollar, Faces Key Central Bank Meetings
👉 Fed Approaches End of Tightening Cycle, ECB Less Hawkish
📊 Eurozone Data: German Producer Prices Contract, Current Account Surplus Widens
💡 US Data: Weekly Jobless Claims, Philly Fed Index, Existing Home Sales
📊 A look at Tesla and Netflix Earnings Reports
📉 New Zealand figures
✍️ Australia’s unemployment rate remains at an impressive 3.5%
Inflation in the U.K. took a significant dip in June, falling below expectations at 7.9% annually. Economists were projecting a rise to 8.2%, following May’s unexpectedly high reading of 8.7%.
However, prices continue to surpass the Bank of England’s target of 2%. Despite this, there is good news in the monthly decrease of headline CPI by 0.1%, lower than the anticipated 0.4%.
Core inflation, excluding volatile items, fell from a 31-year high of 7.1% in May to 6.9%. This drop can be attributed to the decline in motor fuel prices.
While food prices did increase, the rise was less significant compared to last year. These numbers offer hope in the face of persistently high inflation, which the government and the Bank of England have warned could become embedded in the economy.
Bank of England Governor Andrew Bailey and U.K. Finance Minister Jeremy Hunt have expressed concern that high wage settlements are exacerbating inflation.
In fact, the UK is projected to have the highest level of inflation among advanced economies this year, according to the OECD. In response, the Bank of England recently implemented a 50-basis-point interest rate hike, marking its 13th consecutive increase.
Despite this, market expectations are already pricing in another aggressive half-point hike at the MPC’s August meeting. Overall, the unexpected drop in inflation is a positive development that brings cautious optimism to the U.K. economy.
Euro Holds Strong Above 1.1200 Against US Dollar, European Stocks Continue to Rise
The Euro showed resilience as it gained ground against the US Dollar, pushing above the 1.1200 level. This comes amidst uncertain market sentiment.
Meanwhile, the recent strength of the US Dollar seems to be weakening, causing the US Dollar Index to hover around the 100.00 mark.
Looking ahead, the Euro is expected to stabilize as investors await key meetings from the Federal Reserve and the European Central Bank. While both central banks are anticipated to raise interest rates, there are differences in their future policy outlooks. The Fed is nearing the end of its tightening cycle, whereas the ECB has become less optimistic about future rate hikes.
In economic news, German Producer Prices contracted slightly in June, but the euro area’s Current Account surplus expanded. Later, the European Commission will release its initial Consumer Confidence data for July.
In the US, attention is focused on the weekly Initial Jobless Claims, Philadelphia Fed Manufacturing Index, CB Leading Index, and Existing Home Sales.
Exploring the After-Hours Impact of Tesla and Netflix Earnings Reports on the Stock Market
Tesla and Netflix stocks took a hit in after-hours trading after releasing their latest earnings reports. Tesla’s stock dropped 1% while Netflix’s stock declined 5%. The Nasdaq 100 futures also showed a slight softening after regular trading hours.
Tesla, the electric vehicle manufacturer, exceeded expectations with earnings per share of 91 cents, surpassing the estimated 79 cents.
Tesla’s sales of $24.9 billion were slightly higher than projected, showing growth despite challenging macroeconomic conditions. However, concerns arise as their operating margin decreased from 11.4% to 9.6%, possibly due to offering incentives to boost sales in a high-interest-rate environment.
Netflix, the largest video streamer, reported earnings per share of $3.29, surpassing expectations. They generated revenue of $8.19 billion, a 2.8% increase, and added 5.9 million paid subscribers, exceeding projections. However, Netflix’s operating profit margin outlook of 18% to 20% did not impress investors.
The mixed earnings performance of Tesla and Netflix raises questions about the high valuation of technology stocks, which have been on an upward trend despite rising interest rates.
This could impact the Nasdaq 100’s potential for further gains. Investors should closely monitor earnings reports from major companies like Apple, Microsoft, Alphabet, and Amazon to gauge the overall market outlook.
Kiwi Gains Strength as NZD/USD Targets Key Resistance Level, US Dollar Declines
The NZD/USD pair is currently eyeing the crucial resistance level at 0.6300, signaling a strengthening Kiwi. The US Dollar Index (DXY) has declined, adding to the upward movement of the New Zealand Dollar.
However, caution pervades the market as S&P500 futures show losses in London. Uncertainty in the foreign exchange realm, combined with a light economic calendar in the US, is causing investor anxiety.
Moreover, with the start of the second-quarter earnings season, specific actions related to individual stocks are anticipated in the equity markets.
The US Dollar Index faces challenges in maintaining its position above the psychological support level of 100.00 as investors expect a potential interest rate hike by the Federal Reserve (Fed).
If the Fed decides to raise rates in their upcoming policy meeting in July, it could signify the end of the rate increase cycle and alleviate concerns of a recession.
At the same time, the People’s Bank of China (PBoC) maintains a dovish stance on interest rates due to weak household demand in China, posing challenges for their economy.
Additionally, Bank of America (BofA) has downwardly revised China’s growth forecast to 5.1%, adding to global market caution.
It’s crucial to note that New Zealand benefits as a significant trading partner of China, and the supportive monetary policy implemented by the PBoC offers some relief for the New Zealand Dollar.
Australia’s Unemployment Rates Remains Steady
Australia’s unemployment rate remains at an impressive 3.5%, defying expectations and potentially leading to more interest rate hikes from the Reserve Bank of Australia.
New data from the Australian Bureau of Statistics reveals that the number of employed Australians increased by 33,000 in June. This strong performance has caused financial markets to reevaluate their prediction of a slight rise to 3.6% in unemployment.
Additionally, the ABS has revised the May unemployment rate from 3.6% down to 3.5%.
Bjorn Jarvis, head of labour statistics at the ABS, highlights that employment in Australia is at an all-time high, with around 33,000 new jobs and a decrease of 11,000 in the number of unemployed individuals.
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