Most global stock markets closed the week lowerwhile the FTSE MIB – the main index of Piazza Affari – fell less than others, despite a 1% drop in the last eight-day session. Today’s session was the most chaotic, due to important IT service interruptions originated by cybersecurity firm CrowdStrike and have affected industries across the globe, from airlines to banks to the media.
For several hours the FTSE MIB was not updated, making it difficult to understand which direction the market was going, even though trading continued regularly.
“Trump trade” in the USA
Interesting what has happened overseas in recent sessions, with experts talking about a “Trump trade”. Growing expectations that former President Donald Trump will regain the White House in November are pushing investors to position themselves towards those corners of the US stock market that could take advantage of the policies proposed by the Republican politicianincluding small caps and energy stocks. This has led to a rotation out of big tech stocks, with the Nasdaq down about 3% on the week and the Dow (which mostly includes industrials) up more than 1%.
Chip Concerns
There was also a real earthquake in chip stocks midweek, after American press reports said the United States was considering Tighter restrictions on exports of advanced chip technology to ChinaBloomberg News said that the US administration of Joe Biden is considering a measure called the “foreign direct product rule” that would allow the United States to block the sale of a product made with American technology.
This news has also hit the European giant ASMLdespite the above-expected results. However, the mood of the sector was lifted by the performance of the Taiwanese TSMC – the world’s largest contract chipmaker – raised its full-year revenue forecast as demand for chips used in artificial intelligence soars.
No news from the ECB
On Thursday, the European Central Bank (ECB) left official Eurozone rates unchanged. In addition to leaving rates unchanged, the Governing Council avoided telling markets whether or not a further rate cut is likely in September. The approach of taking decisions meeting by meeting based on data was rigorously applied in the statement and then in the press conference of President Christine Lagarde. The elements that will guide the decision are still fundamentally the same: the observed path of underlying inflation, the evolution of the data that influence future inflation projections and the strength of monetary policy transmission.
China slows down
At the beginning of the week, important indications arrived from China, where the GDP growth has decelerated sharply both in cyclical terms (from 1.5% q/q in Q1 to 0.7% q/q in Q2) and in trend terms (from 5.3% y/y in Q1 to 4.7% y/y in Q2), held back by the moderation of both industry and services. consumer demand continues to decelerateheld back by low consumer confidence, making new support measures necessary which, together with those already launched, should favor a recovery in growth in the second half of the year.
Focus on quarterly results
The week was marked by the start of the quarterly earnings season, after the start last Friday with the first banks. In the last few days it has emerged that Goldman-Sachs more than doubled its profit in the second quarter, thanks to higher debt underwriting fees and strong trading performance, while earnings Morgan Stanley have increased thanks to the recovery of investment banking activity. Now the wait is for the tech giants, while Netflix added 8.05 million customers in the second quarter and raised its full-year sales and profit margin estimates.
