The Chinese slowdown has the markets on alert. At the same time, in the US inflation data was reported that was lower than projected, which in a certain way eased fears. However, this week new economic reports will be released that will be key for investors.
Dollar
The dollar in Chile reached lows not seen since late Junewhere the intervention of the Central Bank continues to be relevant for the exchange rate.
The USD/CLP started this week with little movement, despite key external fundamentals for the exchange rate.
For its part, the dollar index, which compares the greenback once morest the world’s main currencies, has shown interesting increases in recent sessions, amid a greater demand for dollars due to global economic uncertainty, even more so following the weak data in China.
On the other hand, they explained from Capitaria, the Chinese slowdown has an impact on demand projections for coppergenerating falls in its price.
“These two external factors are bullish for the USD/CLP, which continues to be held back by the Central Bank selling dollars, but if we maintain these fundamentals, we should soon see further upside for the currency pair”commented the head of trading studies at Capitaria, Ricardo Bustamante.
Battery of macroeconomic data in the US
-Real estate market and industrial production data: Today these data will be known, corresponding to the main economy in the world. We must pay attention to the performance of construction permits and the start of housing in the United States, considering that the real estate sector is very sensitive to economic performance.
If we get weaker-than-expected data, investors might point to a hard landing for the world economy, especially considering that the US is currently in technical recessionthey specified from Capitaria.
-Fed Minutes: On Wednesday we will know the minutes of the last meeting of the Federal Reserve, where investors wait for signals regarding the next movements in the interest rate.
Although the US inflation below expectations has eased some of the latest fearsthese minutes might define a clearer trend in equities and the dollar.
-Retail Sales: The US economy is in a technical recession, following two consecutive quarters with negative real Gross Domestic Product (GDP) data, although investors have not taken the current scenario badly.
In any case, in the middle of the week we will know retail sales data in the world’s main economy, which may be key to determining how the US is doing, considering that private consumption represents close to 70% of GDP.
If the figures disappoint, “close attention to what happens with the vision of investors, since they might strongly impact their decisions,” they pointed out from Capitaria.
Commodities
Some commodities linked to the economic cycle, such as oil and coppershowed interesting gains over the past week, although the enthusiasm seemed to end last Friday.
“A lot of attention these days with figures that might generate changes in the projections of world economic activity, considering that we will know UK inflation data, European GDP and US retail figures. If the data points to a greater economic weakening, renewed falls might be generated in these commodities”, Capitaria specified in its analysis.
Specifically, the price of oil registered a sharp drop in yesterday’s session, with a loss of close to 4% on average between WTI and Brent, following knowing new data from China, confirming a more significant slowdown in the giant Asian economy.
This scenario has a strong impact on crude oil demand expectations, considering the importance of China for the purchase of raw materials in international trade.
Wall Street disconnected from reality
“Last week, the main Wall Street indices closed with gains, highlighting an interesting rebound on Wednesday and Friday, especially when the inflation data generated optimism in investors, this, by the possibility of reaching an inflationary ceiling, although it might be confirmed if it is supported by upcoming price data in the world’s largest economy “explained Capitaria’s senior analyst, Diego Bustos.
Market sentiment has been upbeat following inflation figures came in below expectations last week, giving some relief to the Federal Reserve, on track to be less aggressive in upcoming rate hikes.
Wall Street stocks are “disconnected from reality”. At least that’s what Morgan Stanley’s Mike Wilson thinks.
In a Monday note to clients, a group of analysts led by Wilson noted that Stock valuations are not consistent with the current economic outlook, in other words, stocks have room to fall and the bear market is not over yet.
Added to this are comments from BlackRock analysts who explained that the current rally is not here to stay as deteriorating earnings and a still hawkish Federal Reserve will keep pressure on equities.
Regarding indices, the S&P 500 is up 18% from its low in June and the Nasdaq is up 20%. The asset manager said investors shouldn’t expect more gains.
Delivery of results in the Retail industry
-Walmart: It lowered its annual profit forecast in July and laid off hundreds of corporate workers this month.
America’s largest retailer missed earnings expectations in the first quarter as inventory rose 33% from a year ago.
And this Tuesday reported the results of the second quarter of 2022, that were betterwith adjusted earnings of $1.77 per share and total revenue of $152.9 billion.
-Target: It issued an earnings warning in June, signaling earnings would take a hit in the near term as orders are canceled and prices are reduced to get rid of inventory.
In the first quarter, Target surprised investors with a big profit loss as consumers slashed higher-priced items. Your delivery of results will be during tomorrow Wednesday.
