Take Five: It's a Fed hot summer



July 22 - A likely second straight 75 basis point rate hike from the U.S. Federal Reserve will keep markets on their toes in the week ahead, just as investors digest a wave of earnings from corporate America and Europe.

The prospect of early elections in Italy after the collapse of the government means there's plenty of political drama too, and Australia's latest inflation numbers may add to pressure on the country's central bank to get ahead of the curve.

Here's your week ahead in markets from Ira Iosebashvili in New York, Kevin Buckland in Tokyo, and Sujata Rao, Dhara Ranasinghe and Vincent Flasseur in London.

1/ FED HOT

Fed officials have poured cold water over expectations for a 100 basis point rate hike in July but Wednesday's meeting will still have drama aplenty.

A 75 bps interest rate hike is priced in, and coming on top of 150 bps worth of tightening so far in this cycle, that is sure to bite consumers and businesses.

Investors will be looking at whether the Fed thinks inflation is peaking and how it views the U.S. economy, as they try to gauge the scope of a September rate move.

Hanging in the balance are nascent rallies in U.S. stocks and bonds. The S&P 500 is up almost 10% from its mid-June low .SPX , 10-year Treasury yields are down 60 bps US10YT=RR .

2/ EARNINGS: PART I

Earnings from Google-parent Alphabet, Microsoft, Coca Cola, Apple and others will show how well corporate America is coping with soaring inflation and a strong dollar.

This year's 17% decline in the S&P 500 has lowered the index's forward price-to-earnings ratio to around 17.3 from 21.7 at the start of 2022, closer to the market's historic average of 15.5, according to Refinitiv Datastream.

While there have been several notable beats this season, it's early days and many worry that earnings estimates may not hold up in the face of the highest inflation in four decades and tightening financial conditions.

Also clouding the picture is the burgeoning dollar, which makes U.S. exports less competitive and hurts firms earning much of their money abroad. Alphabet, Microsoft and Coca Cola report on July 26, Apple and Amazon on July 28.

3/ EARNINGS: PART II

One-sixth of Europe's STOXX 600 equity index reports second-quarter results July 25-29, and Refinitiv I/B/E/S forecasts earnings to have grown 22% year-on-year.

That headline figure masks disparities; earnings growth at energy firms basking in the glow of $100-a-barrel oil is seen at 185%, while real estate businesses will show a 70% drop, Refinitiv predicts.

Statements from retailers, heavy industry and hospitality firms may show how much pain is being inflicted by energy shortages and high inflation. The likes of Airbus, Volkswagen and Mercedes will cast light on the state of European exporters.

Bank earnings, expected to have slowed around 16%, include numbers from UBS, Credit Suisse, Deutsche, Barclays and BNP Paribas.

The Q2 season will show if European shares are correctly valued around 11.5 times forward earnings, versus their 14% long-term average, or need to cheapen further.

4/ MAMMA MIA

A political crisis couldn't come at a worse moment for Italy. The ECB has just jacked up rates for the first time since 2011, inflation is soaring and the country has been hit hard by its exposure to Russian gas .

The collapse of Mario Draghi's government ends months of stability, unnerving markets that had cheered when the ex-ECB chief became prime minister in 2021. They now worry about the prospect of new elections and Rome's ability to pass policies.

It also leaves the ECB, with its new tool to contain stress in bond markets, in an awkward position of determining which part of government bond spread widening is "unwarranted" - or giving up buying Italy's bonds altogether.

5/ CREDIBILITY ISSUE

Reserve Bank of Australia (RBA) boss Philip Lowe is pledging a steady policy-tightening campaign to at least double interest rates from current levels to "chart a credible path" back to the RBA's 2-3% inflation target.

Quarterly inflation numbers due Wednesday could show a further acceleration in price growth, which at 5.1% is already at its highest in two decades.

The rate-rise pledges are ironic coming from Lowe, who just months ago pushed back against markets, saying he didn't see rates rising throughout 2022, but has since lifted them three times since May.

Criticism of the RBA's inflation policy has led to an independent inquiry of its operations.



Fed set to hike rate by 75 bps Link
STOXX 600 earnings growth by sector STOXX 600 earnings growth by
sector Link
S&P 500 earnings growth by sector S&P 500 earnings growth by
sector Link
Political crisis weighs on Italian bond spread Political crisis
weighs on Italian bond spread Link
RBA looks for a path back to inflation target RBA looks for a
path back to inflation target Link



Compiled by Dhara Ranasinghe; Graphics by Vincent Flasseur;
Editing by Gareth Jones

Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.

Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.

Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.

Nous utilisons des cookies pour vous donner la meilleure expérience possible de notre site internet. En savoir plus ou modifier vos paramètres de cookies.

Avertissement sur les risques : votre capital est à risque. Les produits à effet de levier ne sont pas recommandés pour tous. Veuillez consulter notre Divulgation des risques