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The new week on the markets started on an optimistic note. US stock indices are recording moderate gains, with noticeable strength among smaller companies. US500 and US100 are up 0.30% to 5685 and 20600 points, respectively. The small-cap index US2000 is up nearly 1.80% to 2200 points.
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The gains appear to be driven by unexpected weekend events, specifically the assassination attempt on the US presidential candidate in the November elections, Donald Trump. As a result, markets are pricing in higher chances of him winning the election. Among the best performers are oil producers, arms manufacturers, private prisons, and health insurers.
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Federal Reserve Chairman Jerome Powell, speaking at the Economic Club of Washington today, said that a hard landing is unlikely in his opinion. Powell also highlighted progress in inflation and mentioned that unexpected labor market weakening would prompt a Fed reaction.
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Strong Q2 2024 financial results boosted Blackrock's stock today, which rose 0.4%, nearing its local highs from March 2024. The company achieved revenues of $4.81 billion (+8% YoY), an operating margin of 44.1% (+1.6 percentage points YoY), and EPS of $10.36 (+12% YoY).
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Weekly inflow data into IShares funds confirm a capital rotation towards smaller companies. Of the total inflows of $8.65 billion in the week ended July 12, the largest participant was the Russell 2000, which added a net $3.7 billion.
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The European market is having a significantly worse start to the week compared to the US stock market. The French CAC40 leads the declines with a nearly 1.2% drop, the German DAX loses 0.8%, and the Italian IT40 is down 0.6%. The Stoxx Europe 600 lost over 1% today.
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Today's declines in European markets were led by luxury goods sector stocks. Burberry lost nearly 16% after warning of a potential H1 2024 loss, cutting its dividend, and replacing its CEO. Swatch Group fell almost 10% after disappointing H1 2024 results, reporting a revenue decline of over 14% and a sharp drop in operating margin from 17.1% to 5.9%.
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NATGAS is down 4.50% today due to updated forecasts showing cooler weather. An additional catalyst for the decline was the cancellation of deliveries by Freeport LNG due to Hurricane Beryl.
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In the cryptocurrency market, most projects are seeing gains. Bitcoin is up nearly 5.00% to $63,700, and Ethereum is seeing similar gains to $3,400. The total market capitalization of altcoins excluding BTC and ETH is up slightly less at 3.00%.
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Bitcoin's dynamic return above the $60,000 barrier can be attributed to a rebound after a very bearish sentiment that prevailed in May and June. The catalyst for the rise was the failed assassination attempt on Donald Trump on Saturday, which increased the likelihood of his victory in the November US elections.
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