Yesterday, volatility on US stock indices, although close to all-time highs, remained relatively low. Investors seem to be waiting for the start of the earnings season, which may increase the volatility.
On Monday, the Dow Jones gained 0.4 percent and rose to 34996 at the close, the S&P 500 gained 15 points and rose to 4385, and the Nasdaq rose 0.2 percent to 14,733. U.S. stock futures were little changed this morning in anticipation of the start of the second-quarter earnings season and a series of economic data to be released this week. JPMorgan Chase and Goldman Sachs will be among the first major companies to report their results during the day, while the key data coming later will be inflation, retail sales and industrial production. Earnings for companies in the S&P 500 index are estimated to have risen 65.8 percent from levels leveled by the pandemic a year ago, which would mark the second consecutive quarter of surging corporate profits, according to Refinitiv (formerly Reuters).
Stock indexes in Europe, such as Germany's DAX, are also near historic highs, and the European Central Bank, which is preparing changes to its strategy as early as next week, may play the first fiddle for investors. Hence, the day of 22 July, i.e. a summary of the ECB's meeting, may be very important for the future of quotations of European shares. For the time being, there might be many indications that the loose monetary policy in Euroland will remain with us for years, which may support asset price inflation.
Meanwhile, in the oil market, which also seems to be a barometer for the economy, the price of a barrel of WTI oscillated around $74 on Tuesday morning after a preliminary Reuters survey showed that U.S. crude inventories are expected to fall further. Meanwhile, fears of a slowing economic recovery eased after data showed China's exports rose more than expected in June, increasing for the twelfth consecutive month, on the back of strong foreign demand. At the same time, China's oil imports in June rose slightly from May, although they were much lower than a year earlier. Meanwhile, OPEC+ has yet to make progress on bridging the divide between Saudi Arabia and the United Arab Emirates. But that's not the only threat to oil; there are also concerns about the rapid spread of the Delta variant, a strain of which is becoming dominant, and many countries have not yet received enough vaccines.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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