Economics

On the face of it, Brazilian iron ore miner Vale saw its second-quarter net profit soar to US$2.77 billion in the three months to June as it boosted production and sales and took advantage of firmer iron ore and copper prices.

It has been a favorable month for America’s smallest stocks as investors seek likely beneficiaries of potential interest rate cuts and reconsider investments in the largest U.S. corporations.

Four of the so-called Magnificent Seven technology stocks that have driven the US market rally for the past nine months ended the week in correction territory, having fallen by more than 10 percent from recent peaks.

Friday's gains on Wall Street were insufficient to erase the damage caused by Wednesday's market downturn.

This week marks the busiest of the S&P 500 earnings season, with 171 companies scheduled to report, including 10 Dow 30 components. Among the most anticipated are the "Magnificent Seven" tech giants, with Microsoft leading the pack on Tuesday followed by Meta Platforms on Wednesday. Amazon and Apple will both report on Thursday.

Iron ore prices experienced a volatile week, with values fluctuating near the psychologically important $US100 per tonne mark on the Singapore Exchange. While the commodity managed to close at $US102.40 on Friday, a slight uptick from the previous week's $US104.52, market sentiment remains subdued.

The US oil industry may be nearing a turning point as evidence suggests a slowdown in the aggressive rig cuts that have characterized the past year. Last week's unexpected increase in the oil rig count by five to 482 marks the lowest level in over two years, according to Baker Hughes. While this number is still notably lower than the peak of 511 rigs seen in late January, it signals a potential bottoming out of the downward trend.

Indonesia is attempting to reduce Chinese investment in new nickel mining and processing projects to help its industry qualify for US tax breaks, as the Biden administration seeks to limit Beijing's influence in the electric vehicle supply chain.

The rise of the S&P 500 has mirrored exceptional US economic growth, making it tempting to see it as a direct reflection of that prosperity.

Australia is bracing for a tumultuous week as crucial economic data is set to be released. The June quarter and monthly inflation figures are expected to be particularly challenging, with economists predicting a surge in prices. This could significantly impact the Reserve Bank of Australia's (RBA) monetary policy stance.

China's economic engine sputtered last week as shares plummeted 3.7%, a stark reflection of investor uncertainty over the government's ability to reignite growth. The Third Plenum, widely anticipated to deliver a decisive stimulus package, fell short of expectations, sending shockwaves through the market.

Gold prices rallied on Friday, recovering from a sharp decline the previous day as US inflation data came in line with expectations. Treasury yields fell, boosting the appeal of non-interest-bearing gold.

The coming week promises to be a tempestuous one for global markets, as a confluence of economic indicators, central bank decisions, and corporate earnings collide. Investors and policymakers alike will be closely monitoring developments across multiple fronts.

Iron ore futures prices continued their downward trajectory on Thursday, impacted by robust global supply and persistent weakness in China’s steel market. Despite indications of potential monetary stimulus, losses were only partially mitigated.

The U.S. and Europe aim to reduce their reliance on China for rare earths, but low prices and Beijing’s market influence pose significant challenges.

The markets regulator, ASIC, has launched civil legal action against subsidiaries of COFCO, China’s biggest food processor and manufacturer, alleging they "manipulated the ASX24 market for Eastern Australia Wheat futures January 2023 contracts.”

Ford shares fell 12% at one stage in after-hours trading after it surprised the markets with a less-than-encouraging June quarter report. The report contained news that its EV division lost $US1.14 billion in the quarter and that warranty costs soared again.

Airlines are preparing for the end of the "revenge travel" surge by cutting ticket prices to fill surplus seat capacity as the two-year post-pandemic travel boom transitions to a more uncertain outlook.

There was a very telling contrast in the quarterly reports from General Motors, Tesla and Alphabet (Google) on Tuesday.

Tesla’s great U.S. rival, General Motors, had a strong second quarter and boosted its guidance for the rest of 2024. Unfortunately, this positive news went largely unnoticed in the markets, and shares fell more than 6%.

Another lesson Tuesday for the Tesla board and Elon Musk from the market: earnings and revenue matter more than all the off-the-cuff ideas and wacky products like robotaxis and Cybertrucks.

YouTube ad revenues jumped 13% in the three months to June, adding a nice bit of cream to what was already a solid result for parent company Alphabet.

Finally, a substantial policy change from the Chinese government: a surprise cut in interest rates on Monday.

As global markets evolve, small-cap stocks are emerging as a compelling opportunity for investors, particularly those in Australia, according to Sadhvi Gupta, Executive Director for Quantitative Investment Strategies at Goldman Sachs Asset Management.

Another losing week for oil – despite growing optimism about a possible rate cut or cuts in the US.