Robust Week For Equities

Robust _Week_for_equities

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At the close of business last Friday, global equities were higher on the week while the yield on the US 10-year Treasury note fell from last week’s 2.75% reading. The price of a barrel of West Texas Intermediate crude oil rose to $100 from $94 last week. Volatility, as measured by the Cboe Volatility Index (VIX), fell to 21.4 from 23.1 last Friday.



Our Auto industry breathed a sigh of relief this past Thursday after U.S. lawmakers scrapped part of a massive incentive package for electric vehicles that would have excluded those assembled in Canada. The $7,500 US credit for clean vehicles is part of $369 billion in proposed new spending on energy and climate-related initiatives. The Senate is expected to vote on the bill this week.



Earnings News

With 56% of the constituents of the S&P 500 Index having reported for Q2 2022, blended earnings per share show that earnings growth is running at around 6% while sales rose about 12.3% compared with the same quarter a year ago. Among the key themes, this past week was better-than-feared technology sector earnings.

Fed delivers three-quarter point hike
This past Wednesday, as widely expected, the US Federal Reserve raised the federal funds’ target by 0.75% to a range between 2.25% and 2.5%. While acknowledging that spending and production have softened, job gains have remained robust. Markets took comfort in comments from Chair Jerome Powell, who said that following the rate hike, “We are now at levels broadly in line with our estimates of neutral interest rates, and after front-loading our hiking cycle until now we will be much more data-dependent going forward.” Smaller rate hikes are anticipated ahead.



German consumer, business sentiment plunged in July
There are continuing energy shortages stemming from Germany’s reliance on Russian energy supplies. While Russian natural gas supplier Gazprom resumed shipments via the Nord Stream 1 pipeline last week, it has already cut those flows by half, meaning the pipeline is now operating at just 20% capacity. At that rate, it will be difficult for Germany to store enough gas to make it through the winter without shortages. In an effort to avoid shortfalls, European Union members agreed this week to target 15% cuts in gas demand and that voluntary cuts would become binding in an emergency. On Thursday, the GfK consumer confidence reading slumped to a record low of -30.6.



China’s population is growing more slowly and is expected to start shrinking no later than 2024, the country’s state media reported on Sunday.



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