Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
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Key Stories from the past week: Tesla and Samsung back on track
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This week saw US equities breaking all-time highs once again with some of the most popular stock names driving Saxo client profits, namely Tesla and Nvidia. A softening of US economic data has solidified expectations that a first Fed rate cut isn’t far away and this in turn has helped lift risk assets as treasury yields fall. The Chinese Shanghai composite index set its seventh straight weekly loss, its longest losing streak since 2021. The slide now increases the pressure on Chinese policymakers ahead of the Third Plenum later this month.
Tesla shares get back in gear
Tesla shares have now gained +75% since bottoming out on the 22nd April. This week’s latest surge came as Tesla 2Q deliveries beat estimates at 443,956 vs 439,302 and was also able to present increasing value of the company’s energy storage business which more than doubled their previous quarterly record for energy deployed in the US. The EV maker now has an opportunity to impress investors with its Robotaxi day on 8th August.
- Tesla established bullish trend
AI gives Samsung a needed boost
Samsung Electronics gains after preliminary Q2 results beat expectations. Q2 profit increases 15-fold to $7.54bn with the company’s memory semiconductor business driving overall performance growth. AI has helped buoy memory-chip prices, which were in a deep slump last year. The AI frenzy will likely keep supply in the overall memory chip market tight. That is good news for Samsung, but it still needs to work harder to protect its leadership position. Samsung's mobile business is seen under performing with a squeeze on profit margin.
- Samsung Electronics forecasts major Q2 profit jump
Bullish sentiment leads upward oil price momentum
Oil remains bid trading at the highest levels since April as positive economic growth drivers and tighter supply are underpinning higher oil prices. Crude oil and especially the fuel products trade higher as Hurricane Beryl raises concerns of a supercharged storm season disrupting production and flow of crude and fuel products to and from the Gulf of Mexico, and together with heightened geopolitical risks, these developments have offset signs of demand weakness in Asia.
- Metals and energy drive early July gains
Next week sees Federal Reserve Chair Jerome Powell testify before the Joint Economic Committee in Washington (Tuesday). June CPI data is due from China (Wednesday), Germany and US (Thursday), France and Spain (Friday). Earnings season will kick off with Pepsico, Delta Airlines (Thursday) and major US banks JP Morgan, Wells Fargo, Citigroup, Bank of New York Mellon (Friday). We will also have the outcome of the French parliamentary elections and no doubt attention will be on developments in the US presidential election race also.
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