Next week (July 18-22) heavy events and their impact analysis

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Huitong.com July 16th - Next week, dozens of companies listed in the US will announce the second quarterly report, and the US Republican Party will hold a regular meeting. In addition, the Turkish military coup is waiting to be effective.

Affected by the Turkish military coup, on the last trading day of this week, risk assets generally suffered selling, US stock index futures closed lower, Turkish lira and other emerging market countries weakened against the US dollar, and funds poured into US debt, gold and other safe havens. assets.

Marc Chandler, chief currency strategist at Brown Brothers Harriman Bank, said: "Uncertainty has once again shrouded the market. Turkey's political influence is significantly greater than the economic level." Chandler said that the Turkish army has always been a leader. The tradition of the democratically elected government to seize power.

Chandler said: "The Turkish army is not the first to seize power. The Turkish military considers itself to be a defender of secularism and democratic institutions. They have already warned of the progressive Islamization of Turkish society. In Turkey, many areas are only Islamic. The teachings are the first."

He said that once the coup is successful, it will eventually be seen as the current government cannot effectively deal with difficult issues, including the Syrian refugee issue and the fight against the Islamic State Organization. In recent years, the Erdogan government has become more and more popular in the eyes of Western leaders.

Turkey has always been one of the best performing economies in the Middle East, Europe and Africa.

Jorge Maris CA l, chief investment officer of UBS's emerging markets, said: “If uncertainty persists, Turkey may have capital flight. At present, the Turkish lira has fallen by more than 4% against the US dollar. However, we do not This will change the overall perception of emerging markets."

Next Monday, the Republican Party will open a regular meeting in Cleveland, where it will officially nominate Trump as the party's presidential candidate. On Thursday night, the meeting will come to a close in Trump's speech. Bill Stone, chief investment strategist at PNC Wealth Management, said: "I am as interested in this conference as many people, and I should be able to learn more about the details. I think everyone can follow this platform before the election. Some reactions, this meeting may cause a big reversal in some industry sectors."

Of course, the biggest impact is the stock market. This week, the S&P 500 index hit a record high, and about 90 of its constituent companies will announce the second quarterly report next week. There are financial companies such as Goldman Sachs, American Express, IT companies Microsoft, IBM, industrial giants, and so on.

This week, the S&P 500 index closed at 2161, up 1.5%, and the closing price hit a record high for four consecutive days. The same record high is the Dow Jones 30 industrial stocks average index, which closed at 18.471 this week, with a weekly increase of 2%.

Gina Martin Adams of Wells Fargo said: "People seem to be expecting that the company's revenue will improve in the next 12 months. The company itself will prove this in the coming weeks."

Adams expects that US stocks will have a bigger increase in the future.

Adams said: "From a technical point of view, we have no reason to look after the market. In the future, the market will have better performance in the long run. Of course, the cooperation of fundamentals is essential. On the fundamental side, we can also see The signs of stabilization and recovery are enough to prove that the stock price will go higher in the next few quarters."

According to Thomson Reuters forecast, based on the performance of dozens of companies that have reported earnings, the overall revenue of the S&P 500 constituents is expected to fall by 4.7% in the second quarter.

Adams said: "But this is the first time that the 8 consecutive quarters of revenue decline is expected to be good for the first time - the decline rate is shrinking. In the first quarter, technology companies have dragged back. If the technology companies in the second quarter can perform well, market confidence will be substantial Enhance, the future is optimistic about the trend of technical and industrial stocks."

Analysts also paid special attention this week to the possible impact of Brexit on many multinational companies.

“The important thing is not how those companies perform in the current season, but the impact on the future. The first quarter is a perfect example. Many companies’ marginal returns are better than expected, but they don’t help, analysts and the company itself,” she said. Both have lowered their expectations for future growth. This is what we are worried about."

The performance of the stock market will naturally affect the bond market. This week, the bond market yield has recovered. The US 10-year bond yield has once risen to 1.6%, the highest since the Brexit referendum. After the news of the coup in Turkey, the yield was retreated to 1.54%.

Traders are now concerned about whether the Fed can return to the interest rate hike faster than the market expects. On Friday, the US federal funds rate futures price showed that the Fed’s probability of raising interest rates in December was about 50%. The main reason is that US retail sales data rose by 0.6% in June, far better than the market expectation of 0.1%.

Adams said: "The stock market and the bond market are highly correlated. I will pay close attention to both performances."

Adams believes: "The economic performance is good, and the bond yield is in the position, indicating that the economic growth rate is moderate and moderate."

On the 26th and 27th of this month, the Fed will hold a monetary policy meeting. Although the market expects that the Fed will maintain the existing monetary policy, the possibility of the Fed transmitting the hawkish signal cannot be completely ruled out – the possibility of raising interest rates during the year is not ruled out.

She said: "I think the Fed will recognize the reality of economic data and financial environment improvement, but I would like to say that the Fed’s attitude has clearly shifted to the hawks in the next few months."

Stone believes that the stock market will continue to be high in the coming week. He pointed out that China's GDP growth in the second quarter was better than expected.

Adams said that the presidential election will not have much impact on the market. The Democratic Party will be held in the following week.

Adams said: "Although the presidential candidates will pass more or less information at the regular meeting, there is still a long way to go before the election begins."

At the moment, Hillary’s performance is more positive and her policies are clearer. Trump has a tough stance on immigration issues and challenges existing trade rules.

However, there are still many details that are not known, and analysts are still unable to fully discern the policy details of both of them. The market expects that both candidates will support the implementation of fiscal stimulus plans, increase infrastructure investment, and benefit related industry stocks.

Morgan Stanley surveyed 650 investors and found that 70% of investors expect the presidential election to have an impact on the market outlook for the next two years.

Citi analysts wrote this week that investors generally believe that if Hillary is elected president, it will maintain the status quo more, and Trump is elected, the uncertainty will be more. Although Trump will introduce a policy of tax reduction and increase, in the short term, it will benefit the economy. However, due to other uncertainties, business leaders may not be eager to make decisions, and the economy will face some stagnation.

The election may also affect the bond market yield. Royal Bank of Scotland strategy director Briggs (John BrigGS said that bond yields may be lower again, retesting historical lows.

He said: "I am worried that the market is still uncertain. The bond market yield in the third quarter may still be lower. However, by the end of this year, the yield will rise again."

Important events and data next week (Beijing time)

Monday (July 18)

The Republican Party of the United States holds a national congress, which will officially nominate Trump as presidential candidate.

06:45 New Zealand second quarter CPI

22:00 US July NAHB Property Market Index

Tuesday (July 19)

09:30 Reserve Bank of Australia announces minutes of July monetary policy meeting

16:30 UK June retail price index, June CPI, PPI

17:00 Germany July ZEW Economic Condition Index, ZEW Economic Climate Index

20:30 US construction permit in June, new housing starts rate in June

21:00 IMF announces latest global economic outlook, including new estimates for UK economic growth

Wednesday (July 20)

04:30 US crude oil stock changes in the week of July 15

16:00 Eurozone May seasonal reconciliation current account

16:30 UK ILO unemployment rate in March, average annual salary rate, UK unemployment rate in June

17:00 Swiss July ZEW Investor Confidence Index, ZEW Economic Status Index

22:30 US EIA crude oil inventories changes during the week of July 15

Thursday (July 21)

New Zealand Federal Reserve released economic situation update

14:00 Swiss June trade account

16:30 UK June retail sales

19:45 ECB interest rate decision

20:30 European Central Bank President Mario Draghi holds a press conference

20:30 The number of people claiming unemployment benefits in the US on July 16

21:00 US May FHFA House Price Index

22:00 US June Conference Board Leading Indicators, June Existing Home Sales

Friday (July 22)

15:50 French July PMI

20:30 Canada May retail sales, June CPI

21:45 US July Markit manufacturing PMI initial value