Market Flip Flops! Inflation Vs Earnings!

US:

Market flip flops. Last week’s stock trading was non-directional as investors digested inflation data and the start of the Q2 earnings season. The top U.S benchmark indexes declined about -0.16% to -1.62% as a weekly loss.

The midcap index Russel-2000 underperformed. As international oil prices plunged to levels not seen before Russia invaded Ukraine, energy stocks lagged. The S&P 500 Index fell to its lowest intraday level since June 22 on Thursday but rebounded dramatically on Friday in response to a new round of bank earnings and encouraging economic data.

After rising to an annual pace of 8.6% in May, the Consumer Price Index increased to 9.1% in June, the highest since November 1981. Excluding volatile energy and food costs, core inflation increased 0.7% monthly, up from 0.6% in the previous two months.

US inflation data-Market Flip Flop

Earnings season began with mixed results for a handful of large US banks. According to Fact Set, analysts were anticipating that second-quarter earnings for banks in the S&P 500 would fall 26% from a year ago, due in part to greater costs from provisions for loan losses.

Europe:

The European benchmark indices closed lower, about -0.52% to -3.06%, as a weekly loss after central banks increased interest rates, stoking fears of a worldwide recession. However, the French index CAC-40 ended as a flat movement.

Yields on core bonds issued in the eurozone declined as investors became increasingly concerned that a disruption in gas supplies from Russia could put European businesses into a recession. As a direct consequence, market participants have lowered their forecasts for further policy tightening, which has increased the value of core bonds. Yields on UK government bonds were not significantly different from those of core markets.

APAC:

As a weekly loss, most APAC benchmark indices dropped about -0.84% to -6.57%. The Hong Kong index HSI-50 underperformed. Chinese stock markets fell after statistics indicated that the country’s economy slowed considerably in the second quarter. A rising trend among homeowners to cease making mortgage payments damaged property and banking shares. However, the Japan Index Nikkei-225 closed higher by over 1% for the week.

Underlying market movement:

Underlying-Weekly-7-18-2022-Market Flip Flop

Following a temporary drop below $100 per barrel the previous week, the price of US crude oil slipped below that level and remained there as recession worries impacted energy consumption.

Sentiment Analysis

Market flip flops. The general trend of the news sentiment for the week continued to go in mixed directions. The sentiment trend for the U.S benchmark indexes Nasdaq-100 and Russel-2000 continues to be negative. The rest remain in an unbiased view.

The sentiment trend for most European benchmark indexes remains in a mixed direction. The Italian index FTSE-MIB and the London index FTSE-100 continue to be bearish. On the other hand, the German index Dax-30 turns into a bullish view. The French index CAC-40 is in neutral view for the week.

The neutral view dominated the news sentiment trend directions for the top Asia-Pacific indexes. However, The Japan index, the Nikkei-225 index, turns in to upward direction for the week. In contrast, the Hong Kong index HSI-50 turned in a negative trend in sentiment direction. The rest remains unbiased.

News Sentiment Trend:

Sentiment Trend Chart-7-18-2022-Market Flip Flop

The following important economic indicators and earnings reports, which can alter current sentiment, may determine the market this week, including the LEI index on Thursday and building permits on Tuesday. (https://www.fxstreet.com/economic-calendar

Sentiment Score:

Sentiment Values-7-18-2022-Market Flip Flop

Note: The news sentiment data is the most useful additional overlay for your existing models to improve the performance further.

Buy & Sell Signals

The table below displays the buy/sell indications generated by InfoTrie’s proprietary Investment/Trading models. These models were created using technical, foundational, and quantitative approaches, with the sentiment score based on news serving as a secondary overlay.

At InfoTrie, I counted the random signals from various Trading/Investment models.

Buy Sell-7-18-2022-Market Flip Flop

The news sentiment score provides a significant ” Alpha ” improvement compared to the traditional investment/trading models.

 For more details on the analysis, accessing complete tear sheets or white paper for the models, subscription details for News Sentiment data and other consulting works, don’t hesitate to contact us with the information below.        

contact@infotrie.com

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InfoTrie Financial Solutions Pte Ltd, Singapore

Sureshkumar Ramani +65 93376035

Frederic GEORJON +33 (0)6 1304 0600


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