Market Eyes Fed, Jobs, and China-US Talks as Trading Resumes

US investors will return to trading after Independence Day celebrations meaning volatility and order flow will likely increase. Throughout the rest of the week, investors will most likely be focused on three elements; tonight’s Federal Reserve Meeting Minutes, employment data and the outcome of this week’s China-US talks. Investors will aim to determine how likely further interest rate hikes are and how resilient the employment sector remains. Also the stock market will be hoping for fruitful negotiations between the world’s two largest economies, which will assist with supply chains and regulations. 

The price of the US Dollar Index is increasing during this morning's Asian session. The US Dollar Index is up 0.12% and remains above 103.00. Investors should note tonight’s Meeting Minutes and tomorrow’s US employment data will affect the US Dollar. 

However, the Euro is the best-performing currency from this morning’s Asian session as we approach the European market opens. European indices are also experiencing a sharp decline as the European market opens edges closer. The DAX has declined by 0.54% and the French CAC by 0.51%. This is partially due to the poor economic data from China, which is known to dampen sentiment across the global economy. The stock market's poor performance is positive for the Euro as it can create a lower-risk sentiment.  

The Chinese Purchasing Managers’ Index reads 53.9, lower than the 56.2 expected and the weakest in the past five months. The data has had a negative impact on European indices but also has the potential to pressure Crude Oil. China is the world’s largest exporter of crude oil. The price of crude oil was supported by production cuts, as mentioned in yesterday’s market analysis. Indeed the price rose by 1.60% throughout the day. However, investors will now monitor OPEC’s response to the poor Chinese data. OPEC members will be meeting throughout the day in Vienna. 

NASDAQ

The price of the NASDAQ rose slightly during yesterday’s trading, but orders were extremely low due to the bank holiday. However, the price this morning is declining, similar to European markets, due to poor Chinese data. The price of the NASDAQ has fallen this morning by 0.35%, which is significantly higher than the bearish price movement seen amongst other US indices. Of the NASDAQ’s top 10 influential stocks, only two ended the day higher in the latest session. These were Amazon and NVIDIA, which rose no more than 0.17%. The most substantial decline from the top 20 influential stocks was Advance Micro Devices declining by 0.39%. 

The NASDAQ has been forming a bullish trend over the past week due to positive economic data and sales figures by influential companies, such as Tesla. However, the price is now very close to the previous resistance points from June 16th and has formed a bearish breakout. If the price breaks below the $15,122 price, bearish signals may materialise. 

NASDAQ 15-Minute Chart on July 5th

Over the past week, one of the best-performing stocks within the index is Tesla. Tesla stocks have risen by 15% over the past week and 6.90% during the latest session. As mentioned above, the stock is being supported by solid sales data, which is a result of the discounted price introduced by Musk. In the past three months ending June, 466,140 cars were available for sale, 10% more than the previous quarter and 83% more than last year. The production and sales volume gap decreased from 17,933 cars in the first quarter to 13,560 vehicles in the second. Most analysts advise that the company will continue experiencing better-performing sales and profits.

However, although certain companies perform well, the monetary policy can still pressure the stock market. Tonight investors will monitor the Fed’s Meeting Minutes report looking for further clues on how likely further hikes are. Further rate hikes can pressure the stock market. Lastly, investors will also be monitoring the effect of the Chinese restrictions on raw materials used to create microchips. If the restrictions significantly impact the supply chain, the NASDAQ will likely experience pressure again due to its link to microchips and tech stocks. 

Summary:

• Throughout the rest of the week, investors will most likely look at three elements; tonight’s Federal Reserve Meeting Minutes, employment data and the outcome of this week’s China-US talks.
• The Euro is the best-performing currency from this morning’s Asian session as we approach the European market opens. European indices are also experiencing a sharp decline as the European market opens edges closer. 
• Poor economic data from China, which is known to dampen sentiment across the global economy.
• Tesla outperforms other NASDAQ components due to stronger sales data.