US stocks ended the week on a high note, with the S&P 500 achieving its best performance of 2024, fuelled by renewed investor confidence and a surge in technology stocks. After a turbulent start to August, positive economic data, including stronger retail sales and lower jobless claims, helped ease recession fears and restore market stability.
US stocks ended the week on a high note, with the S&P 500 achieving its best performance of 2024, fuelled by renewed investor confidence and a surge in technology stocks. After a turbulent start to August, positive economic data, including stronger retail sales and lower jobless claims, helped ease recession fears and restore market stability. Meanwhile, gold reached new heights, reflecting a shift toward safe-haven assets amid ongoing global uncertainties. This strong market rebound underscores a growing optimism, as investors balance the potential for economic resilience with the allure of gold's record-setting momentum.
Key Takeaways:
S&P 500 Posts Best Week of 2024: The S&P 500 rose by 0.2% on Friday to close at 5,554.25, capping a stellar week with a 3.9% gain, its best performance since November 2023. This marks a strong comeback from earlier in the month, bringing the index within 2% of its mid-July record high.
Nasdaq Surges on Tech Strength: The Nasdaq Composite climbed 0.21% on Friday to reach 17,631.72, driven by significant gains in technology stocks. The index recorded a 5.2% increase over the week, its strongest performance since November 2023, with Nvidia leading the charge, soaring over 18%.
Dow Jones Closes Higher: The Dow Jones Industrial Average added 96 points, or 0.24%, on Friday, closing at 40,659.76. This gain contributed to a weekly advance of 2.9% for the 30-stock index. The Dow's performance underscores the broad-based optimism that has returned to the market after the August sell-off. Investor sentiment was reflective of recession fears easing and expectations rising that the Federal Reserve might soon pivot to more accommodative monetary policies.
Gold Reaches All-Time High: Gold prices soared to an all-time high, surpassing $2,500 per ounce on Friday, before settling just below that mark. The surge was fuelled by a weakening US dollar and growing expectations of an interest-rate cut by the Federal Reserve in September.
European Markets Finish Strong: European stocks closed the week on a positive note, with the pan-European Stoxx 600 index rising 0.31% on Friday, bringing its weekly gain to 2.4%. This strong performance was mirrored across major European indices, with Italy's FTSE MIB leading the pack, climbing 2.2% on the day. The CAC 40 in France also posted a solid gain of nearly 0.4%, closing at a monthly high of 7,450. The gains were supported by optimism, which saw companies like Ferrari and Stellantis making significant advances.
Asian Markets React to Mixed Data: In Asia, markets closed mostly higher as investors reacted to a mix of economic data. Japan’s Nikkei 225 rose 0.78% to close at 36,726.64, supported by stronger-than-expected GDP growth of 0.8% for the second quarter, reversing the previous quarter's decline. Meanwhile, China’s CSI 300 rebounded by 0.99%, recovering from a six-month low despite mixed economic data. Hong Kong’s Hang Seng Index fell marginally, reflecting investor caution amid the mixed signals from the Chinese economy.
US Housing Market Shows Signs of Slowdown: Building permits in the US fell by 4% in July 2024, signalling a potential slowdown in future construction. Housing starts dropped sharply by 16% year-over-year, with single-family starts declining by 14.1% from June’s figures.
Treasury Yields Edge Lower: The yield on the 10-year US Treasury fell by 4.3 basis points to 3.883% on Friday, while the 2-year yield declined by 4.9 basis points to 4.052%, as investors digested a week of critical economic data.
Oil Prices Drop Amid Gaza Cease-Fire Talks: US crude oil futures fell by more than 1%, with the West Texas Intermediate September contract closing at $76.65 per barrel, down 1.93% for the day. Brent crude also dropped, settling at $79.68 per barrel, down 1.68%. The drop in oil prices comes despite a slight year-to-date gain of 6.98% for WTI and 3.43% for Brent, highlighting the market's sensitivity to geopolitical developments and demand fluctuations.
FX Today:
Gold Retreats After Setting a New Record High: Gold prices pulled back on Friday after reaching a new record high of $2,500 earlier in the day, driven by a dip in US Treasury bond yields. The precious metal is now trading below $2,490 as profit-taking sets in, potentially increasing volatility heading into the weekend. Analysts suggest that gold could now move down to $2,400, with a potential further decline to the $2,390 range. A break below $2,432 would provide further bearish confirmation. However, a breakout could see gold challenge a new all-time high of $2,550.
GBP/USD Climbs to Multi-Week Highs: The GBP/USD pair reached a multi-week high on Friday, trading around 1.2940 during the American session. This rally suggests that the correction from the 1.3043 high has likely completed at 1.2664 and a firm break above 1.3043 would likely resume the broader uptrend from 1.2298, with targets around 1.3124, which is close to the 1.3141 high. On the downside, a break below 1.2798 could shift the bias back towards 1.2664.
EUR/USD Holds Steady with Potential to Reclaim 1.1000: EUR/USD retreated after briefly edging higher to 1.1046 last week but remained within a range above the 1.0880 support level. The pair’s initial bias remains neutral this week, favouring consolidation. On the upside, a firm break above 1.0665-1.0947 could prompt an acceleration toward 1.1138 resistance, with the potential to reach 1.1232. However, if bearish divergence conditions prevail, a break below the 1.0880 support level could signal a near-term reversal, targeting 1.0776 support and possibly lower levels.
NZD/USD Reclaims Upward Momentum: The NZD/USD pair gained 1% on Friday, reaching 0.6050, and successfully reclaimed the 100-day Simple Moving Average (SMA) at 0.6040. Immediate resistance is now seen at 0.6060, with a break above this level potentially opening the door to further gains towards 0.6080 and 0.6100 (200-day SMA). On the downside, the pair finds support at 0.6030, with a break below this level potentially leading to a deeper correction toward 0.5990 (20-day SMA) and 0.5970.
USD/JPY Extends Pullback: The USD/JPY pair traded around 147.50 on Thursday, continuing its pullback from recent highs. Support is expected around the recent seven-month low of 141.69, with further downside potential towards 140.25. On the upside, resistance is seen at the nine-day EMA around 147.53, with stronger resistance at the 50-day EMA at 153.40. A move above this level could indicate a resumption of the previous uptrend.
Market Movers:
Rocket Lab Soars After Mars Mission Milestone: Rocket Lab’s shares surged 12.5% on Friday, hitting a 52-week high. The company’s stock was boosted by the successful packing and shipping of two Mars-bound spacecraft to Cape Canaveral, Florida, for launch, which represents a significant achievement for the company, lifting the stock to new heights.
Bavarian Nordic Jumps on Vaccine Expansion: Bavarian Nordic saw its stock soar by 14.8% after submitting data to the European Union’s drug regulator to extend the use of its mpox vaccine to teens. The CEO, Paul Chaplin, emphasised the importance of expanded approval for individuals between 12 and 17 years of age in combating the latest strain of the virus. This development was positively received by the market, leading to a significant increase in the company's share price.
H&R Block Rallies on Strong Earnings and Buyback Announcement: H&R Block’s stock jumped more than 12% after the company reported better-than-expected fiscal fourth-quarter results. The tax services provider not only topped Street estimates but also raised its dividend and authorised a substantial $1.5 billion share buyback.
Bayer Climbs on Legal Victory: Shares of Bayer rose by over 10% after the company secured a legal win in its lawsuit concerning claims that exposure to its Roundup weed and grass killer led to cancer. This legal victory alleviated some of the concerns surrounding Bayer’s litigation risks, particularly following allegations that Bayer-acquired Monsanto had violated state law by not adding a cancer warning to the Roundup label.
JD.com Gains on Robust Quarterly Earnings: JD.com’s stock jumped more than 8% following the release of stronger-than-expected quarterly earnings. The Chinese e-commerce giant reported a 74% year-over-year increase in second-quarter earnings, reaching 9.36 yuan per share, excluding items, significantly above the 6.07 yuan per share expected by analysts.
Coherent Rises After Beating Earnings Expectations: Coherent’s shares gained 7.5% on Friday after the electronic manufacturer reported better-than-expected fiscal fourth-quarter earnings. The company posted earnings of 61 cents per share, excluding items, on revenue of $1.31 billion, surpassing the consensus estimates of 60 cents per share on revenue of $1.28 billion.
Sphere Entertainment Pops on Analyst Upgrade: Sphere Entertainment’s stock rose by more than 6% after JPMorgan upgraded the stock to overweight from neutral. JPMorgan cited the company’s Las Vegas Sphere venue as a "mainstay in the destination tourism market" for both travellers and artists.
The strong performance of the S&P 500, coupled with record highs in gold and notable gains in key stocks like Rocket Lab and JD.com, underscores a market lifted by economic resilience and strategic corporate successes. Despite ongoing challenges, including concerns in the housing market and mixed economic data from China, investor sentiment remains optimistic, with tech stocks leading the charge and the broader market showing signs of a robust recovery. As markets continue to navigate the complexities of global economic shifts, the focus remains on key data releases and corporate earnings, which will likely set the tone for the weeks ahead.
