Stock Market Update & Analysis: July 26th

Global Markets

Canada

Canada’s TSX Composite Index rose as investors balanced the impact of falling oil prices and rising gold prices. The energy sector, heavily weighted in the TSX, faced pressure due to declining crude oil prices, driven by concerns over muted demand from China. However, the index found support from the mining sector, with gold prices rising sharply.

USA

In the United States, the stock markets experienced a recovery from a major selloff. The Nasdaq Composite Index was notably driven higher by gains in large cap stocks. These sectors, comprising companies like Apple, Microsoft, and Nvidia, showed significant strength, lifting the tech-heavy index. Meanwhile, the Dow Jones Industrial Average led the broader market rally, supported by positive earnings reports from 3M and economic data that show a positive inflationary reading.

Europe

European shares rose, but the region’s major indices were on track for a modest weekly loss. This was due to a mixed batch of corporate earnings, with some companies reporting better-than-expected results while others disappointed. Investors in Europe remained cautious, digesting the varied financial performance of key corporations amid ongoing economic uncertainties.

UK

The UK’s FTSE 100 Index rose by over 1 percent, driven by a combination of positive economic inflationary data from the United States and growing hopes for a rate cut by the Bank of England in September. UK also joins the global digital trade agreement operated by the WTO (World Trade Organization).

Japan:

Japan’s Nikkei 225 Index closed lower, reversing early gains and extending its losing streak to an eighth consecutive session. The index faced pressure from a stronger yen, which hurt export-oriented stocks.  Japan continued to face concerns over global economic growth and domestic corporate earnings which weighed on investor sentiment.

China:

Chinese markets rose slightly, with major indices such as the Shanghai Composite Index and the Shenzhen Component Index showing modest gains. Apple’s iPhone is no longer amongst the top 5 brands of mobile phones in the country. Goldman Sachs released a report which stated a Trump presidency will negatively affect Chinese stocks.

Currency Markets:

In the currency markets, the Japanese yen continued to strengthen, marking its strongest week in nearly three months. The yen’s rise was attributed to safe-haven demand amid global economic uncertainties and geopolitical tensions. On the other hand, the U.S. dollar index held steady, supported by expectations of a stable U.S. interest rate environment.

Commodities:

Oil prices slipped as traders reacted to concerns over muted demand in China, the world’s largest crude importer, and expectations of a Gaza ceasefire deal, which could alleviate some geopolitical risk premiums. Conversely, gold prices rebounded after experiencing a sharp drop in the previous session. The recovery in gold was driven by bargain hunting and renewed investor interest in the precious metal as a hedge against inflation and economic uncertainty.

Corporate Stock News

3M Co: Raised full-year adjusted profit forecast due to restructuring and higher electronics demand, with shares rising in premarket trading.

Aon Plc: Reported a rise in second-quarter adjusted profit, driven by investment gains and growth in its commercial risk solutions business.

Arthur J Gallagher & Co: Second-quarter profit rose by 21%, driven by strong insurance demand and increased brokerage commissions.

Baker Hughes Co: Beat analysts’ estimates for second-quarter profit, raised its quarterly dividend, and saw higher demand for international drilling services.

Biogen Inc: EU regulator rejected its early Alzheimer’s treatment, citing that benefits did not outweigh the risks of serious side effects.

Bombardier Inc: Scotia Capital maintained an outperform rating with a price target of CAD 120, current price at CAD 97.97.

Bristol-Myers Squibb Co: Posted better-than-expected second-quarter results and raised its earnings forecast for the full year.

Centene Corp: Beat Wall Street estimates for second-quarter profit and was allowed to forgo a $1.3 billion payment related to Medicaid.

Cincinnati Financial Corp: Reported better-than-expected second-quarter profit driven by higher premiums, with earned premiums growing 11%.

Deckers Outdoor Corp: Raised its annual profit forecast after strong demand for Hoka sneakers and UGG boots.

Dexcom Inc: Shares sank after cutting its annual revenue forecast, blaming restructuring and lower revenue per customer.

Digital Realty Trust Inc: Posted a surprise drop in second-quarter revenue and core FFO, causing shares to fall in extended trading.

Eastman Chemical Co: Beat Wall Street estimates for second-quarter profit, benefiting from higher sales volumes.

Edison International: Beat Wall Street estimates for second-quarter profit, reaffirmed its full-year core profit forecast, with revenue rising to $4.34 billion.

Hartford Financial Services Group Inc: Reported a 28% rise in second-quarter profit, driven by strong underwriting gains and higher investment returns.

Healthpeak Properties Inc: Marginally raised its annual FFO forecast due to resilient demand for its medical office and life science properties.

Juniper Networks Inc: Reported second-quarter revenue and profit below analysts’ estimates due to weak cloud computing firm spending.

L3Harris Technologies Inc: Raised its 2024 adjusted profit forecast after beating second-quarter estimates, driven by robust defense spending.

Mohawk Industries Inc: Reported second-quarter profit above estimates due to cost-cutting initiatives and lower energy and material costs.

Norfolk Southern Corp: Reported second-quarter profit above estimates, thanks to robust pricing.

Open Text Corp: TD Securities maintained a buy rating with a price target of CAD 55, market cap at CAD 11.45 billion.

Pieridae Energy Ltd: Shut-in production of about 6,250 barrels of oil equivalent per day due to third-party facility issues.

Vale SA: Reported second-quarter net profit of $2.77 billion, triple the year-earlier period, driven by increased sales.

VeriSign Inc: Reported a 4.1% rise in second-quarter revenue, beating analyst expectations as more businesses expand their online presence.

Weyerhaeuser Co: Reported a fall in second-quarter profit due to low demand amid housing market weakness and announced the acquisition of 84,300 acres of timberlands.