US GDP falls, but markets see it as positive

According to the US Commerce Department, the economy decreased by 0.9% in the second quarter (with an estimate of +0.5%). It is the second quarter of contraction, pushing the economy into a technical recession. Analysts at Morgan Stanley note that the Fed will have to cut the pace of rate hikes to 50 bps in September, but the risks of a rate hike remain as inflation is not slowing. Other economic data showed that initial jobless claims fell by 5,000 to 256,000 for the week.

Amazon (AMZN) stock jumped more than 10% in extended trading Thursday after the report was released. The tech giant missed earnings expectations, but revenue for the quarter was up 7% from a year ago. On Thursday, shares of Intel (INTC) fell more than 8% after the report was released. Experts saw a deterioration in their Q3 outlook. Shares of Roku (ROKU) fell by 26% due to a weak report and a poor Q3 outlook. Shares of Apple (AAPL) added 3% after Q2 earnings beat estimates.

Exxon Mobil (XOM), Procter&Gamble (PG), Chevron (CVX), AbbVie (ABBV), AstraZeneca ADR (AZN), Colgate-Palmolive (CL), and others report today.

Europe’s largest oil companies Shell and Total Energies extended their share buybacks. It happened after second-quarter earnings surpassed the previous quarter’s already recorded high on the back of a surge in oil, gas, and petroleum product prices.

Preliminary data on inflation in Germany showed a 0.9% increase in consumer prices over the past month. Thus, annual inflation in Germany is estimated at 7.6%. The main reason for the price increase is the jump in energy prices after Russia invades Ukraine.

Oil is stable as the market weighs limited supply amid fears of a recession. Investors’ attention has now shifted to the next OPEC meeting next week.

Gold and silver prices have risen over the past few days amid a decline in the US Dollar Index and US government bond yields. But it should be noted that the decline of the dollar is temporary. The US Federal Reserve needs to reduce the pace of interest rate hikes to prevent sending the US economy into recession. But the rate hikes and the Fed’s balance sheet cuts continue, which is negative for the precious metals.

Asian stocks were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 0.36%, Hong Kong’s Hang Seng (HK50) decreased 0.23% and Australia’s S&P/ASX 200 (AU200) was up 0.97% on the day.

The latest economic data showed that Japan’s core Tokyo Consumer Price Index rose from 2.1% to 2.3% annually. The unemployment rate remained at 2.6%. Retail sales for June increased by 1.5%, while the Industrial Production Index added 8.9% last month, while a 7.5% decline was expected.

China will step up efforts to stabilize foreign trade in the second half of the year, the Commerce Ministry said on Friday.