Global inflationary pressures continue to decline. Today, investors’ focus is on the quarterly reports of Tesla and Netflix

Morgan Stanley (MS) jumped by 6% after second-quarter results beat both top and bottom lines forecasts. Charles Schwab Corp (SCHW) topped the growth leaderboard, up more than 12% after posting better-than-expected quarterly results. Quarterly results from companies like Tesla (TSLA) and Netflix (NFLX) are expected today. Tesla’s quarterly results will likely focus on margins following the electric carmaker’s recent price cuts, while Netflix’s quarterly results will focus investor attention on subscriber growth.

Canada’s inflation rate fell to 2.8% from 3.4% year-over-year. Core inflation (which excludes food and energy prices) fell from 3.7% to 3.2% y/y. The sharp decline in inflationary pressures precludes further policy tightening by the Bank of Canada.

ECB officials are becoming less hawkish in their statements. If earlier almost all officials in one voice said about at least two rate hikes of 0.25% at each of them, now the tone of speech has changed, and now some politicians expect one rate hike of 0.25%, and the September decision will depend on incoming data. Apparently, the decline in global inflation, along with weak Eurozone GDP reports, made the officials reconsider their plans for further policy tightening.

Gold rose sharply yesterday after US retail sales rose less than expected in June, putting pressure on US Treasury yields and the US dollar. The US dollar’s overreaction to lower inflation and retail sales suggests that the market is in no mood to buy the dollar amid a growing view that the Fed is close to ending its tightening cycle. The market expects rate cuts from around mid-2024, with nearly five rate cuts by the end of next year. For gold and silver, this is a fundamental strengthening factor for the coming months.

Crude oil prices rose sharply on Tuesday after Chinese officials said the government would soon implement more pro-consumption policies, as data this week showed the country’s economy barely grew in the second quarter.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up by 1.16% for the day, China’s FTSE China A50 (CHA50) decreased by 0.29%, Hong Kong’s Hang Seng (HK50) fell by 1.21%, and Australia’s S&P/ASX 200 (AU200) ended Tuesday positive by 0.42%.

New Zealand’s inflation rate fell from 6.7% to 6% on an annualized basis. Over the last quarter, the consumer price index posted a 1.1% increase, the lowest since the first quarter of 2021. The RBNZ said in its monetary policy review last week that it expects core inflation to fall, although it did not comment on when this might happen. Nevertheless, there will be additional inflationary pressures in the next quarter as the government’s fuel tax and public transport subsidy exemptions expire on July 1.