What to watch around the world next week: AI trading faces a critical test. Earnings season, central bank decisions and the situation in the Middle East will affect the market
① Tech giants such as Alphabet will announce their financial reports next week, and AI capital expenditure guidance will be the focus. If the budget is cut, it may impact the AI industry chain; ② The market expects the European Central Bank to suspend interest rate hikes on Thursday, with rising energy prices being the core concern of its policy; ③ The Federal Reserve’s interest rate meeting at the end of July is expected to remain unchanged, and the situation in the Middle East is the biggest external variable affecting global asset prices. As the U.S. stock earnings season enters its peak, global financial markets are about to usher in another critical trading week.
① Tech giants such as Alphabet will announce their financial reports next week, and AI capital expenditure guidance will be the focus. If the budget is cut, it may impact the AI industry chain; ② The market expects the European Central Bank to suspend interest rate hikes on Thursday, with rising energy prices being the core concern of its policy; ③ The Federal Reserve’s interest rate meeting at the end of July is expected to remain unchanged, and the situation in the Middle East is the biggest external variable affecting global asset prices. As the U.S. stock earnings season enters its peak, global financial markets are about to usher in another critical trading week. Technology giants such as Alphabet (Google’s parent company), Intel, and Tesla will announce their results one after another, and the AI investment logic of US stocks will usher in a new round of testing; at the same time, the European Central Bank will announce its latest interest rate decision. Analysts pointed out that with the situation in the Middle East escalating again, international oil prices rising again, and the Federal Reserve interest rate meeting approaching, the three main lines of corporate profits, central bank policies and geopolitics will jointly determine the trend of global asset prices in the coming week. AI trading faces critical test In the past two years, the AI craze has been the core driving force for the rise of U.S. stocks, and what will attract the most market attention next week will undoubtedly be Alphabet's latest quarterly results, which will be announced after the market closes on Wednesday. Technology giants such as Microsoft, Google, Meta, and Amazon continue to invest hundreds of billions of dollars in building data centers and purchasing AI chips, which has continued to benefit AI industry chain companies such as Nvidia, Broadcom, TSMC, and Micron, and has also become an important force in driving U.S. stocks to continue to reach historical highs. Therefore, the market pays more attention to Alphabet management's latest guidance on future AI capital expenditures than the profit itself. Kevin Mahn, chief investment officer of Hennion & Walsh Asset Management, said that if Alphabet releases any signal to reduce its AI investment budget, it may trigger a chain reaction throughout the AI industry chain and have a serious impact on AI transactions. However, Wall Street currently generally believes that Alphabet is not likely to significantly reduce its AI investment in the short term. As OpenAI, Anthropic and Meta continue to increase competition, Google still needs to maintain a high level of capital expenditures to maintain its competitive advantage in the AI field. In addition to Google, Intel and Texas Instruments will also report results next week. Compared with previous quarters, the importance of this chip company's financial report has increased significantly. Just recently, AI concept stocks have experienced the biggest adjustment this year. The Philadelphia Semiconductor Index has fallen more than 20% from its historical high at the end of June, technically entering the bear market zone. The sharp correction for several consecutive days has also dragged down the S&P 500 Index and the Nasdaq Index to end their previous consecutive record highs. Previously, Samsung Electronics and TSMC announced better-than-expected financial reports, but the market response was relatively muted, showing that investors have already placed extremely high expectations on the semiconductor industry, and simply "exceeding expectations" is no longer enough to drive stock prices to continue to rise. Since the chip sector currently has a very high weight in major stock indexes, its trend has become an important variable affecting the entire U.S. stock market. At the same time, a large amount of leveraged ETF funds have gathered in the semiconductor sector, which has further amplified stock price fluctuations and significantly intensified short-term fluctuations in AI trading. In addition to the technology sector, according to market statistics, more than 80 S&P 500 companies will announce quarterly results next week. Tesla, one of the seven giants, will also announce its latest financial report. In addition, financial and defense leaders such as American Express, Philip Morris, and Raytheon Technologies will also gradually hand over their report cards. LSEG data shows that analysts currently expect the overall profit of the S&P 500 index components to increase by about 26% year-on-year in the second quarter, which is expected to be one of the fastest growth rates in recent years. Michael Arone, chief investment strategist at State Street, said that although the market is constantly disturbed by news such as geopolitics and tariff policies, what really supports the continued rise of the stock market is corporate profitability fundamentals, and the overall profitability of listed companies still shows strong resilience. ECB expected to remain on hold At the macro level, global economic data next week will be relatively limited. Among them, the most watched data are the U.S. small non-farm payrolls, PMI, new home sales, weekly initial jobless claims and other data.
As the recent escalation of conflicts in the Middle East has pushed up international oil prices, the market hopes to use US PMI data to observe whether rising energy prices have begun to affect business activities and whether the US economy still maintains strong growth momentum. Previously released U.S. CPI and PPI data for June were both lower than market expectations, which temporarily eased market concerns about a resurgence of inflation and caused investors to lower their bets on further interest rate hikes by the Federal Reserve. The current interest rate futures market shows that traders basically expect the Federal Reserve to remain unchanged at its interest rate meeting at the end of July, and the next 25 basis point interest rate hike is more likely to occur in December this year, rather than September as previously feared by the market. In Europe, the European Central Bank will announce its latest interest rate decision on Thursday, which is another major focus of global markets. The market generally expects that the European Central Bank will choose to suspend action at this meeting after completing a 25 basis point interest rate hike in June. Recent inflation data in the Eurozone have been lower than market expectations, and there is still great uncertainty about the situation in the Middle East. Most institutions believe that the European Central Bank is more likely to wait for more economic data before deciding whether to raise interest rates again in September. The situation in the Middle East remains the biggest external variable However, a renewed rise in energy prices remains one of the ECB's biggest concerns. If the situation in the Middle East continues to deteriorate and international oil prices return to their previous highs, energy costs may push up European inflation again and increase the pressure on the European Central Bank to continue to tighten policy in the future. Tensions between the United States and Iran have escalated again recently, and international oil prices have rebounded again. Investors are worried that if the conflict further expands, it may push up global energy prices again and reignite inflationary pressures. The market currently generally expects that this round of conflict will not last too long, so risk assets as a whole remain relatively stable. However, if oil prices rise further in the future, it may not only weaken corporate profit expectations, but may also force major central banks, including the Federal Reserve and the European Central Bank, to maintain tightening policies for a longer period of time. Overview of key events next week: Monday (July 20): China's one-year loan market quotation rate to July 20, Germany's June PPI monthly rate, Canada's June CPI monthly rate, the United States' June Conference Board Leading Indicator monthly rate, the Tokyo Stock Exchange is closed for one day Tuesday (July 21): UK unemployment rate in June, German ZEW economic sentiment index in July, Eurozone ZEW economic sentiment index in July, weekly changes in ADP employment in the United States in the week to July 4 Wednesday (July 22): API crude oil inventories in the United States for the week to July 17, UK June CPI monthly rate, EIA crude oil inventories in the United States for the week to July 17, Samsung Galaxy global new product launch Thursday (July 23): China's June Swift RMB share of global payments, Australia's seasonally adjusted unemployment rate in June, the number of initial jobless claims in the United States for the week to July 18, EIA natural gas inventories in the United States for the week to July 17, the European Central Bank announced its interest rate decision, and ECB President Lagarde held a monetary policy press conference Friday (July 24): Japan's June core CPI annual rate, Eurozone's July manufacturing PMI initial value, UK's July manufacturing PMI initial value, US's July S&P global manufacturing PMI's initial value, US June new home sales annualized, Russian central bank announces interest rate decision (
As the recent escalation of conflicts in the Middle East has pushed up international oil prices, the market hopes to use US PMI data to observe whether rising energy prices have begun to affect business activities and whether the US economy still maintains strong growth momentum. Previously released U.S. CPI and PPI data for June were both lower than market expectations, which temporarily eased market concerns about a resurgence of inflation and caused investors to lower their bets on further interest rate hikes by the Federal Reserve. The current interest rate futures market shows that traders basically expect the Federal Reserve to remain unchanged at its interest rate meeting at the end of July, and the next 25 basis point interest rate hike is more likely to occur in December this year, rather than September as previously feared by the market. In Europe, the European Central Bank will announce its latest interest rate decision on Thursday, which is another major focus of global markets. The market generally expects that the European Central Bank will choose to suspend action at this meeting after completing a 25 basis point interest rate hike in June. Recent inflation data in the Eurozone have been lower than market expectations, and there is still great uncertainty about the situation in the Middle East. Most institutions believe that the European Central Bank is more likely to wait for more economic data before deciding whether to raise interest rates again in September. The situation in the Middle East remains the biggest external variable However, a renewed rise in energy prices remains one of the ECB's biggest concerns. If the situation in the Middle East continues to deteriorate and international oil prices return to their previous highs, energy costs may push up European inflation again and increase the pressure on the European Central Bank to continue to tighten policy in the future. Tensions between the United States and Iran have escalated again recently, and international oil prices have rebounded again. Investors are worried that if the conflict further expands, it may push up global energy prices again and reignite inflationary pressures. The market currently generally expects that this round of conflict will not last too long, so risk assets as a whole remain relatively stable. However, if oil prices rise further in the future, it may not only weaken corporate profit expectations, but may also force major central banks, including the Federal Reserve and the European Central Bank, to maintain tightening policies for a longer period of time. Overview of key events next week: Monday (July 20): China's one-year loan market quotation rate to July 20, Germany's June PPI monthly rate, Canada's June CPI monthly rate, the United States' June Conference Board Leading Indicator monthly rate, the Tokyo Stock Exchange is closed for one day Tuesday (July 21): UK unemployment rate in June, German ZEW economic sentiment index in July, Eurozone ZEW economic sentiment index in July, weekly changes in ADP employment in the United States in the week to July 4 Wednesday (July 22): API crude oil inventories in the United States for the week to July 17, UK June CPI monthly rate, EIA crude oil inventories in the United States for the week to July 17, Samsung Galaxy global new product launch Thursday (July 23): China's June Swift RMB share of global payments, Australia's seasonally adjusted unemployment rate in June, the number of initial jobless claims in the United States for the week to July 18, EIA natural gas inventories in the United States for the week to July 17, the European Central Bank announced its interest rate decision, and ECB President Lagarde held a monetary policy press conference Friday (July 24): Japan's June core CPI annual rate, Eurozone's July manufacturing PMI initial value, UK's July manufacturing PMI initial value, US's July S&P global manufacturing PMI's initial value, US June new home sales annualized, Russian central bank announces interest rate decision (