- Signs of recovery in U.S.-EU relations
The prominent development last week was the meeting between President Donald Trump and President of European Union Commission Jean-Claude Juncker.
Trump and Juncker held a successful meeting at the White House amid rising trade tensions. Addressing reporters at the White House after the meeting, the pair announced their agreement to work towards the following:
- Reaching zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods
- Reducing barriers to services, chemicals, pharmaceuticals, medical products, and soybeans
- Strengthening strategic cooperation with respect to energy and facilitating more U.S. natural gas shipments to Europe
- Reforming the World Trade Organization and addressing unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state-owned enterprises, and overcapacity.
Trump and Juncker announced that a working group of senior advisers would meet to achieve these objectives. The two sides also pledged to refrain from new trade restrictions during negotiations.
- U.S. economy grows at fastest pace in 4 years
Another agenda item that global markets focused on last week was second quarter GDP figures.
According to data released by the Department of Commerce, the U.S. economy expanded by 4.1 percent in the second quarter this year, recording the best growth performance since 2014. The market expectation was 4.2 percent. It followed a 2.2 percent growth rate in the first quarter, which was revised up from 2 percent.
Personal consumption expenditures and non-residential business investment were the largest contributors solid growth, which increased by 4 percent and 7.3 percent, respectively. It was also reported that net exports added about 1 percentage point to the second quarter’s growth with the surge in soybean shipments ahead of retaliatory tariffs.
- Facebook experiences biggest loss in US history
Technology companies were also under the spotlight last week.
Facebook released its financial statements on Wednesday, showing $13.23 billion in revenue in the second quarter, missing the market forecast of $ 13.24 billion.
Furthermore, the number of daily Facebook users in Europe fell to 279 million from 282 million in the first quarter, while in the U.S. and Canada, its figures remained unchanged at 185 million. Daily active users worldwide also stalled, rising just 22 million as the company struggled with a data leak scandal in which Cambridge Analytica illegally accessed 87 million users’ data.
Facebook lost $122 billion in value Thursday due to lower than expected earnings and a decline in the number of users.
On the other hand, e-commerce giant Amazon reported a huge surge in profits even though it slightly missed revenue forecasts for its second-quarter earnings.
The company’s income increased twelve-fold to a record $2.5 billion, marking the third consecutive quarter in which it surpassed $1 billion in profits.
- Fed meeting, employment data, earnings
The markets will focus on developments regarding monetary policy along with data releases on inflation and employment.
The Federal Open Market Committee’s August meeting will begin Tuesday and end Wednesday. Currently, markets will not price a rate hike for this meeting, but investors will seek signs for future meetings in the post-meeting statement.
Personal consumption expenditures (PCE) price index will be released Tuesday and employment figures on Friday.
In addition, the Institute for Supply Management (ISM) and Purchasing Managers' Indexes (PMI) and factory orders in the manufacturing sector will be closely monitored.
Company earnings, including Apple, Sony, Caterpillar, and Tesla, may also have an impact on the market.