All eyes on the financial results of US companies – Market Analysis – July 14

All eyes on the financial results of US companies – Market Analysis – July 14

Q2 US earnings season might show the real face of the economy

The earnings season has started for American banks with mixed results.

While JP Morgan exceeded expectations for earnings per share thanks to better trading results, Well Fargo reported losses for the first time since 2008 and substantially cut the dividends.

USA

The North American indexes registered slight advances at the beginning of the session after experiencing a severe setback in the last hours of yesterday when it was known that Florida and California could return to the situation of partial lockdown due to the uncontrolled evolution of the disease.

TECH100 plunged yesterday, more than 4% from the highs reached in the session.

The news that triggered this collapse was that of the worsening of the pandemic in the states mentioned above, but in reality, on previous occasions, the index has ignored this type of data and exceeded by more than 13% the highest levels before the crisis.


Many analysts and investment professionals began to speak that the technological index shows signs of exhaustion.


Technically, the index maintains a stable upward trend, but daily RSI registers several bearish divergences that may be anticipating technical corrections that could take it to the zone between 10170 and 10290.

EUROPE

In Europe, the ZEW Economic Sentiment figure for Germany has been published with a result adjusted to expectations without significantly impacting the market. The ZEW report states that there have been no substantial changes in this country's economy since last month.

The negative surprise has come from the UK's GDP's economic data with the growth of 1.8%, well below market forecasts that placed it at 5.5%.

This significant deterioration in the growth expectations of the British economy together with the worrying evolution of the number of contagions that the government seems not to be able to control will reawaken hopes of interest rate cuts at the next meeting of the Bank of England, and will even stage the possibility that negative interest rates will decide this.


The Sterling Pound has weakened substantially as an immediate reaction to the unexpectedly weak GDP growth figure. It should not be forgotten that Sterling Pound has another open front of vulnerability, still to be resolved, such as the lack of agreement for a consensual exit from the European Union.

EUR/GBP has reversed the past two weeks' bearish momentum by surpassing the resistance level at 0.9070.

If the pair manages to stay at current levels at a daily close, it is heading towards the most relevant resistance zone around 0.9180, 0.618% Fibonacci retracement of the entire downward leg between March and May 2020.


GOLD has experienced a lateral consolidation movement in the last week within a strong uptrend that is still active today. It finds an intermediate resistance in the current area around 1800, a strength that, once overcome, will mark a theoretical objective in the historical highs of $1920.

This lateral consolidation has served to decongest the RSI from overbought levels in charts of 1h and 4h, which allows it to continue the trend as fundamentals continue to support this price action.


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