Global Highlights for This Week: Fed Minutes Approaching, US Q2 Earnings Season Commences

Last week, the three major US indices posted broad gains, with the Dow up 1.97%, the S&P 500 rising 1.76%, and the Nasdaq gaining 2.12%, driven by cooling rate hike expectations.

 

Looking ahead to this week, investors will scrutinize clues on the Fed’s interest rate path and preliminary Q2 earnings signals to gauge the resilience of the current stock rally.

 

While tech and semiconductors have been the primary growth engines, technical volatility has surged recently, culminating in a sharp sell-off at the end of last week.

 

Concurrently, strong monthly gains in healthcare, industrials, and financials have fueled investor anticipation for a healthy, broader market rotation.

 

"A key question for the coming weeks is whether this expanding market breadth can be sustained," noted Joe Mazzola, Director of Trading and Derivatives Strategy at Charles Schwab. "Alternatively, if marquee tech names continue to correct, it could signal a broader market adjustment."

 

Early-year expectations for a rate cut cycle have shifted toward potential rate hikes in the coming months, though Thursday's soft nonfarm payrolls tempered some of that hawkishness.

 

Early Thursday morning, the Fed will release its June monetary policy meeting minutes. Matthew Miskin, Co-Chief Investment Strategist at Manulife Investment Management, noted it will be highly instructive to observe the internal debate and the strength of the hawkish shift.

 

"Markets want to know what variables the new Fed Chair and decision-making team are prioritizing for the rate path," Miskin added, emphasizing how officials assess energy-driven inflation.

 

On the commodities front, Citi indicated Brent crude could decline toward $60 per barrel as the Strait of Hormuz shock recedes. Saudi media reported a new round of US-Iran negotiations is scheduled for July 11th in Pakistan.

 

For corporate earnings, Delta Air Lines and PepsiCo will kick off the Q2 season, offering critical insights into US consumer spending trends following an unexpectedly strong Q1.

 

"If corporate earnings are the 'North Star' of this bull market, this season must validate that the profit growth trajectory remains intact into next year," said Keith Lerner, Chief Investment Officer at Truist Advisory Services.

Key Global Economic Events This Week:

• Monday: Eurozone May PPI; US June S&P Global Services/Composite PMI (Final); US June ISM Non-Manufacturing PMI.

• Tuesday: ECB Chief Economist Philip Lane speaks; BOE Financial Stability Report; US May Trade Balance.

• Wednesday: EIA Short-Term Energy Outlook; Japan May Trade Balance; RBNZ Rate Decision; US May Wholesale Sales; US Weekly EIA Crude Oil Inventories.

• Thursday: Federal Reserve FOMC June Meeting Minutes; ECB June Policy Meeting Accounts; US Weekly Initial Jobless Claims; NY Fed President John Williams speaks; US June Angelized Existing Home Sales.

• Friday: Dallas Fed President Lorie Logan speaks; Germany June CPI (Final); IEA Monthly Oil Market Report.