It is worth noting that over the entire week the Polish blue‑chip index rose 1.6%, remaining resilient to turmoil in the Middle East.
While in the second half of July the stability of WIG20 was largely due to the performance of Żabka shares, the start of this week may bring a completely different scenario.
On Saturday, Seven & i Holdings, the Japanese retail conglomerate that had been negotiating the acquisition of a significant stake in Żabka, withdrew from further negotiations.
Earlier, on the wave of information about ongoing talks, the company’s shares rose by about 20% over two sessions (July 16 and 17).
Meanwhile, the week’s close on Wall Street was mixed. The S&P 500 managed to rise by a symbolic 0.05%, while the tech Nasdaq fell 0.64%.
So far, almost 30% of companies have published their results.
In 86% of cases, the reported earnings were higher than consensus, prompting analysts to raise the earnings‑per‑share (EPS) growth forecast for the S&P 500 in Q2 to almost 38% year‑over‑year.
Recall that at the start of the earnings season, an EPS growth of 23% year‑over‑year was expected.
Just as in the first‑quarter earnings season, this “surprise” was largely driven by Alphabet’s reported accounting profit from over‑valuing investments in Anthropic and SpaceX.
Therefore, the term “surprise” this time should be taken with a large quotation mark. From the perspective of the earnings season, this week marks its climax.
Upcoming Reports from Microsoft, Meta, and Amazon
In the coming days we will see, among others, reports from Microsoft, Meta, and Amazon. Investors will likely watch closely the board comments from these companies regarding increasing spending on data‑center construction. For Alphabet, the somewhat “hawkish” tone of the company’s leadership on AI spending led to a 7%+ share price decline in the next session.
It is therefore clear that in the second half of the week investors will face a clear increase in volatility, especially as the July Fed meeting will also conclude on Wednesday. For Kevin Warsh, this will be the second meeting after taking over as Federal Reserve Chair from J. Powell.
At the time of writing, oil prices are down about 5%. The last week’s attack on the $100 per barrel level has so far been deemed unsuccessful. The direct cause of the declines is the pause after two weeks of US attacks. According to media reports, the pause in the exchange of fire was prompted by an Oman delegation’s visit to Tehran.
For the market, it is important that despite regular flare‑ups, the diplomatic channel remains open. The drop in oil prices also affects the bond market – in the morning, the yield on U.S. 10‑year bonds falls by 5 basis points.
Recall that last week the yield on the U.S. 10‑year bond surpassed the May peak, becoming a significant burden for the equity market.
The Asian session is running in a calm atmosphere – Hang Seng gains about 0.7%, Nikkei 0.2%, while KOSPI 0.5%.
We expect that over the next two days investors will shift to a waiting mode.
Undoubtedly, the most interesting phase of the week is still ahead and will begin on Wednesday evening.
