Super Central Bank Week Approaches, Focus on Tech Stock Earnings

Summary of Last Week's Earnings Reports

Alphabet

　　Alphabet reported earnings and revenue exceeding expectations, driven by strong growth in search advertising and ongoing expansion in cloud computing, despite weak performance in YouTube ad sales. Capital expenditures for Q2 reached $13 billion, mainly allocated to AI infrastructure for servers and data centers.

　　Alphabet indicated it will continue to invest billions in AI infrastructure, prioritizing overinvestment to avoid missing out on opportunities despite current lack of expected returns.

Tesla

　　Tesla's stock fell over 12% following its Q2 earnings report. Bloomberg estimated Q2 revenue at $25.05 billion, slightly above expectations of $24.63 billion but below last year's $24.93 billion. Adjusted earnings per share were $0.52, lower than the expected $0.60.

　　Global deliveries for Q2 totaled 443,956 vehicles, exceeding Bloomberg's forecast of 439,302 vehicles but down nearly 5% year-over-year. However, deliveries showed significant improvement from Q1's 386,810 vehicles. Tesla reported a record deployment of 9.4 GWh of battery energy storage in Q2, more than double any previous quarter in company history.

　　Tesla plans to launch a budget model in the first half of 2025 and has postponed the release date of its robot taxi from August 8 to October 10. Additionally, Tesla's Semi factory is expected to commence production by late 2025.

LVMH

　　LVMH's financial data for the first half of this year showed Q2 revenue of €20.98 billion, a 1.1% year-on-year decline slightly below analysts' €21.41 billion expectation for a 0.9% growth. Organic sales growth achieved from existing resources was 1%, significantly lower than the expected 2.89%.

　　LVMH's sales performance has been below expectations for two consecutive quarters, primarily impacted by declining sales in Asia, including China.

Ford

　　Ford's stock fell as it did not report Q2 earnings and did not revise its full-year profit outlook. Q2 revenue was $47.8 billion, higher than Bloomberg's estimate of $43.37 billion, up 2.9% year-over-year. Adjusted earnings per share were $0.47, below the expected $0.67; adjusted pretax profit was $2.8 billion, far below the expected $3.73 billion.

　　Ford's Ford+ plan divides operations into three departments: Ford Blue for traditional gas-powered vehicles, Ford Model e for electric vehicles, and Ford Pro for commercial and super truck businesses. Q2 revenue for Ford Blue was $26.7 billion with a pretax profit of $1.171 billion; Model e department revenue was $1.1 billion with a pretax loss of $1.143 billion; Ford Pro department revenue was $17 billion with a pretax profit of $2.564 billion. Ford's truck sales also saw a recovery, with Q2 truck sales up 4.5% to 308,920 units.

Mercedes-Benz

　　Mercedes-Benz reported Q2 sales of €36.74 billion, down 3.9% year-on-year. Pretax profit was €4.04 billion, a 19% decline. Adjusted profits for the core automotive segment decreased by 27.5%. Major factors contributing to the decline include poor performance in the passenger car division and a decrease in the proportion of electric vehicle sales. Particularly in the Chinese market, Mercedes-Benz faces intense competition for entry-level and core models. Additionally, Mercedes-Benz adjusted its automotive manufacturing profit margin expectation from a previous 12% to 11%.

Market Summary from Last Week

　　US stocks rose overall by more than 1% last Friday. Specifically, the S&P 500 index halted a three-week decline but still marked its first consecutive two-week decline in three months. Meanwhile, the Dow Jones Industrial Average continued its four-week rally, achieving its longest streak of consecutive gains in two months. Small-cap stocks rose by 3.5% this week, maintaining their upward trend for three consecutive weeks.

　　Tesla's stock fell by over 8% following its earnings report, while Google dropped by 6%. In Europe, stocks rebounded on Friday, showing nervous weekly performance but ultimately turning bullish. Following the release of US PCE data, US Treasury yields accelerated downward, with the 10-year yield hitting a new weekly low and the 2-year yield declining by over 10 basis points. With the release of PCE data, the US dollar index began to decline while the Japanese yen strengthened, rebounding 1% intraday and rising over 2% for the week, marking its largest weekly gain in over two months.

　　During the Asian session, A-shares fluctuated upward, while high dividend assets continued to decline, and bond futures hit new highs. In the US session, US-listed Chinese tech stocks rebounded by over 1%, ending a three-week downtrend. New Oriental's gain exceeded 4%, while NIO and XPeng's gains approached 4%. Offshore yuan briefly fell below the 7.26 mark, although it rebounded over 300 points intraday and rose over 200 points for the week.

Headlines for This Week

　　Key focus this week: Global markets brace for a Super Central Bank Week, with rate decisions from the major central banks of the US, Japan, and UK coming into play; data focus on US July nonfarm payrolls, China's July PMI, Eurozone Q2 GDP, and July CPI; earnings spotlight on major tech firms such as Microsoft, Apple, Meta, and others.

　　The current market anticipates that with slowing employment growth, the Federal Reserve may hint at the possibility of rate cuts. Meanwhile, the Bank of Japan, while considering tapering bond purchases, may also start contemplating rate hikes, potentially diverting attention from the Federal Reserve.

　　The Bank of England may undergo its first rate cut in four years, despite domestic price pressures. Investors generally believe there is a 50% probability of a rate cut, expected to be 25 basis points. In other central banks' news, the Central Bank of Chile has lowered its benchmark rate to 5.5% for the ninth consecutive time; the State Bank of Pakistan is expected to cut its benchmark rate to 19.5%; and the Central Bank of Colombia also appears ready to reduce rates by 50 basis points.

　　Next Wednesday, the policy meeting of the Bank of Japan will be a market focus. According to Japanese officials, the meeting will disclose specific details, marking the beginning of a tightening of quantitative easing policy, with plans to reduce monthly bond purchases from ¥60 trillion to ¥50 trillion and intending to halve them gradually over the next two years. Analysts caution that if the Bank of Japan fails to reduce bond purchases as expected, particularly if it fails to achieve rate hikes, it could reactivate yen short-selling arbitrage trades.

　　This week is expected to see quarterly earnings reports from 40% of the S&P 500 companies, including major tech giants like Microsoft, Apple, Meta, Amazon, AMD, Qualcomm, Arm, Intel, and others.