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US jobless claims continued to rise modestly as of July 23rd, still below pre-pandemic levels. Tomorrow's payroll report should be important. The Nasdaq has rallied 19% from its lows in mid-June, and S&P500 climbed 13%. Behind the rally, tech earnings have been stronger than feared. More importantly, the market consensus has evolved from a hard-landing with a recession to one where the Fed gradually pivots to being less aggressive as inflationary pressures soften. Data is supporting this view with oil prices declining and the Prices Paid Index revealing intense deflationary pressures. From a technical perspective, on the Nasdaq there is some resistance at 13’530, about 2% higher from here.

The Bank of England raised its key interest rate by 0.5% as expected to 1.75%. The BoE forecasted a recession for the UK economy in the fourth quarter. The pound dropped 0.5% on the news and the yield curve inverted for the first time since 2019. The BoE also plans to begin to sell some of its corporate bond holdings as soon as September 19th. The FTSE 100 Index rose slightly on relief from not higher interest rates and action from the BoE. 

Markets found some relief after Nancy Pelosi left Taiwan without provoking a huge Chinese backlash. While an immediate concern around US-China tensions may be fading, investors still face a host of worries including inflation and how the policy response by central banks to surging prices could hobble global growth. Nasdaq which is up more than 15% from its June lows is reaching a major resistance.

US job openings fell in June to a 9-month low, suggesting tightness in the labour market is easing somewhat amid growing economic pressures. The number of available positions decreased to 10.7 million. The 605'000 decline is the biggest since April 2020. Though the number of vacancies remains elevated as demand for workers broadly outweighs supply.
 

Investors are digesting the result of the Federal Reserve's latest meeting as the corporate earnings season continues. Furthermore, after markets close, Apple and Amazon will report their latest earnings. The United States will also release its Q2 GDP later in the day, and another poor reading will likely match a technical definition of a recession (though lately the United States defines a recession differently.) In the meantime, European stock markets have opened higher, with the Stoxx50 above its major resistance level (EUR3'600).