In today’s daily market update for Thursday, July 20, 2023, we dive into the latest happenings in the financial world. We’ll be discussing Goldman Sachs’ Q2 results, the performance of US benchmark equity indices, fluctuations in US 10-year yields, housing starts, currency movements, and the rise of major digital assets like Bitcoin and Ethereum.
Goldman Sachs’ Q2 Results:
Goldman Sachs’ Q2 results fell year on year due to lower investment banking fees and increased operating costs. The investment-banking slump, real estate markdowns, and a goodwill write-down in its consumer business resulted in a staggering 58% drop in Q2 earnings. This performance brought Goldman Sachs’ return on equity to 4%, the lowest among the top US banks. However, the company had been managing expectations, leading analysts to reduce their quarterly profit estimates by almost half since mid-June.
US Benchmark Equity Indices:
The Dow Jones Industrial Average rose 0.3% to 35,061.2, while the S&P 500 added 0.2% to 4,565.7. The Nasdaq Composite remained relatively stable at 14,358. Investors closely assessed corporate financial results, which influenced the overall market sentiment.
US 10-year Yield and Two-year Rate:
The US 10-year yield declined by 4.3 basis points to 3.75%, while the two-year rate rose 1.1 basis points to 4.76%. These movements in the bond market reflected investors’ response to changing economic conditions.
Housing Starts in the US:
Housing starts in the US fell 8% to a seasonally adjusted annual rate of 1.43 million units, compared to May’s revised estimate of 1.56 million units. The consensus was for a smaller decline to 1.48 million, indicating a potential slowdown in the housing market.
The Dollar strengthened after UK inflation fell more than expected in June to its slowest pace in over a year, boosting market sentiment. The Dollar Index rose 0.32%, while GBP/USD fell 0.74% to 1.2938, resulting in a significant drop in the British Pound against other major currencies.
Energy Information Administration (EIA) Report:
The EIA reported a decrease of 700,000 barrels in US commercial crude stockpiles for the week ending July 14, bringing the total to 457.4 million barrels. This decline was smaller than the consensus estimate of 2.5 million barrels and followed a surprising inventory increase of 5.9 million barrels the previous week.
Oil and Gold Prices:
Oil prices retreated slightly as traders took profits following earlier gains driven by tighter US crude supplies and China’s commitment to revitalize its economic growth. West Texas Intermediate (WTI) crude settled at $75.35 a barrel, and Brent settled down at $79.46. Gold prices settled off an 8-week peak due to expectations that the Fed will conclude its aggressive rate-hiking approach when it raises rates for the last time on July 26.
Major Digital Assets:
In the cryptocurrency market, most major digital assets advanced with thin volumes, mirroring the gains in US equity markets. Bitcoin (BTC/USD) was up 1.1% at $30,071 in the past 24 hours. Ethereum (ETH/USD) rose 0.8% to $1,914, while Ripple’s native token, XRP (XRP/USD), surged over 9%.