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The major U.S stock indexes fell for the second week in a row, as technology stocks experienced their worst pullback since March. The market was volatile in a holiday-shortened week, with the Nasdaq posting a 4% decline on Tuesday followed by a nearly 3% gain on Wednesday.

Meanwhile, stocks in Europe rose 1.7% on the continuing economic recovery, shaking off the resurgence in Covid infections across the Continent, renewed fears of a hard Brexit and the disappointment that the ECB did not announce additional stimulus.

In commodities, crude oil prices dropped for the second week in a row, sinking below $40 per barrel for the first time since July. Gold managed modest gains on the week while Silver futures limped modestly lower on the week, unable to hold $27.

On the currencies front, the euro surged after the ECB President expressed optimism for the continent's economic recovery. The Cable recorded its worst week since March as EU-UK discussion on Brexit seems to go into another impasse.

Asian stocks firmed on Monday morning on renewed hopes for a Covid Vaccine after AstraZeneca resumed its phase-3 trial.

Day Ahead

Themes for the day ahead are ongoing sell-off in US tech stocks and the first debate on the Brexit-inspired ‘internal markets bill’ in the UK parliament.

There is also industrial production data from Japan and the EU, inflation data from India and earnings from US home-builder Lennar.

Tech stocks just had their worst week since March, with Apple leading the losses down -6.9%. For those waiting for a pullback to buy tech at better prices, here you have it- but of course there’s always the question of whether the pullback has further to go. The Apple product launch is on Wednesday so I will touch on that tomorrow.
As a reminder, the Internal Market Bill addresses the Northern Ireland Protocol – formerly known as the Irish backstop, which caused so many issues in the Brexit deal passing in the first place – and is back causing problems again.

If it became law it would give UK ministers powers to “disapply" rules in the Brexit deal relating to Ireland from 1 January, if the UK and EU are unable to strike a trade deal. The EU says the planned changes must be scrapped or they risk jeopardising the UK-EU trade talks but the UK government is pressing ahead with it anyway.

Japanese industrial production is expected to have dropped a hefty -16.1% year-over-year in July. For the Eurozone we’re looking at an even worse -18.3% and down from the -12.3% in June. Indian CPI is forecast to remain above the central bank’s target range in August.

US homebuilder Lennar is expected to show earnings of $1.55 per share compared to $1.59 from the same quarter last year. Sales are set to decrease by 9% to $5.33 billion. But given the mini housing boom going on in the US, where house prices just averaged over $300,000 for the first time ever- guidance should be better.