Overseas Headlines – July 8, 2024

July 8, 2024

United States:

Strategists Say Stock Rally Needs a Bumper US Earnings Season

Corporate America needs to deliver a blowout quarterly earnings season for US stocks to extend a record-breaking rally, according to some Wall Street strategists.

Analysts’ upgrades to profit estimates have outnumbered downgrades going into the second-quarter reporting period, according to a Citigroup Inc. index. At the same time, expectations for 12-month forward earnings stand at an all-time high, data compiled by Bloomberg show.



United Kingdom:

UK Chancellor Has No Plans to Change Interest on BOE Reserves

The UK’s new Chancellor of the Exchequer said she has no plans to change the way interest is paid on the Bank of England’s reserves, amid growing scrutiny of the losses the central bank’s crisis-era bond buying program incurs for the government.

Rachel Reeves’ comments addressed a policy known as tiering — whereby a portion of commercial banks’ deposits held at the central bank are paid either zero interest or a discounted rate. Former prime minister Gordon Brown backs the idea as a way of increasing fiscal headroom, and it’s among a range of proposals aimed at addressing losses caused by the rise in interest rates.




China’s Central Bank Takes More Control Over Rates by Adding Temporary Repos

The People’s Bank of China tightened its grip on interest rates, introducing a new mechanism to influence short-term borrowing costs as policymakers expand their toolkit to guide markets.

The central bank’s move to conduct new bond repurchase or reverse repo operations effectively narrows the corridor within which short-term rates can fluctuate. That will strengthen market expectations for the seven-day repurchase rate to become the new benchmark.



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