1. Before the opening of the US stock market on Tuesday, the futures of the three major US stock indexes rose. At the time of publication, Dow Jones Industrial Average futures rose 0.02%, S&P 500 index futures rose 0.28%, and Nasdaq futures rose 0.37%.

2. At the time of publication, the German DAX index rose 0.38%, the UK FTSE 100 index fell 0.16%, the French CAC40 index rose 0.37%, and the STOXX50 index rose 0.56%.

3. At the time of publication, WTI crude oil fell 0.66% to $75.31 per barrel. Brent crude oil fell 0.62% to $78.56 per barrel.

Market News

Bank of America warns: US stocks may face higher downside risk in the coming months. The rise in the US stock market may slow down in the coming months as historical and seasonal trends show that the S&P 500 index faces increased risk. On Monday, according to the analysis of Bank of America's global research, since 1936, the large-cap S&P 500 index has experienced an average of three declines of 5% or more and at least one correction of 10% each year. Bank of America said, "We may be facing a correction soon." At the same time, as the US presidential election approaches, the stock market may see increased volatility. Since 1928, in election years, the volatility index (VIX) of the Cboe Global Markets has risen by an average of 25% from July to November, which is the "risk background" of the stock market. According to Bank of America strategists, VIX has surged 32% in July and is expected to record the largest monthly increase in more than two years.

Goldman Sachs: Hedge funds are selling industrial stocks at a record pace, turning to energy and materials. As geopolitical risks intensify and concerns about global economic slowdowns increase, hedge funds are quickly liquidating their bets on industrial stocks and moving into the field of commodity markets such as energy and materials. Reports from Goldman Sachs' bulk brokerage department show that last week, the industrial sector was the most sold sector of US stocks. More notably, Vincent Lin wrote in a client report that, in US dollars, the group's risk-closing total reached an all-time high within two weeks of July 11, indicating the "surrender" behavior in this area. Market observers said that there are many different types of companies in the industrial sector, making it difficult to identify the clear direction behind the sales. However, some believe that the upcoming US presidential election has increased the risk of policy changes.

World Gold Council: High prices do not hinder strong demand, global gold demand in Q2 increased by 4% year-on-year. The World Gold Council said on Tuesday that due to strong over-the-counter trading offsetting the impact of record prices, total global gold demand increased by 4% year-on-year to reach 1258 tons. The global gold ETF holdings decreased by 7 tons in the second quarter, which is positive compared with the decrease of 21 tons in the same period last year. Retail gold bar and coin investment fell 5% to 261 tons, mainly due to weak demand in Western markets. The WGC added that as the AI trend continues to drive demand in the industry, gold for use in the technology sector increased by 11% year-on-year. In terms of investment, the demand for gold ETFs in developed markets is still weak as the price of gold has soared since 2024. However, the demand for over-the-counter transactions in the second quarter was strong, increasing significantly by 53% year-on-year to 329 tons. At the same time, secondary market activities were robust, indicating that investor interest has always existed.

"Hawkish" Bank of Japan may appear on Wednesday? Economists: It is possible to raise interest rates and announce a QE plan. Bank of Japan Governor Haruhiko Kuroda will announce a Quantitative Tightening (QT) plan on Wednesday and make a decision on policy interest rates. At that time, the outside world will pay close attention to his actions; his actions may cause turbulence in the global financial market. A survey showed that about 14 of the 48 economists predicted that the Bank of Japan will raise the interest rate from the current 0 to 0.1%, and almost no one ruled out the risk of this move. As for QT, the central bank is expected to outline a plan to reduce monthly bond purchases within one to two years. The Bank of Japan will announce its policy decision around noon on Wednesday Beijing time, and Kuroda will attend a press conference in the afternoon. A few hours after the Bank of Japan meeting, the Fed will issue new signals on its interest rate cut prospects around Thursday morning Beijing time, which will bring about dual policy fluctuations and may cause the yen exchange rate to shake in any direction.

Individual stock news

Financial report preview: Will the AI boom continue to boost Microsoft (MSFT.US)? Wall Street analysts predict that Microsoft's Q4 revenue will increase by 14.6% year-on-year to $64.37 billion; net income will increase by 8.9% year-on-year to $21.88 billion; earnings per share will be $2.93. Investors will closely follow the growth of Microsoft's cloud business Azure and the latest updates on the company's AI plan. As customers use cloud platforms to train and run AI workloads, Azure is benefiting from the AI boom. The continuous growth of Azure revenue has driven Microsoft's profit growth in the past few quarters. Goldman Sachs analysts predict that Azure business revenue will reach $37.2 billion, a year-on-year increase, and a month-on-month increase. Analysts said that as long as the market is still in the infrastructure construction stage of generative AI cycles, Azure's share will continue to lead in generative AI and lead Microsoft on an independent path.

Financial report preview: Multiple headwinds still exist, and Starbucks (SBUX.US) Q3 is difficult to reverse its performance decline. Starbucks will release its third-quarter results on Tuesday US eastern time. Investors are ready to embrace another difficult quarter, as the coffee chain continues to be plagued by low traffic, high promotion, rising wages and input costs, all of which are dragging down profits. In the previous quarter, Starbucks' same-store sales decreased by 4%, and transaction volume decreased by 6%, and profits and sales were also hit. Looking ahead to Tuesday, Wall Street will focus on Starbucks' performance guidance. In the previous quarter, the company acknowledged that sales were lower than expected and lowered its global revenue growth expectations from the previous 7%-10% to低个位数。Same-store sales growth rate is expected to remain steady to低个位数, compared to 4%-6% before. Starbucks also expects operating margin to remain steady, previously expected "gradual expansion".

Merck (MRK.US) Q2 exceeds expectations and raises full-year sales forecast. Merck's Q2 revenue was $16.11 billion, a year-on-year increase of 7%, and the market expectation was $15.84 billion. Net income was $5.46 billion, or $2.14 per share. By comparison, net losses were $5.98 billion, or $2.35 per share, in the same period last year, including costs related to the acquisition of Prometheus Biosciences. Adjusted earnings per share excluding acquisition and restructuring costs were $2.28 per share, and the market expectation was $2.15 per share. The pharmaceutical giant also raised its full-year sales forecast to between $63.4 billion and $64.4 billion, citing increased demand for key products, slightly higher than the $63.1 billion to $64.3 billion guidance provided in April. However, Merck lowered its adjusted earnings per share expectation from $8.53 per share to $8.65 per share to $7.94 per share to $8.04 per share.

Pfizer (PFE.US) raises full-year performance expectations, and Q2 financial report exceeds market expectations. Pfizer's Q2 revenue reached $13.283 billion, a year-on-year increase of 2%. Although the adjusted profit of $3.4 billion decreased by 11% year-on-year, earnings per share reached 60 cents, which is higher than the average analyst expectation of 46 cents. Pfizer raised its full-year revenue forecast to between $59.5 billion and $62.5 billion. At the same time, the company expects that the adjusted earnings per share for the full year will be adjusted to between $2.45 and $2.65 per share, compared to the previous forecast of $2.15 to $2.35 per share. These series of expectation adjustments reflect Pfizer's efforts to rebuild investor confidence and company market reputation after the fluctuation of sales caused by the COVID-19 pandemic. However, Pfizer also faces challenges.

Procter & Gamble (PG.US) Q4 sales net revenue of $20.53 billion, lower than expected. Procter & Gamble's Q4 sales net revenue was $20.53 billion, and the market estimate was $20.74 billion. Core earnings per share in Q4 was $1.40, and the market estimate was $1.37. It is expected that the core earnings per share growth rate from 2021 to 2025 will be between+5% and +7%; internal income growth rate is expected to be between 3% and 5% through 2025, while the market estimate is 3.86%.

PayPal (PYPL.US) rose more than 4% before the market, and net revenue in the second quarter exceeded market expectations. PAYPAL rose more than 4% before the market and reported $61.4 per share. The net revenue in the second quarter of PAYPAL was $7.89 billion, and the market expectation was $7.82 billion. The second quarter adjusted operating profit was $1.46 billion, and the market estimate was $1.31 billion. The adjusted earnings per share in the second quarter was $1.19, and the market estimate was $1.00.

Trading and wealth management business surges, Nomura Holdings' (NMR.US) Q1 profit doubles. Nomura Holdings Q1 profit growth exceeded analysts' expectations, as Japan's largest brokerage's trading and investment banking businesses grew significantly, while its domestic wealth management business benefited from a record stock market rebound. Nomura Holdings announced on Tuesday that in the three months ending June 30th, net profit doubled from the same period last year to 68.9 billion yen ($640 million). This is higher than the market's expected 56.6 billion yen. This performance continues the recent strong momentum. As Japan emerges from years of deflation, Nomura Holdings is benefiting from the recovery of Japan's bond and stock markets. Kentaro Okuda, CEO of Nomura Holdings, recently set a goal of doubling pre-tax income by March 2031 and took measures to control the expenses of trading and investment banking businesses.

BP plc (BP.US) Q2 profit exceeded expectations, with a 10% increase in dividend. BP announced on Tuesday its better-than-expected profit for the second quarter and increased its dividend. Earlier, the energy giant had warned that refining margins would fall sharply. The oil and gas giant's second quarter underlying replacement cost profit (a net income indicator) was $2.8 billion, exceeding analysts' expectations of $2.6 billion. By comparison, net income for the first three months of this year was $2.7 billion, compared to $2.6 billion for the same period last year. In addition, the energy company announced that it will raise its dividend from 7.27 cents per share to 8 cents per share, an increase of 10%. The company also plans to maintain its share buyback program of $1.75 billion over the next three months and said it will continue to repurchase $7 billion worth of shares this year. The decrease in net debt and strong operating cash flow supported shareholder returns. As of the end of the second quarter, BP's net debt was $22.6 billion, down from $23.7 billion for the same period last year.

Diversified spirits producer Diageo (DEO.US)'s earnings for the fiscal year were lower than expected due to difficulties in Latin America, but net sales of $20.27 billion were down only 1.4% from the same period last year, slightly higher than analysts' forecast of $20.24 billion. In the fiscal year ending June 30, Diageo achieved an 8% year-on-year increase in operating profit to $6 billion. However, net income fell from $4.45 billion in the previous year to $3.87 billion, slightly below expectations, primarily due to a significant decline in sales in Latin America and the Caribbean. Looking ahead, Diageo remains cautious about the market environment for 2025 fiscal year, expecting the consumer environment to remain challenging. Diageo reaffirmed its goal of returning to the mid-term guidance range of 5% to 7% organic net sales growth, and expects organic operating profit margin to face some pressure through the 2025 fiscal year.

Important economic data and events notice

20:55 Beijing time: US Redbook retail sales year-on-year rate (%) for the week ending July 22nd.

21:00 Beijing time: US FHFA House Price Index monthly rate (%) for May, US S&P/CS 20-City Composite Home Price Index year-on-year rate (%) for May, not seasonally adjusted.

22:00 Beijing time: US Conference Board Consumer Confidence Index for July, US JOLTs Job Openings (thousands) for June.

04:30 Beijing time the next day: Weekly API crude oil inventory change (thousands of barrels) for the week ending July 26th in the United States.

Performance forecast.

Wednesday morning: Microsoft (MSFT.US), AMD (AMD.US), Starbucks (SBUX.US), Rio Tinto (RIO.US).

Wednesday pre-market: GlaxoSmithKline (GSK.US), United Microelectronics (UMC.US), Mastercard (MA.US), HSBC (HSBC.US), Boeing (BA.US), New Oriental (EDU.US), Hutchmed (China) (HCM.US), Autohome (ATHM.US).