US stocks extended gains as strong bank earnings and the AI frenzy continued to fuel the bull run, while weaker-than-expected economic data strengthened bets on a sooner full stop of the Fed’s rate hike cycle. Dow rose for the seventh straight trading day, the longest winning streak since March 2021. Both Bank of America and Morgan Stanley beat earnings expectations, with their shares jumping 4.3% and 6.3%, respectively. And the AI-powered stocks’ soar also added to the bullish momentum, with Microsoft’s shares up 4% after the company announced a monthly subscription plan for its AI tool. However, the tech rally was not broad-based as other big names like Apple, Alphabet, and Amazon finished lower.
On the economic front, US retail sales rose 0.2% monthly in June, less than expected, while industrial production contracted for the second straight month. The mixed picture may secure the last 25 basis point rate hike by the Fed in July before ending its hiking campaign, fundamentally supporting the prevailing bullish sentiment on Wall Street.
Notably, the FX markets seem to be more cautious than equities. While the US dollar index stabilized at the recent low, gold jumped to a 7-week high. Haven currencies, such as the Swiss Franc, the Eurodollar, and the Japanese Yen, were stronger than those risker peers, such as the New Zealand dollar and the British Pound.
In Asia, Chinese stock markets extended losses following Monday’s disappointing economic data, dragging on broad sentiment on Monday. But Wall Street’ s rally is set to push most regional stock markets to open higher, with the ASX 200 futures up 0.53%, and Nikkei 225 futures up 1.11%. But Hang Seng Index futures slid 0.70%.
Price movers
- For the second straight trading day, 8 out of 11 sectors finished higher in the S&P 500, with Technology and Financials leading gains again, up 1.26% and 1.12%, respectively. Utilities and Real Estate were the laggards, down 0.78% and 0.82%, respectively. The energy stocks were also higher, up 0.98%, due to a further jump in crude oil prices.
- Microsoft’s shares popped 4%, hitting a new high amid its AI subscription announcement. The AI pioneer announced a new artificial intelligence subscription service for Microsoft 365, with an additional cost of US$30 per month for users.
- Bank of America’s shares jumped 4.3% due to a beat on earnings expectations. The bank’s earnings per share rose 19% to US$0.88, and revenue climbed 11% to US$25.33 billion.
- Gold futures rose to 1,982, the highest level since 1 June, on a softened USD and a decline in bond yields. The precious metal faces imminent resistance at the current level. A breakout of this level may take gold prices to approach an all-time high of above 2,070.
ASX and NZX announcements/news
- Tower Limited (NZX/ASX: TWR) updated its FY23 guidance to a range of between a loss of NZ$2 million and a profit of NZ$3 million from a profit of between NZ$8 million and NZ$13million, due to the ongoing challenging claims environment in New Zealand.
- Ampol Limited (ASX/NZX: ALD) provides an update on the Group trading conditions and performance for the 1H of 23FY. The unaudited RCOP EBIT for the first half is AU$575 million, and EBITDA is approx. AU $800 million. The Australian fuel sales volume is up 13% year on year to 7,531 ML, and international sales volume rose 8.1% annually to 4,548 ML.
Today’s agenda
- New Zealand second-quarter CPI
- UK CPI for June
