The NASDAQ and S&P 500 index ended another record high session despite a mixed earnings picture. Facebook was leading gains in the technology sector after reporting a 28% surge in 2Q revenue.
Earnings per share (EPS) of US$1.99 also beat Bloomberg consensus forecast of US$ 1.88. Facebook’s share price rose 1.14% yesterday and climbed another 0.87% to US$ 206.44 in the after-hours trading.
Tesla’s share price plunged as much as 12% to US$233 this morning, as the company made losses of US$1.12 per share in the second quarter, much worse than the expectation of a US$ 31 cents loss polled by Bloomberg. Tesla’s automotive gross margin shrank to 18.9% from 20.6% in the earlier quarter, due to higher delivery of its lower-margin Model 3. This suggest the outlook remains challenging for the company to achieve a sustainable profitable model.
Boeing was among the biggest loser in Dow Jones last night, down 3.12% to US$ 361.4 as the company registered its largest quarterly losses of US$ 5.82 per share due to the grounding and halting production of its flagship 737 Max airplanes after two fatal crashes. The company delivered 104 fewer airplanes in the second quarter. Boeing has burned over US$ 1 billion of free cash flow in the second quarter as the halting of 737 series started to bite. The company warned it will consider slowing or even temporarily halt the production of the 737 Max if the global grounding drags on.
For the rest of this week, Amazon, Google, Unilever and McDonald’s are among the significant companies to announce their earnings.
Brent crude oil fell 1% last night despite a big decline in the US commercial crude inventory. According to EIA/DoE report, the US stockpile has fallen by 10.83 million barrels last week, deeper than market forecast of 3.9 million barrels drop. The historical negative correlation between crude oil prices and the US commercial inventory changes has somewhat broken down these weeks due to concerns about weaker energy demand. Traders also believed that falling stockpiles was due to Hurricane Barry that caused disruptions in the oil supply in the Gulf of Mexico, not due to a pick-up in demand.
Today, currency traders are watching on ECB’s interest rate decision and monetary policy guidance. The futures market is predicting a 38.7% probability of a 10bps cut in ECB rate. EUR/USD is trading lower to 1.1137 this morning, reaching a two-month low. Immediate support level could be found at around 1.1117-1.1128 area.
Crude oil stocks (net change)
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