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US stocks off session highs amid July CPI, Alibaba earnings beat


Wall Street cut early gains and finished slightly higher following the US July CPI data. The headline inflation printed at 3.2% year on year and 0.2% month on month, the smallest monthly increase in two years. The data meets expectations and strengthens the odds for another Fed pause in September. But markets pulled back from session highs after the Fed Bank of San Francisco President Mary Daly said “more work to do” to tame inflation.

While uncertainties remain around the Fed’s policy path, the US 10-year bond yield jumped to a one-week high of 4.1%, capping the equity markets gains and sending the US dollar higher, pressuring other major currencies and commodity prices.

On the earnings front, Disney’s shares jumped nearly 5% after the company announced to hike the streaming service prices amid a further decline in Disney+’s users in the June quarter. Alibaba’s US ADR shares rose 4.6% following strong second-quarter earnings, lifting other US-listed Chinese tech stocks, such as Baidu and JD.com.

Most Asian regional markets finished higher on Thursday, and futures point to a mixed open, with Nikkei 225 futures up 0.21%, the ASX 200 futures up 0.06%, and the Hang Seng Index futures down 0.35%. 

Price movers:

  • 6 out of 11 sectors finished higher in the S&P 500, with Communication Services and Consumer Discretionary, leading gains, up 0.42% and 0.28%, respectively. Real Estate, Utilities, and Industrials were the laggards, down 0.31%, 0.32%, and 0.28%, respectively.
  • The Chinese e-commerce giant, Alibaba’s revenue grew by 14% year on year in the second quarter, the biggest growth since the third quarter of 2021. The company’s revenue was 234.16 billion yuan, beating an expected 224.92 billion yuan. And net income attributable to ordinary shareholders was 34.33 billion yuan, topping an estimated 28.66 billion yuan, up 51% year on year. The growth was attributed to online shop user growth and surged international demands. Alibaba said it saw strong demand in its cloud business and plans to invest further in AI.
  • USD/JPY rose to a one-month high of 144.75 amid a strengthened USD. The Japanese Yen weakened since the Bank of Japan’s policy tweak in late July, but the pair is facing a potential imminent resistance of about 145 from a technical perspective.  
  • WTI futures fell as oil markets may have been overbought in July. While OPEC+’s output cuts remained bullish factors, a technical correction may be needed, with near-term possible support at around 82.  

ASX and NZX announcements/news:

  • No major announcements.

Today’s agenda:

  • US PPI & core PPI for July
  • Prelim UoM Consumer Sentiment for August

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