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Wall Street extends losses on tech wreck ahead of key CPI data

Wall Street

US stocks extended losses following a broad selloff on technology stocks ahead of the key CPI data later today, which can be a pivotal event for global markets. The recent surge in energy and grain prices weighed on sentiment due to inflation concerns. The US 2-year bond yield rose for the first time in the last 4 trading days, suggesting markets were pricing higher-for-longer rates. US headline inflation is 3% year on year in June, and consensus calls for 3.2% for July.

On the earnings front, Disney’s shares jumped 4% after falling 2% in after-hours trading amid the earnings report. The entertainment giant extended Disney+’s user loss, but its shares rebounded after the company announced a price hike in the streaming business.

However, a slowdown in consumer spending and high-interest rates remain issues for the global economy. China’s July CPI declined 0.3% year on year in July as the county slid into deflation due to sharply weakened domestic demands with faltering recovery from the multi-year restricted Covid curbs. Futures point to a mixed open across the APAC region, with Nikkei 225 futures down 0.16%, the ASX 200 futures up 0.06%, and the Hang Seng Index futures down 0.35%. 

Price movers:

  • 7 out of 11 sectors finished lower in the S&P 500, with Technology, Communication Services, and Consumer Discretionary, leading losses, down 1.51%, 1.24%, and 1.2%, respectively. Energy was the best performer, up 1.22%, due to surging oil prices. The defensive sectors, such as Consumer Staples and Utilities, also ended in the green as investors sought safety.  
  • Disney reported disappointing fiscal third-quarter earnings. The company’s earnings per share were US$1.03, topping an estimated US$0.95. The revenue was US$22.33 billion, missing the expected US$22.5 billion. Disney+’s subscription was US$146.1 million, a 7.4% decrease from the prior quarter. Its shares fell 2% initially but jumped 2.8% on the announcement of price hikes for Disney+ and Huhu.
  • Roblox’s shares plunged 20% following the second-quarter earnings report. The gaining company reported a loss of US$0.46 in earnings per share, more than an estimate of US$0.45. And its revenue was US$781 million, short of the expected US$785.
  • WTI futures rose to the highest since November 2022 on supply fears as OPEC+’s total production may fall to the lowest level in nearly two years after Saudi and Russia’s decisions to cut output further. The oil cartel’s production was at 40.40 million barrels per day (bpd), down by 940,000 bpd, according to a Platts survey.

ASX and NZX announcements/news:

  • Arena REIT (ASX: ARF)’s FY23 net operating profit rose 6% to A$60M, up 6% from a year ago. Earnings per share is A$0.171, up 5% annually. The average like-for-like rent increase was +6.8%, up 270 basis points from FY22.

Today’s agenda:

  • Chinese new yuan loans for July
  • US CPI & unemployment claims

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