US stocks rose for the second straight trading day after Netflix reported better-than-expected earnings results. However, Tesla’s performance was not the same impressive as usual, the electric car maker grew revenue by 42% with a squeezed profit margin due to economic headwinds, and Shanghai’s Covid-lockdown, despite a beat on EPS estimate.
In Europe, the energy crisis remains an alert for investors as the level of recovery in the supply of the Nord Stream 1 pipeline may not be the same as before. While the UK printed a fresh 40-year high inflation at 9.3% in May, the European Central Bank’s policy meeting tonight will keep Eurodollar’s movement in check.
Elsewhere in Asia, the Bank of Japan’s rhetoric of its monetary guidance is in the spotlight in today’s session, when the central bank is expected to keep its ultra-loss policy to keep the yield curve control (YCC) target. However, the pair of USD/JPY seems losing steam from a technical perspective, with a bearish divergence in play. In addition, China’s Premier, Keqiang Li, says the policymaker will not impose aggressive stimulus measures to keep the country’s high growth pace. The mainland Chinese stocks rose for the third straight trading day.
AU and NZ day ahead
The S&P/ASX 200 is set to open lower as indicated by the futures pricing, down 0.5% in the overnight session. The RBA governor Phillip Lowe reiterated to get inflation back to the 2-3% target, which strengthens the odds for more aggressive rate hikes in August. The energy and mining stocks may keep the local market strong performance, with Whitehaven Coal jumping for the tenth straight trading day on Wednesday.
The S&P/NZX 50 was up 0.28% in the first hour of trading. ANZ bank shares jumped 3.4%, to NZ$24.76 after the trading halt is lifted. The bank has issued an AU$3.5 billion renounceable entitlement offer to shareholders to fund its acquisition deal of AU$4.9 billion with Suncorp. Fletcher Building’s shares rose 1.4% on the disclosure that Allan Gray Group is holding 5% of its stakes.
Dow Jones Industrial Average rose 0.14%, the S&P 500 was up 0.59%, and Nasdaq jumped 1.58%.
The growth sectors, including consumer discretionary, technology, and service communications outperformed on tech earnings optimism. The streaming stocks were boosted by the better-than-expected Netflix earnings. Disney rose 3%, and Roku jumped more than 5%. All the mega caps were higher, with both Amazon and Meta Platforms up by 4%.
Tesla beat the estimate for earnings per share, reported at US$2.27 vs $1.82 expected for the second quarter. However, the company missed the revenue expectation, which was at US$16.93 billion, shy of the consensus of US$17.1 billion. Tesla's share rose 4% in after-hours trading.
The energy sector was also up more than 1% on worries about the energy crisis in Europe. However, the defensive sectors slid due to the mounting risk-on sentiment.
The major companies’ performance overnight (20 July 2022)Source: CMC Markets NG
The European markets lost steam as gas supply woes dampen investor confidence due to the geopolitical uncertainties.
The Stoxx 50 (-0.06%), FTSE 100 (-0.44%), DAX (-0.20%), CAC 40 (-0.27%).
Natural gas prices jumped on renewed worries about supply woes as Russia seems not to recover the full capacity of the Nord Stream 1 pipeline. However, oil and gold dipped due to a strong dollar as the bond yield picked up gains.
WTI: US$102.26 per barrel (-1.88%), Brent: US$106.92 per barrel (-0.40%), Natural Gas: US$7.88 per MMBtu (+8.00%)
COMEX Gold futures: US$1,694 per ounce (-1.00%), COMEX Silver futures: US$18.70 per ounce (-0.47%), Copper futures: US$3.32 per ounce (-0.27%)
Wheat: US$819.50 per bushel (+0.89%), Soybean: US$1,332.25 per bushel (-1.91%), Corn: US$590.00 per bushel (-0.88%).
The US dollar index rose 0.33%, to 106.905 as the Eurodollar weakened ahead of the ECB meeting later today. EUR/USD fell 0.47% to 1.0187 at EAST 8:30 am this morning, while USD/JPY was flat at just above 138 for the third session. All the commodity currencies were also slightly down against the greenback. But the US dollar still shows weakness ahead of the BOJ and ECB policy meetings will be in the spotlight today.
The global bond yields were flat but expectations for the central banks to keep rate hikes strengthened amid record inflation figures that were released recently. Both New Zealand and the UK printed fresh high CPI data. In Europe, the bond yield spreads between Italy and German widened in July due to the political uncertainty in Italy.
US 10-year: 3.03%, US 2-year: 3.24%.
Germany bund 10-year: 1.25%, UK gilt 10-year: 2.14%.
Australia 10-year: 3.55%, NZ 10-year: 3.78%.
The cryptocurrencies cut early gains as more crypto exchanges halt withdrawals, according to Bloomberg. Zipmex, a crypto broker based in Thailand has frozen withdrawals due to high volatile market conditions.
(See below prices at AEST 8:56 am according to Coinmarketcap.com)
Bitcoin: US$23,352 (-0.49%)
Ethereum: US$1,531 (-2.00%)