Wall Street gave up early gains and finished the session lower after Apple says it plans to slow its hiring and spending growth next year amid an economic downturn, according to Bloomberg News. Not only Apple, Tesla, Meta platforms, and Alphabet have all indicated to cut new hires or lay off workers in expectations that the US economy will encounter an unavoidable recession. Despite looming recession fears, the broad equity markets have been resilient since mid-June as bets on a less hawkish Fed boosted optimism. Netflix’s shares rose ahead of the second quarter earnings as investors seem bracing for another weak performance.
The US dollar has also weakened after the Fed members played down a 100-basis points rate hike last week. The softened dollar gave the commodity markets a lift after a month-long drop, with both copper and oil prices recouping losses overnight.
However, a jump in the crude oil prices fuelled inflation concerns again, with the US bond yields moving higher. And the yields on the 10-year and 2-year notes stayed inverted.
AU and NZ day ahead
Both Australian and New Zealand dollars rebounded against the greenback in the early session but pared gains overnight on Monday. New Zealand reported hotter-than-expected inflation data for the second quarter, which printed at 7.3% at a fresh 30-year high. The data strengthen the odds for the RBNZ to raise the cash rate at least by another 50 bps in August.
ANZ bank announced an AU$4.9 billion acquisition deal with Suncorp and issued an AU$3.5 billion fully underwritten pro rata accelerated renounceable entitlement offer to shareholders to fund the deal. The bank is in a trading halt since yesterday.
The S&P/ASX 200 is set to open lower, the futures were down 0.32%. The recent bounce in energy and resource sectors has taken the index back to a one-week high. The RBA meeting minutes for July will be released today for investors to seek more clues about its future rate hike path.
The S&P/NZX 50 was flat in the first half-hour of trading. The local markets’ rebound is losing steam this week amid another unexpected high inflation data. The upcoming GDT price will be a focus for the dairy sector as well as the Kiwi dollar.
US
The Dow Jones Industrial Average fell 0.64%, the S&P 500 slid 0.84%, and Nasdaq declined 0.81%.
8 out of 11 sectors in the S&P 500 finished lower. Big tech companies led broad losses on Apple's news, with Alphabet falling 2.47%, Apple down 2.06%, and Microsoft sliding 0.88%, while Amazon gained 0.22%, Meta Platforms rose 1.55%, and Tesla advanced 0.21%. Netflix shares rose 0.95% ahead of the earnings report tomorrow.
The Energy sector outperformed as oil prices sharply rebounded. The major oil producers, including Occidental, Devon Energy, and Exxon Mobil were all up between 1-3%.
Bank stocks were mixed on Monday after a sharp rebound last Friday, boosted by Citigroup’s strong earnings report. Goldman Sachs’s shares jumped 2.5% after beating earnings expectations.
On the economic front, the US homebuilder sentiment plunged to the lowest since April 2020, highlighting sharply dampened housing market confidence.
The major companies’ performance overnight (19 July 2022)
Europe
Major European indices all finished strongly, buoyed by the US market optimism early in the session.
The Stoxx 50 (+1.00%), FTSE 100 (+0.90%), DAX (+0.74%), CAC 40 (+0.93%).
Commodities
Oil prices jumped as Russia may not resume the Nord Stream 1 pipe operations as scheduled, which sparked concerns about the supply crunch again. A weakened US dollar also boosted energy prices. The bellwether industrial metal copper also rebounded amid a weakened US dollar, along with the rise in agricultural products. But precious metals pared early gains and finished flat as the bond yields rose oil gains.
WTI: US$102.60 per barrel (+5.13%), Brent: US$105.71 per barrel (+4.50%), Natural Gas: US$7.48 per MMBtu (+6.60%)
COMEX Gold futures: US$1, 710.20 per ounce (+0.39%), COMEX Silver futures: US$18.84 per ounce (+1.32%), Copper futures: US$3.34 per ounce (+3.36%)
Wheat: US$812.75 per bushel (+4.63%), Soybean: US$1,380.25 per bushel (+2.83%), Corn: US$610.75 per bushel (+1.16%).
Currencies
The US dollar index fell 0.58%, to 107.28 as the Eurodollar rose further against the greenback at 1.0147 ahead of the ECB meeting this week. The USD/JPY has also dropped to just above 138. The Bank of Japan will hold a policy meeting on Thursday hours before the ECB meeting.
Treasuries
The US bond yields were higher on Monday as recession worries mounted amid Apple’s slow hiring news ahead of the major tech companies’ earnings report.
US 10-year: 2.99%, US 2-year: 3.17%.
Germany bund 10-year: 1.21%, UK gilt 10-year: 2.15%.
Australia 10-year: 3.43%, NZ 10-year: 3.70%.
Cryptocurrencies
The crypto markets rebounded further amid a weakened USD. The bets of a less aggressive Fed continued to support risk assets’ comeback. Notably, Ethereum outperformed Bitcoin in the last few days, with a 10% jump in the last 24 hours.
The global market cap rose 4.41%, to US$1.01 trillion in the last 24 hours, which is the first time for the crypto markets value to bounce back above US$1 trillion since the crash of the stablecoin TerraUSD sparked a broad selloff in early June.
(See below prices at AEST 8:28 am according to Coinmarketcap.com)
Bitcoin: US$21,622 (+3.05%)
Ethereum: US$1,488 (+9.75%)
Polygon: US$0. 9191 (+20.24%)
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