ASX Futures (SPI 200) imply the ASX 200 will open 33 points lower, down -0.5%.
The S&P 500 and Nasdaq trade above their 50-day moving average for the first time in three months, Tesla converted 75% of its Bitcoin back into cash and Saudi Arabia reveals that its oil output is near its ceiling.
Let’s dive in.
Thu 21 Jul 22, 8:32am (AEST)
|US 10 Yr T-bond||3.036||+0.56%|
US stocks are powering ahead amid a theme of ‘better-than-feared’ earnings, lifting investor sentiment.
“After the big valuation reset, the market wonders whether earnings will be the next shoe to drop. So far, the consensus estimate has been eerily quiet. With 46 companies reporting so far, 32 have beaten their estimate by an average of 3.7%. But it’s early days still,” wrote the Director of Global Macro at Fidelity.
The S&P 500 and Nasdaq are trading above their 50-day moving averages for the first time in nearly three months, trying to buckle this year’s ugly downtrend.
“Tuesday was the best day for breadth on the NYSE since January 4, 2019 … While breadth has been rather unimpressive during the market’s rally since the June lows, days like Tuesday … can go a long way towards changing the character of this market,” said LPL Financial.
7 out of 11 US sectors higher
Discretionary, Tech and Energy outperformed
Defensives incl Utilities, Healthcare, Staples and Real Estate were red
65% of US stocks advanced
69% of US stocks trade below their 200-day moving average (70% on Wednesday, 75% a week ago)
Netflix (+7.4%) shares rallied after posting a smaller-than-expected subscriber loss of 1m. The streaming platform beat earnings expectations but a miss on revenue
Nasdaq (+6.1%) shares rallied on better-than-expected earnings. Revenues for the exchange operator rose 5.6% year-on-year
Amazon (+3.9%) nothing news related. Amazon shares are up almost 16% in July, on pace for its best month since April 2020
Tesla (+0.8%, after hours +1.2%) second quarter earnings per share of $2.27 was ahead of analyst expectations of $1.83. Profits for the quarter fell -32% compared to the first quarter due to lockdowns in China
Tesla converted 75% of its Bitcoin investment back to cash, adding US$936m back to its balance sheet
United Airlines (+0.5%, after hours: -6.8%) missed earnings expectations. Revenues in the second quarter was 24% higher than 2019 due to strong travel demand and higher ticket prices. The airline said it will scale back growth plans for 2023
“Industry-wide operational challenges that limit the system’s capacity, record fuel prices and the increasing possibility of a global recession are each real challenges that we are already addressing,” said CEO Scott Kirby
Biogen (-5.8%) shares tumbled despite beating quarterly earnings expectations. Biogen flagged increasing generic and biosimilar competition for its drugs
US corporate earnings we’re watching this week:
Thursday: Tesla, AT&T, American Airlines, Domino’s Pizza
Friday: Snapchat, Verizon, American Express, Twitter, Verizon
German producer price index rose 32.7% year-on-year in June, down from 33.6% in May
Producer prices rose 0.6% month-on-month, well below the expected 1.3%
UK inflation jumped to 9.4% year-on-year in June, the highest since 1982
Slightly ahead of consensus expectations of a 9.3% rise
The Bank of England has raised interest rates five times since December in an attempt to tame inflation
Core inflation, which removes volatile food and energy categories, was 5.8% in June, down from 5.9% in May
Canada inflation hit 8.1% year-on-year in June, the highest since 1983
Below consensus expectations of a 8.4% rise
Iron ore futures rose 0.9% to US$104.1. China’s new covid cases jumped to a 2-month high of almost 700, leading to further restrictions. Prices rallied on Monday following reports of additional stimulus measures in China to boost demand
Though, Chinese premier Li Keqiang said “we won’t resort to super large stimulus or excessive money printing to accomplish a high growth target. That will overdraw on the future.”
Oil prices retreated after the EIA crude oil inventory report posted a surprise draw as exports came in above expectations. The report flagged weaker-than-expected gasoline demand, which pushed oil prices slightly lower
Gold closed below US$1,700 amid a risk-on session on Wall Street and the US dollar index snapping a three-day losing streak
Thursday, 21 July 2022
Thursday, 21 July 2022
|Lithium & Battery Tech||72.01||+0.13%|
|Aerospace & Defense||99.195||+1.31%|
|Robotics & AI||21.3||+3.05%|
Another impressive day on Wall Street was not enough to inspire SPI futures, currently down -0.5%.
It was another solid day for fast growing tech stocks. The Global X Cloud, Fintech and eCommerce ETFs rose 5.02%, 3.03% and 2.1% respectively.
The ETFs consist of mostly US-listed tech companies and provide a useful gauge of performance and sentiment for the sub-sectors.
The Nasdaq is in breakout mode. Will be interesting to see how it behaves around the next level of resistance (black) and 100-day moving average (yellow), both are about +3% away.
Likewise, the S&P/ASX 200 Info Tech Index is getting close to the upper bound of its channel range and 100-day, both are about 4.2% away.
President Joe Biden's trip to Saudi Arabia was supposed to bring more oil supply to the market. Instead, the Saudi's said their oil output is near its ceiling.
"The oil market just doesn’t have enough spare capacity that even with whatever demand destruction we are seeing, oil prices should find a home above the US$100 a barrel level," said Oanda senior market analyst, Ed Moya.
ASX corporate actions occurring today:
Dividends paid: CQE, GNC
Other things of interest (AEST):
Indonesia Interest Rate Decision at 5:30 pm
Eurozone Interest Rate Decision at 10:15 pm
South Africa Interest Rate Decision at 11:00 pm
Finance Writer & Social Media
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