ASX Futures (SPI 200) imply the ASX 200 will open 11 points lower, down -0.16%.
US House Speaker Nancy Pelosi lands in Taiwan, China kicks off "important military exercises", US job openings hit a 9-month low and key quarterly earnings from names like PayPal, Airbnb and Uber.
Let’s dive in.
Tue 02 Aug 22, 10:41pm (AEST)
|US 10 Yr T-bond||2.741||+5.18%|
Geopolitical tensions run high after Nancy Pelosi safely landed in Taiwan last night, the first time that a US House speaker has visited Taiwan in 25 years. In parallel, China has commenced “important military exercises”, including live-fire air and sea drills. Perhaps more importantly, the decline in US and China relations could impact supply chains and demand, which could further elevate inflationary pressures.
Adding further insult to injury were comments from the Fed’s San Francisco President Mary Daly, who opened up the possibility of another large interest rate hike.
“Nowhere near almost done,” Daly said during an interview with CNBC . “We have made a good start and I feel really pleased with where we’ve gotten to at this point.”
All 11 US sectors declined
Communication Services, Utilities and Healthcare were relative outperformers
Interest rate sensitive sectors including Real Estate, Financials and Industrials underperformed
52% of US stocks declined
58% of US stocks trade below their 200-day moving average (57% on Tuesday, 67% a week ago)
Uber (+18.9%) posted a net loss of -US$2.6bn, mostly attributed to loss making investments in Aurora, Grab and Zomato. Still, the company topped revenue expectations as spending shifted from retail to services
Uber posted US$382m in free cash flow for the first time ever
Caterpillar (-5.9%) shares slumped on disappointing earnings, with profit beating expectations but revenue missed
“Sales to users were…below our expectations, largely due to the impact of supply chain constraints,” said CEO Jim Umpleby
“These constraints were mostly due to component shortages which resulted in production delays and shortfalls against our schedules.”
After hours earnings:
PayPal (+1.2%, after hours: +11.6%) posted better-than-expected results, with revenue up 9% to US$6.81bn and active customers up 6% to 429m users
AMD (+2.6%, after hours: -5.3%) slightly beat both revenue and earnings expectations but forward looking guidance fell short of Wall St expectations
“We delivered our eighth straight quarter of record revenue based on our strong execution and expanded product portfolio. Each of our segments grew significantly year-over-year, led by higher sales of our data centre and embedded products,” said CEO Lisa Su
Airbnb (+4.6%, after hours: -8.7%) quarterly revenue jumped 58% to US$2.1bn and net income of US$379m compared to a US$68m loss a year ago. Still Wall St was expecting faster growth and revenue was slightly below expectations
“We did see some elevated cancellations in the back of the quarter relative to our forecast,” warned Airbnb CFO Dave Stephenson
“From a growth perspective, we exceeded 103M Nights and Experiences Booked, our largest quarterly number ever. We generated $2.1 billion in revenue, growing 58% year-over-year. Our revenue and GBV are 73% larger than in Q2 2019.”
US corporate earnings we’re watching this week:
Wednesday: Moderna, Booking.com, Siemens, eBay
Thursday: Alibaba, Block, Beyond Meat, Virgin Galactic, DoorDash
Friday: DraftKings, Norwegian Cruise Line
RBA hiked interest rates by 50 bps to 1.85%, in-line with expectations
“The Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path,” said Governor Philip Lowe in a statement
US job openings fell -605,000 to 10.7m in June, below expectations of 11m
Fresh nine month low and the largest decline in over two years as demand for workers eased in wholesale and retail industries
Job openings have been declining since reaching a record high of 11.9m in March
Iron ore futures fell -0.1% to US$114.7 a tonne
Chinese iron ore port inventories and seaborne cargoes recovered in late July in response to improved market sentiment, according to Mysteel
Price movement remains subdued as market seeks clarity on August outlook
Oil briefly rallied on expectations that tomorrow’s OPEC+ meeting and weekly US oil inventory data will show that the supply side remains tight
Gold was close to a 1-month high of US$1,788 but fell sharply as Treasury yields rebounded and the US dollar got a kick from hawkish Fed comments
Tue 02 Aug 22, 10:41pm (AEST)
Tue 02 Aug 22, 10:41pm (AEST)
|Lithium & Battery Tech||75.47||-0.19%|
|Aerospace & Defense||104.58||+0.08%|
|Robotics & AI||22.77||-0.53%|
Markets have plenty of reasons to stage a pullback. In the event of a pullback, it'll be interesting to see what kind we get - the constructive, garden variety 3-5% pullback or a tumble towards fresh lows.
Geopolitical tensions run high, but we have yet to see the full extent of how China will respond to Pelosi's visit. US Treasury yields ripped higher overnight and the VIX is starting to creep upwards. You might want to put the seat belt on.
The Nasdaq held up relatively well amid rising geopolitical tensions and hawkish Fed talk. Though, it still has to face rather disappointing earnings from AMD and Airbnb tomorrow.
The S&P/ASX 200 Info Tech Index is starting to get comfortable above the trendline and 100-day moving average (yellow).
Talking technicals, it's interesting to see the Hydrogen ETF hold the gap up from last Friday, when it rallied 11.1% on optimism that a US$369bn bill for clean energy would make it through Senate and Congress.
The Copper Miners ETF is down -5.3% in the last two sessions as copper prices begin to pull back. It will be interesting to see whether or not the rebound was just a 'dead cat bounce' or if copper can stabilise around these levels.
On a side note, PayPal shares are up 11.6% in after hours on better-than-expected results.
Might be worth watching how local BNPL performing on Wednesday. It was interesting to see BNPL names rip higher after the RBA rate hike, with names like Zip (ASX: ZIP) adding 15.1%.
The same goes for Airbnb and local travel companies.
ASX corporate actions occurring today:
Ex-dividend: AMH, CBC, QRI
Dividends paid: None
Issued shares: 3DA, 5EA, A4N, AJQ, ALA, BCI, BUB, CAU, DCG, DEG, DRE, EBR, EQT, EUR, FZO, HRZ, INR, KAT, MAY, MMI, MPR, NAB, NAC, NBI, NSC, NUF, PCG, PME, PRL, QGL, RFF, RFX, RNU, STX, SYA, TRM, TRY, VUK, XF1
Other things of interest (AEST):
Eurozone Services PMI (July) at 5:50 pm
UK Services PMI (July) at 6:30 pm
Eurozone Retail Sales (June) at 7:00 pm
US Services PMI (July) at 11:45 pm
Finance Writer & Social Media
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