Market Wraps
Watch For:
NFIB Index of Small Business Optimism for June
Today’s Top Headlines/Must Reads:
– Historic Rate Increases Leave Some on Wall Street Wanting More
– China’s Reopening Trade Is Fizzling Out
– The Next Challengers Joining Nvidia in the AI Chip Revolution
Opening Call:
Stock futures were mixed on Tuesday as investors looked ahead to inflation data that are expected to play a crucial role in shaping the next stretch of monetary policy.
Investors don’t expect softening inflation to stymie interest-rate hikes in the near term. Traders currently forecast rates will finish 2023 around 5.37%, according to Tradeweb.
Overseas, stock markets mostly gained after Beijing announced new loan-relief measures for China’s troubled property sector.
One exception was the U.K.’s FTSE100, which fell after data showed wage growth remained strong, increasing the prospect of further interest rate rises by the Bank of England.
Pre-Market Movers
Amazon.com was up 0.4% in premarket trading as the online retailer kicked off Prime Day.
ADRs of Daimler rose about 2% after it raised its guidance for full-year revenue and said it would start a share buyback in August for up to $2.2 billion.
Iovance Biotherapeutics said it is planning a $150 million underwritten public offering of common shares. The stock fell 11%.
Kingspan’s London-listed shares were up over 10% after it said it expected to report a higher trading profit for the first half of the year than in the comparable period of 2022.
Microsoft was rising slightly after it was revealed the company would be laying off more workers in addition to the 10,000 jobs the software giant said earlier this year it was eliminating.
New York Times said it was dismantling its sports desk and would rely on the Athletic for its sports coverage, further integrating the publication it bought for $550 million last year. Shares fell 1.1%.
Rivian Automotive was up about 1%, pointing to a tenth straight day of gains for the stock.
Uber Technologies was down 0.3% following a report from Bloomberg that said CFO Nelson Chai was planning to leave the ride-hailing company. Chai has informed CEO Dara Khosrowshahi of his intentions to leave, though a decision on timing hasn’t been made, people familiar with the matter told Bloomberg.
WD-40 reported fiscal third-quarter earnings and sales that rose from a year earlier and beat analysts’ expectations, and reiterated its fiscal-year guidance. Stock was up 4%.
Monday’s Post-Close Movers
Better Therapeutics said the FDA authorized AspyreRx as a treatment for adults with Type 2 diabetes. Shares rose 29%.
E2open guided for subscription revenue growth in the second quarter and for the fiscal year. Shares rose 7.4%.
EzFill said it reached record-high second-quarter deliveries. Shares rose 5.5%.
Forex:
The dollar fell to a two-month low against the euro and a basket of currencies as U.S. interest rates look likely to rise less than rates in other countries, ING said.
“There has not been too much data but the push factor of the Fed/U.S. interest-rate story versus the pull factor of overseas asset markets is slightly working against the dollar.”
ING pointed to the New York Fed consumer inflation expectations survey, which showed short-term expectations at their lowest since April 2021.
—
Sterling rose to its highest in nearly 15 months against the dollar at $1.2914, after the U.K. wage and jobs data.
“These are not figures the BOE will want to see and will maintain the market’s exceptionally aggressive pricing of the Bank Rate up near 6.40% early next year,” ING said.
This leaves GBP/USD looking likely to rise to 1.30 against a backdrop of a weak dollar while EUR/GBP could fall to 0.8520, ING added.
Energy:
Oil prices ticked higher in Europe, buoyed by hopes that China will provide more support to its property sector.
The focus this week will be on U.S. CPI data due Wednesday, followed by OPEC and IEA reports on Thursday.
Metals:
Base metals and gold moved higher in early London traing on the China support measures and with a weaker dollar providing a tailwind.
Today’s Top Headlines
Amazon’s Prime Day to Test Consumer Demand
Amazon.com is projecting new heights for this year’s Prime Day, while analysts expect concerns about the economy to weigh on consumer demand.
The annual summer promotion, an early indicator of shopping patterns for the year, is set for Tuesday and Wednesday at a pivotal moment for the country’s largest online retailer. In recent quarters, the growth rate at Amazon’s online store has slipped, its cloud-computing services business has cooled and the company has cut thousands of jobs.
Microsoft Cuts Hundreds More Jobs. Tech Layoffs Are Slowing but Not Stopping.
Technology stocks have had a great year so far. Tech employees, not so much. A new round of layoffs at Microsoft shows the threat of job cuts continues to loom over the sector.
Microsoft (ticker: MSFT) is cutting at least 276 jobs, according to a local government filing in Washington. The layoffs look to be largely focused in customer service, support and sales according to technology-news website GeekWire, which first reported the cuts, and appear to be on top of the 10,000 jobs which Microsoft said it would cut earlier this year.
Is China Mired in a ‘Balance Sheet Recession?’
China’s housing market is weakening again. But as worrying as that is for the nation’s growth, it may be a symptom of a much larger, thornier problem.
After a rebound at the beginning of the year in the wake of China’s reopening, the country’s property market has resumed its downward trend: Both sales and prices have started to fall again.
UK Wage Growth Stays High Despite Rising Jobless Rate in The Three Months to May
The U.K.’s jobless rate rose in the three months to May but wage growth maintained its rapid pace, keeping pressure on the Bank of England to raise already high interest rates as it strives to bring down inflation.
The unemployment rate stood at 4% in the period, according to data from the Office for National Statistics published Tuesday, climbing from 3.8% the previous month and above economists’ forecasts in a poll by The Wall Street Journal.
German Economic Outlook Weakened in July as Interest Rates Bite
Germany’s economic outlook worsened in July by more than expected, as rising interest rates continue to add to a bleak outlook for the eurozone’s largest economy.
The ZEW institute’s index of economic sentiment for Germany fell to minus 14.7 in July from minus 8.5 in June, it said Tuesday.
Donald Trump Asks Court to Delay Trial in Classified-Documents Case
Donald Trump’s legal team asked a federal court in Florida late Monday to delay the former president’s criminal trial over his handling of classified documents after he left office, saying it wants time to review the inquiry that led to his indictment.
Trump pleaded not guilty last month in a Miami court to charges that he illegally retained and shared classified national-security documents after leaving the White House, including at his Florida Mar-a-Lago resort.
Biden’s Reluctance to Let Ukraine Join NATO Tests Alliance’s Unity
VILNIUS, Lithuania-President Biden has spent much of the past year rallying the world behind Ukraine, funneling billions of dollars in aid to the war-torn country and strengthening ties with leader Volodymyr Zelensky.
But for Biden, Kyiv’s campaign for rapid entry into the North Atlantic Treaty Organization is a bridge too far.
Source: Dow Jones Newswires