Market Wraps
Watch For:
CPI for July; Weekly Jobless Claims
Today’s Top Headlines/Must Reads:
– What to Watch in July’s CPI Report: Why an Uptick in Annual Inflation Might Not Worry the Fed
– U.S. and China Poised to Drift Further Apart After Investment Ban
– ‘It’s Hard to Be an Activist These Days’: Gadfly Investors Trail Stock-Market Returns
Opening Call:
Stock futures rose ahead of inflation data that could influence the Federal Reserve’s decision about when to stop raising interest rates.
“We see a continued disinflation in goods, and slowing shelter and broader services momentum, but at a slower pace than witnessed in the first half of 2023,” Vanguard said.
“Although underlying inflation data suggests a decelerating trend, we maintain reservations about a seamless path towards 2% inflation by next year,” it added.
With about 90% of second-quarter earnings from S&P 500 companies now published, the percent beating on earnings has improved from the previous quarter, but fewer are beating on sales, RBC Capital Markets said.
“Reporting season has been fine in our view but not good enough to fend off a bit of choppiness in the equity market,” RBC added.
“While the conversation around outlooks has seemed a bit thin, the outlook commentary has generally been fine with most of those who have commented highlighting resiliency, strength despite headwinds, normalization, and ongoing uncertainty.”
The upside of earnings season being largely done is companies are now free to resume their stock buyback programs.
Overseas stock markets were broadly higher. Europe’s Stoxx 600 made modest gains, led by insurance and real-estate stocks. Japan’s Nikkei 225 ended 0.8% higher and China’s Shanghai Composite added 0.3%.
Pre-Market Movers
Applovin rose 23% as the company swung to a profit in the second quarter and revenue beat forecasts.
Capri Holdings was rising 19% following a report from The Wall Street Journal said Tapestry, the owner of Coach, was in talks to buy Capri, the parent company of Michael Kors, Jimmy Choo and Versace.
Disney said it would significantly raise prices for its Disney+ and Hulu streaming services as it looks to make its direct-to-consumer business profitable. Shares rose 1.9%.
Plug Power fell 8.5% after the company’s second-quarter loss of 40 cents a share was wider than analysts’ expectations.
Sonos rose 8.7% after the company reported better-than-expected fiscal third-quarter revenue and said it expects fiscal-year revenue of between $1.64 billion and $1.66 billion.
Trade Desk reported second-quarter adjusted earnings of 28 cents a share, higher than expectations of 26 cents, while revenue of $464 million also beat forecasts. Shares fell 3%.
Wynn Resorts rose 1.9% after second-quarter profit and sales beat forecasts.
Forex:
Inflation data are expected to add to expectations that the Fed could refrain from raising rates further, but this shouldn’t be enough to cause sustained dollar falls, ING said.
The consensus in a WSJ poll is for both headline and core inflation to rise by 0.2% on month in July, “consistent with inflation running closer to the Fed’s 2% target,” ING said, even as headline annual CPI is expected to rise.
Activity data have been stronger than expected and will likely “keep the Fed on guard for longer,” ING added.
Energy:
Oil prices rose to their highest level in almost nine months ahead of the inflation data.
“Supply concerns continue to underpin prices,” Saxo said, pointing to the threat to oil shipments in the Black Sea from the war in Ukraine.
Metals:
Base metals prices were tepidly rising, while gold was flat in early London trading, as investors look to today’s consumer inflation print in the U.S., and how it will affect the dollar and the Fed’s outlook on interest rates.
“The impact of today’s CPI print will ripple through our commodity markets via Fed interest-rate projections, the direction of the dollar, and the overall risk-on/risk-off vibe,” Peak Trading Research said.
Today’s Top Headlines
Coach Owner Near Deal to Take Over Parent of Michael Kors, Versace
Coach owner Tapestry is in talks to buy Capri Holdings, parent of well-known fashion brands Michael Kors, Jimmy Choo and Versace, in a move that could help the new company better compete with the European fashion giants.
The deal, which has been under discussion for months, could be announced as soon as Thursday barring any last-minute snags, according to people familiar with the matter.
Disney Gets Iger’s Second Show on the Road
The Mouse House is taking a page-or three-from “House of Cards.”
Disney’s fiscal third-quarter report late Wednesday was an eventful one. The entertainment giant reported weaker-than-expected revenue and better-than-expected operating profit. That was due to an odd pairing reflective of a turbulent box office, slipping tourism in Florida and less cash going out the door because of Hollywood’s ongoing strikes.
Siemens Shares Fall After 3Q Revenue, Earnings Miss
Shares in Siemens dropped after the company reported third-quarter revenue and earnings that came short of expectations.
At 0739 GMT, shares were down 2.5% at EUR142.80 after falling as much as 4.4%.
Novo Nordisk Raises Guidance Amid Surging Demand for Diabetes, Obesity Drugs
Danish pharmaceutical giant Novo Nordisk on Thursday raised its full-year guidance amid surging demand for its Ozempic diabetes drug and Wegovy obesity treatment.
The company said it will continue to hold back some lower-strength starter doses of Wegovy in the U.S. in an effort to safeguard supplies for current patients, while capacity limitations at some manufacturing sites will result in continued periodic supply constraints and related drug shortage notifications across a number of products and geographies.
China’s Economy Isn’t Ailing-It’s ‘Evolving’: IPO Lawyers Told to Watch Their Language
Regulators in China have become uncomfortable with how some companies are describing the country’s risks to international investors.
Last month officials from the country’s securities regulator told a group of domestic law firms to soften the wording of China-specific risk disclosures in overseas stock-listing documents, according to people familiar with the meeting. The officials suggested alternative descriptions of certain risks and said some should be dropped entirely.
A U.S. Ally Promised to Send Aid to Sudan. It Sent Weapons Instead.
ENTEBBE, Uganda-When a cargo plane landed in Uganda’s busiest airport in early June, its flight documents said it was carrying humanitarian aid sent by the United Arab Emirates for Sudanese refugees.
Instead of the food and medical supplies listed on the aircraft’s manifest, Ugandan officials said they found dozens of green plastic crates in the plane’s cargo hold filled with ammunition, assault rifles and other small arms.
Europe Is Embarking on a Mining Renaissance. Winning Over Locals Is Proving a Challenge.
COVAS DO BARROSO, Portugal-Tucked away in the mountains of northern Portugal, about two hours northeast from the country’s second-largest city of Porto, sits this idyllic farming village. It is home to under 200 people, most over the age of 60, with the surrounding region most famous for its Barrosão cattle, a protected species prized for its meat. The nearest town, Boticas, is a 20-minute drive away, and if you stand on the hilltop, the only sounds you hear are the cattle, song birds and insects.
Covas, however, is set to play host to the green-energy transition in its rawest form. Just a third of a mile away from the houses of Covas do Barroso is one of Europe’s richest lithium deposits-the silvery metal used in electric-vehicle batteries-and a planned mining operation to dig out the mineral.
Wildfires Leave at Least 36 Dead on Hawaii’s Maui
At least 36 people have been killed as a result of the wildfires that have torn through Maui, devastating the popular tourist town of Lahaina, authorities said.
The three wildfires, which started on the Hawaiian island earlier this week, were fanned by the arrival of Hurricane Dora on Tuesday. The cause of the wildfires hasn’t been determined.
Source: Dow Jones Newswires