Market Wraps
Watch For:
Trade for July; ISM Report on Business Services PMI for August; Canada Trade for July; Bank of Canada rate decision; The Fed’s Susan Collins speaks at New England Council breakfast event
Today’s Top Headlines/Must Reads:
– This Tech Stock Rally Can Keep Going. What History Shows.
– Saudi Cuts Send World Diesel Prices Soaring
– Everyone Is Bearish on China-Except Bond Investors
Opening Call:
Stock futures fell on Wednesday as investors remained wary of higher bond yields as recently rising oil prices revived inflation concerns.
“The downbeat mood on the markets is continuing, with little to lift sentiment in sight, as oil prices stay elevated and inflationary fears are pushed back up,” Hargreaves Lansdown said.
The increase in energy prices has raised concerns that inflationary pressures will be revived, forcing central banks to keep borrowing costs higher for longer.
“[W]hile oil bulls are dancing in the street, the notable price uptick could prove challenging for central banks and financial markets, which were embellishing the current lower inflation groove…if bonds are selling off mainly thanks to higher inflation expectations, that truly will be bad news for markets,” SPI Asset Management said.
Premarket Movers
Amazon slipped 0.6% premarket after WSJ reported the FTC plans to file a lawsuit against Amazon later this month.
Apple fell 0.8% premarket after WSJ reported that China ordered officials at central government agencies not to use iPhones and other foreign-branded devices for work or bring them into the office.
Asana stock fell 3% despite the business software provider’s earnings topping analysts’ estimates for the second quarter.
Block fell more than 2% premarket on high volume.
Dominion Energy said late Tuesday it would sell several natural gas-distribution businesses to Enbridge for $9.4 billion. Enbridge’s shares fell more than 8% premarket, while Dominion stock was barely active.
GitLab shares rose 5.5% after the company beat earnings expectations as revenue soared 38% in the second quarter.
Zscaler stock fell 1% despite beating earnings expectations and delivering an upbeat outlook. The company’s CFO Remo Canessa warned that the global macro environment remains uncertain and that closing deals within 90 days “remains challenging.”
Forex:
The dollar should hold on to most of Tuesday’s gains, DZ Bank Research said.
Even if the service purchasing managers surveys are weaker than expected they are “unlikely to trigger a complete reversal of yesterday’s losses in EUR/USD,” it added.
Tuesday’s “noticeable upward movement of the dollar” was slowed after Fed board member Christopher Waller suggested interest rates may not need to rise this month.
Energy:
Oil prices slipped in Europe but remained close to a 10-month high following Saudi Arabia’s extension of its supply cuts.
The three-month extension is longer than the one-month one many analysts were expecting, but the Saudis added that they will review the cuts monthly, which isn’t that different from what they had been doing until now, Investec said.
Still, “the signal the Saudis are sending is important-that the default will be to maintain the cut.”
Metals:
Base metals and gold prices edged lower in early London trade, as worries around the Chinese economy continued to dominate sentiment.
Cuts to Saudi and Russian oil production till the end of the year are sparking worries over China’s energy needs, as markets hadn’t expected cuts to last till the end of the year, Commonwealth Bank of Australia said.
China’s demand is expected to account for roughly 70% of oil-demand growth this year, it said. However, “growing concerns over China’s economy could see global oil demand growth downgraded further in 2H 2023.”
Today’s Top Headlines
Apple Tests Limits for Most Expensive iPhones
Apple is testing the limits of how much people will pay for premium iPhones as it tries to drive revenue despite slowing global demand for smartphones.
The tech company is expected by analysts to raise prices by as much as $100 for some updated models of its flagship device when it unveils the iPhone 15 at an annual promotional event set for Tuesday. Those new iPhone Pro models are expected to include titanium casing, improved processors and photography features.
Wells Fargo Is Still in Fix-It Mode
Wells Fargo is still trying to fix itself.
Seven years after a fake-accounts scandal engulfed the bank, thousands of employees are grappling with how to best catch or prevent problems in everything it does.
Arm Still Trying to Punch Above Its Weight
Arm has long had an outsize reach in the chip industry. Still, a $50 billion market valuation is ambitious even in a market starved for major new tech listings.
The British chip designer proposed pricing terms Tuesday morning for its planned initial public offering. That listing looks likely to take place soon: The company said it has already launched its roadshow to support the deal. Arm is currently planning to list its shares in the range of $47 to $51 a piece, and they will trade on the Nasdaq exchange following the listing.
German Manufacturing Orders Tumbled by More Than Expected in July
New orders at German factories fell considerably more than expected, a further indication of declining demand for goods from the key manufacturing sector of Europe’s largest economy.
Manufacturing orders fell 11.7% on month in July, after ticking up 7.6% in June, according to seasonally and calendar adjusted-data released Wednesday by the German statistics office Destatis.
Chinese Property Stocks Jump Amid Hopes for More Stimulus
Chinese property stocks jumped early in Hong Kong amid hopes of more property-market stimulus ahead and a state-owned media report saying Beijing might roll out new measures to shore up the sector, in what would be the latest in a recent string of such policy moves.
China Evergrande Group rose 27%, while Shimao Group added 25%, Agile Group jumped 9.2% and Sunac China surged 68%. The Hang Seng Mainland Properties Index rose 3.1%, bucking the decline of the city’s broader Hang Seng Index, which was down 0.8%.
Blinken Visits Kyiv at Key Moment for War, Ukraine Ties
KYIV, Ukraine-Secretary of State Antony Blinken arrived in Ukraine on Wednesday in a visit aimed at signaling Washington’s support amid a slow-going counteroffensive and grumbling among some Republicans about the level of U.S. assistance for the country.
Blinken is expected to announce more than $1 billion in additional aid for the country and to meet Ukrainian President Volodymyr Zelensky in the capital, a senior State Department official said. He will also sit down with the country’s Prime Minister Denys Shmyhal and Foreign Minister Dmytro Kuleba.
Mitch McConnell Returns to Senate After Health Scares
WASHINGTON-Senate Minority Leader Mitch McConnell returned to the Senate on Tuesday and released a doctor’s letter saying he didn’t suffer a stroke or seizure, moving to quell concerns about his health and underscore he is still the top Republican in the chamber.
“Now one particular moment of my time back home has received its fair share of attention in the press over the past week,” he said in a speech on the Senate floor, less than a week after appearing to freeze during a Kentucky event. “But I assure you, August was a busy and productive month for me and my staff,” he said.
Source: Dow Jones Newswires