Nature

Daily Markets: $2 Trillion Options Expiry Ends Relatively Calm Week


The big picture today

Asia-Pacific equity indices ended today’s session on a mixed note. A number of markets ended the day mostly flat as the Japanese Nikkei was down 0.04%, Australia’s ASX All Ordinaries gained 0.01%, Hong Kong’s Hang Seng rose 0.05% and Taiwan’s TAIEX added 0.08%. South Korea’s KOSPI fell 0.61%, China’s Shanghai Composite fell 0.59% and India’s Sensex fell 1.08%. By midday, major European equity indices are down across the board and US futures are pointing to a tough open later this morning.

With a blank slate of US economic data today and less than a handful of quarterly earnings reports before markets begin trading today, markets are heading for the August slump. This week’s retail revenue effectively wraps up this quarter’s reporting season. With the release of the Fed’s final minutes, we have a break until next week’s PMI updates as well as second quarter GDP which, if you’ve been following the Atlanta Fed’s GDPNow model, has evolved a bit in recent weeks, with the latest estimate at 1.6% down from the early August estimate of 2.5%.

The estimated $2 trillion notional value of options expiring today complicates trading today. Turmoil is expected as traders look to ease or exercise their positions. With around $975 billion in S&P 500-linked contracts and around $430 billion in derivatives on individual stocks set to expire, odds are a volatile day is on deck.

Data download

International economy

The annual inflation rate in Japan rose to 2.6% in July, accelerating from the 2.4% year-on-year rise in June. The July figure marked the 11th consecutive month of consumer price increases and the fastest pace since April 2014, driven mainly by soaring fuel and food prices.

Hong Kong announces it will reopen one of its largest Covid-19 isolation facilities as the number of cases hit its highest level in more than four months with rising daily infections fueled by sub- more transmissible omicron variants.

Annual producer inflation in Germany hit a new high of 37.2% year-on-year in July, well above the market consensus of 32% for the month and June’s 32.7%. Energy prices, including natural gas and electricity distribution, remained the main drivers of the year-over-year increase. Excluding energy, producer prices increased by 14.6% year on year in July.

UK retail sales fell 3.4% year-on-year in July, the fourth consecutive decline as inflationary pressures continue to undermine affordability.

Domestical economy

As noted above, today is one of those rare occasions when the US economic calendar does not show any data released today. But speaking of calendars, be sure to mark August 26: the day Fed Chairman Powell speaks at the annual conference of world central banks in Jackson Hole, Wyoming.

Markets

Investors were a bit more bullish yesterday as Cisco Systems (CSCO) announced a good quarter. The Dow gained 0.06%, the Nasdaq Composite and S&P 500 gained 0.21% and 0.23% respectively, and the Russell 2000 gained 0.68%. Energy was the big winner, up 2.51%.

Here’s how the major market indicators stack up since the start of the year:

  • Dow Jones Industrial Average: -6.44%
  • S&P 500: -10.12%
  • Nasdaq compound: -17.13%
  • Russell 2000: -10.89%
  • Bitcoin (USD-BTC): -52.20%
  • Ether (ETH-USD): -51.86%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Loop (BKE), Deere & Co. (DE), and Foot Locker (FL) will be among the companies releasing their latest quarterly results and forecasts.

Semiconductor Capital Goods Company Applied Materials (AMAT) beat expectations for revenue and earnings for its July quarter and issued an online EPS guidance of $1.82 to $2.18 for its current quarter versus consensus of 1, $94.

Shares of Bed Bath and Beyond (BYND) were hammered yet again last night following reports that the company has hired law firm Kirkland & Ellis to help it deal with debt that has become unmanageable due to falling sales.

Whereas Ross Stores (ROST) announced better than consensus net results for its July quarter, revenue for the period fell 4.6% year-over-year to $4.58 billion, missing the consensus of $4.62 billion. Comps sales for the quarter fell 7% year-over-year, missing the guided decline of 4% to 6%. Citing today’s increasingly challenging and unpredictable macro landscape and more promotional retail environment, Ross issued a lower outlook for the current quarter and its full year than expected. consensus.

Keurig Dr Pepper (KDP) reportedly in talks to acquire VPX, owner of energy drink Bang Energy.

The board of directors of Atlas Corp. (ATCO) formed a special committee of independent directors to consider Poseidon Acquisition Corp.’s non-binding unsolicited proposal. received by the council on August 4th.

Samsung (SSNLF) opened a new semiconductor R&D complex in South Korea, where it plans to invest about 20 trillion won ($15 billion) by 2028 to become the leader in chip technology.

IPOs

As of now, no IPO is expected to be priced this week. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

No company is expected to release quarterly results after shares halt trading today. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

monday august 22

  • United States: Chicago Fed National Activity Index – July

Tuesday August 23

  • Japan: Flash manufacturing PMI – August
  • Euro zone: Flash composite PMI – August
  • United States: S&P Global Flash PMI
  • United States: Sales of new homes
  • United States: Richmond Manufacturing and Services Indexes

Wednesday August 24

  • Euro zone: Consumer confidence – August
  • US: Weekly MBA Mortgage Applications
  • United States: Sustainable orders – July
  • United States: pending home sales – July
  • United States: EIA Weekly Crude Oil Inventories

Thursday August 25

  • South Korea: producer price index – July
  • Germany: GDP – 2Q 2022
  • Germany: Ifo business climate – August
  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: PCE price index – 2nd quarter 2022
  • United States: GDP – 2nd quarter 2022
  • United States: EIA Weekly Natural Gas Inventories
  • United States: Fed KC Composite Index – August

friday august 26

  • Japan: Tokyo CPI – August
  • Germany: GfK consumer sentiment – ​​September
  • France: Consumer confidence – August
  • Italy: Consumer confidence – August
  • United States: PCE price index – July
  • United States: personal income and expenditure – July
  • United States: Non-auto retailer inventories – July
  • United States: Michigan Consumer Sentiment Index (final) – August

Thought of the day

“If it’s bearable, then endure it. Stop complaining.” ~ Marc Aurèle

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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