Daily Markets: After Pelosi leaves Taiwan, investors focus on economy


The big picture today

Asia-Pacific equity indices ended today’s session on a mixed note. Australia’s ASX All Ordinaries fell 0.19% and China’s Shanghai Composite was down 0.71% while Taiwan’s TAIEX gained 0.20%, India’s Sensex rose 0.37% and the Hang Hong Kong’s Seng and the Japanese Nikkei rose 0.40% and 0.53%, respectively. South Korea’s KOSPI led the way, up 0.89% on the day. By midday, major European equity indices are mixed and US futures are pointing to a positive open later this morning.

As US-China relations dominated the headlines yesterday, markets around the world appeared to have shrugged off any immediate concerns as House Speaker Nancy Pelosi’s visit to Taiwan drew to a close. Yet while China has gone so far as to conduct live-fire military exercises that appeared to surround the island during the Speaker’s visit, there does not appear to be any other immediate impact following the visit to the nation of Taiwan. Investors will be watching how easy or difficult it will be for U.S. companies to negotiate or renegotiate contracts with China in the future, but for now, it appears the worst is over.

Even though investors are drinking profits again this morning, shortly after the market opens, we’ll get an in-depth look at how the services economy fared in the U.S. in July as well as some initial indications on what she will probably look like in August. Also later today we will have the results of the latest OPEC+ meeting, and while some believe the group could modestly increase oil production, there have been more than a few false hopes for such action in the course of the last few months. Between the two reports, the results could bring some clarity to the contradictory comments from the Fed yesterday which sent a mixed message as to what the Fed is likely to do in the months ahead.

Data download

International economy

The S&P Global Eurozone Services PMI was revised up to 51.2 for July 2022 from the preliminary reading of 50.6 and the June final print of 53.0, indicating the sector’s slowest growth services since January. Reasons cited for the decline include the continued decrease in post-pandemic restrictions and cooling demand pressures.

The S&P Global/CIPS UK services PMI was revised down to 52.6 for July from its preliminary estimate of 53.3 and the 54.3 recorded for June. The July reading marked the weakest expansion in services activity in 17 months as inflationary pressures and a squeeze in the cost of living led to heightened economic uncertainty.

Eurozone retail sales fell 3.7% year-on-year in June, the first drop since February 2021 and much worse than market forecasts for a 1.7% decline. Eurozone annual producer inflation fell to 35.8% in June from 36.2% the previous month and marked the lowest level in four months, although it was slightly above market expectations for 35.7%.

Domestical economy

At 9:45 a.m., S&P Global will release its final July services PMI reading for the United States, and it is expected to come in at 47.5, indicating a contraction for the month from June’s 52.3 figure. Shortly after, at 10 a.m. ET, the Institute for Supply Management will release its July non-manufacturing activities PMI, which is expected to show the services economy continued to grow during the month with a reading of 53.5. , compared to 55.3 the previous month. Recession watchers will no doubt compare the two reports and the new orders and price information they contain.

Also at 10:00 a.m. ET, June’s factory orders data will be released, and it is expected to show a drop in factory activity with its figure of 1.1%, compared to 1.6% in May.

Yesterday, St. Louis Fed President James Bullard said he was confident the US economy could achieve a “soft landing”, while San Francisco Fed President Mary Daly said the central bank’s job of controlling inflation was “far from done.” Adding to the mixed signals, the Chicago Fed’s Charles Evans said there was a chance for a lower rate hike at the next monetary policy meeting.

Markets

Yesterday’s developments in China-US relations helped prolong the market decline, with the Dow Jones falling 1.23%, the S&P 500 0.67%, the Nasdaq Composite 0.16% and the Russell 2000 suffered the least, down 0.05%. Despite President Pelosi’s visit to Taiwan and the live-fire military drills China has conducted in the waters surrounding the island nation, yesterday was not a sell-out. names like Monolithic Power Systems (MPWR) and Gartner Inc (IT) posted gains of 9.29% and 7.65%, Caesar’s Entertainment (CZR) gained 6.80%, and Caterpillar (CAT) fell 5.82%, indicating that stocks were still trading largely on fundamentals.

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

  • Dow Jones Industrial Average: -10.85%
  • S&P 500: -14.16%
  • Nasdaq compound: -21.07%
  • Russell 2000: -17.17%
  • Bitcoin (USD-BTC): -52.19%
  • Ether (ETH-USD): -57.24%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Cars.com (CARS), Cedar Fair (FUN), CVS Health (CVS), Intercept Pharma (ICPT), Meritor (MTOR), Moderna (MRNA), Stratasys (SSYS), Tradeweb Markets (TW), Tupperware (TUP) , Under Armor (UAA), and Yum! Brands (MIAM) will be among the companies releasing their latest quarterly results and forecasts.

Shares of PayPal (PYPL) climbed in aftermarket trading last night after the company raised its outlook for 2022 EPS from $3.87 to $3.97 from the consensus of $3.85 and its earlier forecast of 3, $81 to $3.93. Helping out, the company’s June quarter EPS came in at $0.93 well ahead of the consensus of $0.87. Net new active accounts were 0.4 million in the quarter, compared to 2.4 million in the March quarter. As of the June release, the total number of active accounts was 429 million, up 6% year-on-year.

Shares of Advanced Micro Devices (AMD) drop last night after the company reported slightly better-than-expected top and bottom results for its June quarter, but released online revenue guidance of $6.5 billion to $6.9 billion for the current quarter compared to the consensus of $6.83 billion. For its 2022, AMD reiterated its revenue forecast of $26.0-26.6 billion versus consensus of $26.18 billion driven by growth in the Data Center and Embedded segments.

Identity Ping (PING), a provider of smart identity solution for the enterprise, announced that it has entered into a definitive agreement to be acquired by software investment firm Thoma Bravo for $28.50 per share in a wholly owned transaction. cash. The offer represents a premium of about 63% to Ping Identity’s stock closing price last night of $17.47.

The UK Competition and Markets Authority has provisionally cleared the NortonLifeLock (NLOK)Avast (AVASF) merger to raise competition concerns in the UK.

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

Altice USA (ATUS), Bandwidth (BAND), Booking Holdings (BKNG), Clorox (CLX), elf Beauty (ELF), Ethan Allen (ETH), Fair Isaac (FICO), Fastly (FSLY), Fortinet (FTNT) , Ingersoll-Rand (IR), Lumen Technologies (LUMN), MercadoLibre (MELI), Ping Identity (PING), Qorvo (QRVO), Robinhood Markets (HOOD), Sunrun (RUN), TPI Composites (TPIC) and Vimeo (VMEO ) are expected to release their quarterly results after the 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

Thursday August 4

  • Germany: factory orders – June
  • UK: Bank of England monetary policy meeting and interest rate decision
  • United States: report on job cuts at Challenger
  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: EIA Weekly Natural Gas Inventories

friday august 5

  • Japan: household spending, coincident indicator, leading index – June
  • Germany: Industrial production – June
  • United States: Employment report – July
  • United States: Consumer credit – June

Thought of the day

“Don’t let loneliness cause you to reconnect with toxic people. You shouldn’t drink poison just because you’re thirsty. ~Robert Downey Jr.

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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