The big picture today
Asia-Pacific equity indices ended today’s session up across the board. Taiwan’s TAIEX gained 0.27%, South Korea’s KOSPI rose 0.67%, China’s Shanghai Composite gained 0.77% and Hong Kong’s Hang Seng and India’s Sensex rose 1.11% and 1.15% respectively while Australia’s ASX All Ordinaries gained 1.78% on the day. The Japanese Nikkei led the way, up 2.67% after talks with Saudi Arabia on stabilizing the oil market. By midday, major European equity indices are up across the board and US futures are pointing to a soft open later this morning.
As investors assimilate the latest inflation readings from the UK and Germany and grapple with the latest verbal sparring between the Eurozone and Russia, the speed of the June quarter earnings season will increase further. up a notch today. As much as investors will be evaluating quarterly results and guidance against consensus expectations, they will also be evaluating the stock price’s reaction to those results, looking to see what, if anything, has already been priced in. We warn readers that it will likely take more than a day or two to determine this and we will report the 180 companies reporting between this morning and the end of the week, plus the nearly 900 next week. Next week will also bring the Fed’s monetary policy meeting in July, and we suspect that more than a few investors will be waiting to hear what it has to say about monetary policy plans in the months ahead.
In short, the question is: are we finding support in the market or are we preparing for the latest false head? The next few days will answer this question.
The annual inflation rate in the UK rose to 9.4% in June, reaching the highest rate since 1982 and slightly above the market forecast of 9.3%. While inflationary pressures were broad-based, the greatest price pressure came from fuel costs, which rose 42.3%, reflecting the sharp increase in average gasoline prices during the month. The Producer Price Index reading for June showed that input prices rose 24% year-on-year, the highest level on record and easily higher than the forecast increase of 23.2%.
The June reading on Germany’s annual producer inflation slowed to a three-month low of 32.7% from a record high of 33.6% the previous month and the expected reading of 33.9%. While energy prices continued to be a major thorn in the back of inflation, non-energy producer prices rose 15.5% year-on-year.
At 8:30 a.m. ET, the June inflation rate for Canada will be released, and it is expected to come in at 8.4% versus 7.7% the previous month.
The July Flash reading for Eurozone consumer confidence will be released at 10:00 a.m. ET and it is expected to drop to -24.9 from -23.6 in June.
Bloomberg reports that Russian President Vladimir Putin has signaled that Europe will start receiving gas again via the Nord Stream pipeline, but warned that unless a row over sanctioned parties is resolved, flows will be tightly limited.
10:00 a.m. ET will see the release of existing home sales for June with expectations calling for a decline to 5.37 million units from the previously reported 5.41 million homes sold. So far this week, all housing-related releases have been below expectations. If existing home sales also disappoint, has that already been factored in or will investors react?
10:30 a.m. ET brings the latest weekly inventory data for oil and gasoline inventories. Ahead of this report, weekly API data showed U.S. crude oil inventories rose 1.86 million barrels last week, while gasoline inventories rose 1.29 million. barrels after increasing by 2.9 million barrels the previous week.
Optimism over second-quarter earnings overshadowed weaker-than-expected housing starts yesterday Apple (AAPL) news on hiring and spending, and the Atlanta Fed adjusted its Q2 GDP estimate down 0.10% to -1.6%. The Russell 2000 gained 2.16%, the Dow Jones rose 2.43% and the S&P 500 advanced 2.76%. The Nasdaq Composite led the way, closing up 3.11%. Relative weakness was seen in Utilities, Consumer Staples and Healthcare as investors adopted a classic bullish stance with all other sectors up more than 3% except real estate at 2 .83% over the day.
Here’s how the major market indicators stack up since the start of the year:
- Dow Jones Industrial Average: -12.41%
- S&P 500: -17.40%
- Nasdaq compound: -25.13%
- Russell 2000: -20.82%
- Bitcoin (USD-BTC): -51.15%
- Ether (ETH-USD): -59.02%
Stocks to Watch
Prior to the start of trading for stocks listed in the United States, Abbott Labs (ABT), ASML (ASML), Health Services (HCSF), Lithia Motors (LAD), and Northern Trust (NTRS) are among the companies expected to release their latest quarterly results.
Netflix (NFLX) reported mixed results for the June quarter with net results beating consensus expectations even as its revenue grew 8.6% year-on-year to $7.97 billion, missing the consensus of $8.03 billion. Second-quarter global streaming paid net additions were -0.97 million, better than the company’s forecast of -2.0 million and Netflix’s forecast adding 1.0 million streaming paid net additions worldwide during the current quarter. The company issued a lower third-quarter guidance with EPS of $2.14 versus consensus of $2.76 and revenue of $7.838 billion versus consensus of $8.1 billion. of dollars.
Cal-Maine (CALM) reported May quarter EPS of $2.25 per share, well ahead of consensus of $1.96. Revenue for the quarter climbed 69.4% year-on-year to $593 million, helped by both higher volumes and significantly higher prices. The average net selling price per dozen during the quarter was $2,069, compared to $1,318 in the prior year quarter.
Interactive Brokers (IBKR) missed June quarter expectations with EPS of $0.84 and revenue of $717 million versus consensus expectations of $0.90 and $745 million, respectively. During the quarter, accounts receivable increased 36% to 1.92 million, but customer equity decreased 19% to $294.8 billion and customer margin loans decreased 13% to $42.6 billion.
NXP Semiconductors (NXPI) announced that it has signed a memorandum of understanding with Hon Hai Technology Group to jointly develop platforms for a new generation of intelligent connected vehicles.
A bipartisan bill subsidizing US semiconductor production with around $52 billion cleared its first procedural hurdle yesterday in a 64-34 vote, even as details of the legislation were still being worked out . Chip stocks including Intel (INTC), AMD (AMD), Nvidia (NVDA) and others should see a boost today, as will chip equipment companies such as Applied Materials (AMAT) and Lam Research (LRCX).
As of now, no IPO is expected to be priced this week. Readers interested in learning more about the timing of upcoming IPOs should visit Nasdaq’s Most Recent and Upcoming IPOs page.
After today’s market close
Alcoa (AA), Crown Castle (CCI), CSX (CSX), Las Vegas Sands (LVS), Steel Dynamics (STLD), United Airlines (UAL), and Tesla (TSLA) is expected to release its 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 July 21
- Japan: Bank of Japan interest rate decision
- Euro zone: European Central Bank decision on interest rates
- United States: Initial and Continuing Weekly Unemployment Claims
- United States: Philadelphia Fed Manufacturing Index – July
- United States: leading indicators index – June
- United States: EIA Weekly Natural Gas Inventories
friday july 22
- Japan: CPI – June.
- Japan: Manufacturing and services PMI flash – July
- United Kingdom: Retail sales – June
- Euro zone: Manufacturing and services PMI flash – July
- United States: Flash manufacturing and services PMI – July
Thought of the day
“If you hate a person, you are defeated by them.” ~Confucius
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.