Investors turn their attention to the earning season

By JustForex

US stock indices rose on Tuesday as investors temporarily put aside recession fears and dived into the reporting season. Investors are taking a close look at factors, how companies are struggling with higher costs and persistent supply problems, and how consumer behavior is changing amid persistently high inflation. As the stock market closed, the Dow Jones Index (US30) increased by 2.43%, and the S&P 500 Index (US500) added 2.76%. The NASDAQ Technology Index (US100) jumped by 3.11% yesterday.

The number of new homes in the US fell in June to its lowest level in over a year as demand declined due to the pandemic boom. Rising mortgage rates and record-high home prices have sidelined many potential buyers.

Twitter (TWTR) shares jumped nearly 3% after a Delaware Court of Chancery judge said the social network may accelerate its lawsuit against Elon Musk, setting a trial date in October. Shares of Lockheed Martin Corporation (LMT) fell by 0.7% after the military contractor said fighter jet sales fell and lowered its 2022 revenue and profit targets. Shares of Netflix increased by 7% on the report, despite the company losing 970,000 subscribers in the last quarter. But the outlook for the third quarter indicates that the company will return to customer growth and also plans to launch an ad-supported option. Tesla (TSLA), ASML (ASML), Abbott Labs (ABT), Biogen (BIIB), Baker Hughes (BKR), and United Airlines Holdings (UAL) all report today.

Stock markets in Europe were mostly up on Tuesday. German DAX (DE30) gained 2.69% yesterday, French CAC 40 (FR40) added 1.79%, Spanish IBEX 35 (ES35) gained 2.03%, British FTSE 100 (UK100) closed with 1.01% gain.

The annual inflation rate in the Eurozone in June 2022 was 8.6%, compared to 8.1% in May. A year earlier, the rate was 1.9%. The lowest annual rates were registered in Malta (6.1%), France (6.5%), and Finland (8.1%). Estonia (22.0%), Lithuania (20.5%), and Latvia (19.2%) registered the highest annual rates. European Central Bank policymakers are considering raising interest rates by more than 50 basis points at their meeting on Thursday to combat record-high inflation. The euro is strengthening on these expectations.

Investors are also watching the political drama in Rome as the Italian government is mired in uncertainty over whether Mario Draghi will remain as prime minister.

Nord Stream 1 resumes gas flows on Thursday after annual maintenance but at a reduced level.

In the oil market, traders continue to weigh limited inventories against the prospect of a recession that has brought the price back to $100 a barrel. Investors may see oil fall further if the economic outlook continues to deteriorate or if Saudi Arabia agrees to produce more oil. On the other hand, the summer season is in full swing, and the demand deficit is still there. These factors prevent the price from falling lower.

In metals, everything is the same. Gold and silver are inversely correlated to the dollar index and US government bond yields, which in turn are rising against a background of tighter monetary policy from the Fed. There are no fundamental reasons for buying now, and while the rates are going up, there won’t be. At the moment, buying gold and silver is possible only for speculative purposes for short periods.

Asian stocks are mostly rising at the market opening today. Japan’s Nikkei 225 (JP225) added 2.40% since opening, Hong Kong’s Hang Seng (HK50) jumped by 1.74%, and Australia’s S&P/ASX 200 (AU200) is trading up 1.58%.

RBA Governor Lowe said today that inflation in Australia would reach 6% or 7% this year, so the Central Bank will have to keep raising rates.

The Bank of Japan will also rule on policy on Thursday, but it is not expected to make any changes to its ultra-soft stance.

China and the European Union (EU) have agreed to work together to promote economic and trade cooperation and jointly address the global economy’s challenges. The two sides reached several outcomes and consensus on macroeconomic policy coordination, cooperation in production and supply chains, WTO reform, broader market opening, implementation of the China-EU geographical indications agreement, and regulatory cooperation.

S&P 500 (F) (US500) 3,936.69 +105.84 (+2.76%)

Dow Jones (US30) 31,827.05 +754.44 (+2.43%)

DAX (DE40) 13,308.41 +348.60 (+2.69%)

FTSE 100 (UK100) 7,296.28 +73.04 (+1.01%)

USD Index 106.71 −0.65 (−0.61%)

• – Australia RBA Governor Lowe Speaks at 02:10 (GMT+3);
• – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Existing Home Sales (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.