The big picture today
Asia-Pacific stock markets ended the day higher except for Hong Kong’s Hang Seng, which closed down 0.33%, and Taiwan’s TAIEX, which fell 0.65% on a broad decline led by what the index provider describes as “undefined” names. China’s Shanghai Composite and South Korea’s KOSPI ended the day flat, posting gains of just over 0.00%. India’s SENSEX rose 0.45%, Australia’s ASX All Ordinaries gained 0.55% and Japan’s Nikkei advanced 1.24% on the back of a weaker yen and strong US bank earnings. European markets are up across the board at midday and US stock futures point to a positive open.
The flow of quarterly earnings reports intensifies today with high-profile results from Nasdaq (NDAQ), Goldman Sachs (GS), Netflix (NFLX), And Tesla (TSLA). The day also brings the next iteration of US housing starts data, with the market looking to see if May’s data signaled a rebound for this part of the economy. So far, the second quarter earnings cycle has gotten off to a good start, and given the multi-day rally we’ve seen, markets look set to go higher. Comments from Charles Schwab (SCW) indicate that customers are becoming increasingly optimistic during the 2nd quarter of 2023 and the conclusions of Bank of America (BAC) indicate that global equity funds have accumulated inflows of more than $70 billion in recent weeks.
As we know, these entries have to go somewhere and while this is poised to give equities an additional boost, the next pronounced move for the market will depend on what the rest of the Q3 earnings season is. June has us in store. A weakening dollar and moderate spending backed by better-than-expected results might start to nudge some towards soft landing camp, but as with everything, only time will tell and the details will matter. . As this story unfolds, the market awaits more details on China’s pledge yesterday to roll out policies to “restore and expand” consumption as part of a broader effort to stimulate its economy.
Data download
International economy
The Reuters Tankan confidence index for manufacturers in Japan fell to +3 in July from +8 in June, falling for the first time in six months amid growing concern among exporters about slowing external demand.
Passenger car registrations in the European Union rose 17.8% year-on-year to 1 million units in June, marking the 11th consecutive month of increases. All of the largest EU markets experienced solid growth, led by Germany (24.8%), Spain (13.3%), France (11.5%) and Italy ( 9.1%). Meanwhile, battery electric car registrations in the EU jumped 66.2% to 158,300 units in May, accounting for 15.1% of the market.
The consumer price inflation rate in the euro zone was confirmed at 5.5% year-on-year in June, the lowest level since January 2022, mainly due to a drop in energy prices. However, the base rate, which excludes volatile items such as food and energy, rose to 5.5% from the preliminary estimate of 5.4%, remaining close to a recent high of 5.7%. Such an impression supports the view that ECB policymakers should continue to raise rates in the coming months.
UK consumer price inflation fell to 7.9% year-on-year in June, marking the lowest level since March 2022 and slightly below the market consensus of 8.2%. Similar to what we saw in the Eurozone data above, the main driver of the decline was falling fuel prices. While the core inflation rate, which excludes volatile items such as energy and food, fell to 6.9% from May’s 31-year high of 7.1%, the distance from the Bank of England’s 2% target supports the idea of further rate hikes to come.
Domestical economy
We have the usual Wednesday data fare which includes the latest MBA Mortgage Demand Index update and Crude Oil Inventory data.
We also have housing starts and building permits data for June at 8:30 a.m. ET. After May’s strong report, which showed 1.631 million housing starts, market consensus is for a drop to 1.48 million in June. We expect this report to come under scrutiny given what it may mean for Q2 2023 GDP expectations, but we caution readers that strong housing starts numbers don’t always translate to sales of new homes.
Markets
Stocks were boosted by Bank earnings as Financials gained 1.13% and was matched only by Technology (1.13%), followed by Energy (0.84%) . Laggards included consumer staples (-0.11%), utilities (-0.77%) and real estate (-0.83%). This happened across major indices, with the S&P 500 up 0.71%, the Nasdaq Composite up 0.76% while the Dow Jones rose 1.06% and the broad bullish trend boosted the Russell 2000 by 1.27%. Shares of Charles Schwab rose 12.57% after the company reported earnings above analysts’ estimates, even though earnings were lower than the same period in 2022.
Here’s how the major market indicators stack up since the start of the year:
- Dow Jones Industrial Average: 5.44%
- S&P 500: 18.63%
- Nasdaq compound: 37.14%
- Russell 2000: 12.20%
- Bitcoin (BTC-USD): 79.75%
- Ether (ETH-USD): 58.19%
Stocks to Watch
Before US stock markets begin trading today, Ally Financial (ALLY), ASML (ASML), Elevance Health (ELV), First Horizon (FHN), Halliburton (HAL), Goldman Sachs, And Northern Trust (NTRS) are among the companies that must publish their quarterly results.
Shares of Carvana (CVNA) fell last night after the used-car sales company said it would release its second-quarter results before today’s market open instead of its previously shared August 3 date.
Results for the quarter from June to JB Hunt (JBHT) was weaker than expected, due to lower intermodal volume which caused segment revenue to decline 19% year-over-year. Operating profit decreased year over year primarily due to lower revenues across all business segments, primarily due to a combination of lower customer volumes and rates.
Interactive Broker (IBKR) announced June quarter results below consensus expectations. Despite the revenue gain of more than 52% year-over-year, June quarter revenue of $1.00 billion beat the consensus of $1.06 billion. According to the company, client trading volume was mixed across product types, with options contract volume up 9%, while futures and stock volumes were down 3% and 28%, respectively.
Qualcomm (QCOM) announced on Tuesday that it is partnering with Meta platforms (META) to bring large language models to run on smartphones and PCs, starting next year. Meta and Microsoft (MSFT) also announced support for the Llama family of large language models on Azure and Windows.
shareholders of both Extra Space Storage (EXR) And Lifetime Storage (LSI) approved the planned merger of the two self-storage REITs.
The UK Competition and Markets Authority has been provisionally cleared Broadcom (AVGO) $69 billion deal to buy VMware (VMW).
IPOs
Oddity Tech (ODD), Fitell Corp. (FTEL) and SRM Entertainment (SRM) are expected to price their IPOs in the coming days. 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
Alcoa (AA), Crown Castle (CCI), Discover Financial Services (DFS), IBM (IBM), Las Vegas Sands (LVS), Netflix (NFLX), Steel Dynamics (STLD), Tesla (TSLA) and United Airlines (UAL) are expected to report quarterly results after the stock halt. Those interested in learning more about upcoming quarterly earnings reports should head to the Nasdaq Earnings Calendar.
on the horizon
Thursday July 20
- Germany: producer price index – June
- Euro zone: Consumer confidence – July
- United States: Initial and Continuing Weekly Unemployment Claims
- United States: Philadelphia Fed Index – July
- United States: Sales of existing homes – June
- WE; Leading indicators – June
- United States: EIA Weekly Natural Gas Inventories
friday july 21
- Japan: Consumer Price Index – June
- United Kingdom: Retail sales – June
Thought of the day
“Failure is nothing more than the chance to revive your strategy” ~ Anonymous
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.