Pre-market: Nasdaq futures rise 0.5% as earnings season kicks off
Global stocks turned back into the red on Tuesday after swinging back and forth between gains and losses as traders avoided making big bets ahead of congressional testimony from Federal Reserve Chairman Kevin Warsh, U.S. inflation data and the unofficial start of earnings season. Markets were also rattled by hawkish comments from Federal Reserve Governor Christopher Waller on Monday. Waller said the Fed may need to raise interest rates "in the near term" if data shows inflation continues to be significantly above its 2% target. S&P 500 futures were little changed. Technology stocks get a boost, South Korea's two major memory chip giants rebound, 100 futures rose 0.5%. In the European market, the Stoxx Europe 600 Index fell 0.7%, with the travel and leisure sector leading the decline, and media and consumer stocks also performing weakly. Warning that its core network business profit margins would be under pressure, the stock price fell by 10%. Samsung Electronics is studying the possibility of issuing American depositary receipts, people familiar with the matter said, amid market confidence that artificial intelligence infrastructure construction will continue to drive chip demand. "This suggests that if this trend continues, the Nasdaq could break its recent inverse relationship with oil prices and continue to move higher while energy prices rise," said Kathleen Brooks, director of research at XTB. Market risk events are coming intensively The economic and corporate events of the day were very intensive. The company released its second-quarter earnings before the U.S. stock market opened. The market expects that the U.S. consumer price report for June will show that the impact of falling gasoline prices exceeds the consumption boost brought by the World Cup. After a rapid rise in inflation from March to May, inflation may have eased in June. Warsh will testify before Congress hours after the data is released. Bruno Schneller, managing partner at Erlen Capital Management in Zurich, said: "The market is at an important turning point on Tuesday, as investors need to weigh three competing forces: renewed geopolitical tensions in the Middle East, the start of the second-quarter earnings season, and the release of U.S. inflation data in June." "These events will likely determine whether the recent rally extends further or turns to a more selective structural move," he added. What really matters is the US CPI Richard Flax, chief investment officer at Moneyfarm, said: "Geopolitical factors are marginally negative for the market, but there is no extreme spike in oil prices. I expect Warsh to give a data-driven speech and not go too much into forward guidance. For us, what really matters is the inflation data." Economists predict that the U.S. consumer price index may decline month-on-month for the first time since the outbreak of the epidemic in 2020. These data will help the market judge the policy outlook for the Federal Reserve's July 28-29 meeting. Currently, the market expects that the probability of the Fed raising interest rates by 25 basis points is about 40%. However, if the current rise in oil prices persists, this cooling trend in inflation may soon reverse. The year-on-year growth rate of U.S. CPI is expected to remain significantly higher than the Fed's 2% target. The situation between the United States and Iran escalates, and oil prices rise above US$86 As the U.S.-Iran confrontation over the Strait of Hormuz escalates, U.S. President Trump re-imposed a blockade on Iranian ships passing through the waterway and demanded that all other cargo pay 20% compensation. At the same time, the US military also completed a new round of strikes against Iran. Alpesh Patel, managing partner at RootBridge Capital, said: "We already know that even if oil prices are well above current levels, the market will still be able to bear it and U.S. stocks will likely continue to rise. There is only one thing that really matters, and that is whether there is a signal that interest rates are about to rise." Brent crude oil rose above $86 a barrel, hitting its highest level in a month, as the confrontation between the United States and Iran over the status of the Strait of Hormuz intensified. Rising oil prices have kept markets betting that the Federal Reserve may raise interest rates in July. Analysts at the group said: "The re-implementation of the blockade by the United States will have a far greater impact on the market than the previous suspension of Iranian oil sanctions exemptions. This memorandum of understanding seems to be completely in name only." Bond markets slide, dollar lower
U.S. Treasuries are in volatile territory. The interest rate-sensitive 2-year U.S. Treasury bond yield was last at 4.29%, the highest level since February, rising 2 basis points on the day. The yield on the 10-year U.S. Treasury note rose 2 basis points to 4.63%. Euro zone government bond yields rose in early trade. UK two-year government bond yields rose to their highest level since May. The German 10-year government bond yield once hit 3.114%, an eight-week high, rising by about 4 basis points during the day. The dollar fell. The U.S. dollar index, which measures the dollar's performance against six major currencies, fell 0.1% to near 101.16, still close to this month's highs. Money markets currently expect the Bank of England and the European Central Bank to each raise interest rates at least once this year, and believe that the probability of another rate increase by December is about 80%. Jefferies economist Mohit Kumar said in a report that the data scheduled to be released at 20:30 Hong Kong time on Tuesday night, as well as Warsh's testimony starting at 22:00, will be the key to affecting monetary policy expectations. He predicted that Warsh would try to project policy credibility and stress that the Fed would respond based on newly released data and inflation risks. Kumar said it was too early for the recent rise in oil prices to be clearly transmitted into the inflation data. Bitcoin rebounds, gold moves higher Bitcoin edged up 0.8% to $62,619. But it remained within a tight range ahead of U.S. inflation data. Nexo analyst Dessislava Ianeva said: "Bitcoin has been stuck in the same trading range since mid-June, with $64,441 above suppressing every rebound and $58,457 below absorbing selling. Even renewed tensions with Iran have not pushed the price to break out on either side." Gold prices rose and a rebound in crude oil further reinforced market concerns about inflation. Gold futures in New York rose 0.5% to $4,024.90 in early trading. Analysts at ING Group said: "Gold remains relatively vulnerable around $4,000. The market is paying close attention to the development of the situation in the Strait of Hormuz and its impact on energy prices, inflation and interest rates." After JPMorgan Chase announced its second-quarter earnings report, its stock price fell slightly before the market opened. Excluding the impact of special items, the bank earned $6.14 per share on total revenue of $58.02 billion. Analysts polled by Refinitiv had expected earnings of $5.85 per share and revenue of $50.19 billion. It should be noted that the bank’s current profit caliber may not be completely comparable to the consensus expectations of the market. Bank of America's latest quarterly results beat market expectations. The company's earnings per share were $1.21, higher than Refinitiv analysts' consensus estimate of $1.13; total revenue of $31.7 billion also beat market expectations of $30.72 billion. However, the stock's stock price was unchanged before the market opened. Wells Fargo reported better-than-expected earnings of $2 per share on revenue of $22.62 billion, but shares still fell 1%. Analysts surveyed by Refinitiv had expected earnings of $1.72 per share and revenue of $21.84 billion. Goldman Sachs released better-than-expected second-quarter earnings, and its stock price rose 1.4% before the market opened. The company's earnings per share were $20.98, significantly higher than Refinitiv's consensus estimate of $14.48; total revenue of $20.34 billion also beat market estimates of $16.13 billion. Shares fell about 1%. Kibang Capital downgraded Apple's rating from industry standard to underweight and gave the company a target price of $250, which represents a 21% downside compared to Monday's closing price. The Wall Street institution believes that rising prices will prompt consumers to cut back on spending, and Apple's stock price may continue to be under pressure. Shares plunged 17% after the company announced preliminary second-quarter earnings that fell short of expectations. Excluding certain items, the company was expected to earn $2.93 per share, while analysts polled by FactSet expected $3.01.
Swedish network communications equipment maker Ericsson's shares fell nearly 10%. Data from the financial data platform StreetAccount showed that the company's revenue was 52.7 billion Swedish kronor, lower than market expectations of 53.94 billion Swedish kronor; the adjusted gross profit margin was 48.4%, which also fell short of the expected value of 47.8%. Masayoshi Son: The AI boom will require an annual investment of US$5 trillion. Masayoshi Son, founder of SoftBank Group, said that by 2040, global artificial intelligence infrastructure will require an annual investment of US$5 trillion to support the expansion of data centers, power supply and humanoid robots, thereby promoting the transformation of a "human-centered" work model to a new model. He noted that as AI develops into "artificial superintelligence" (ASI), the resulting revenue will justify these huge expenditures. “Artificial intelligence will revolutionize our lives – and that change will be profitable,” Son said. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed
U.S. Treasuries are in volatile territory. The interest rate-sensitive 2-year U.S. Treasury bond yield was last at 4.29%, the highest level since February, rising 2 basis points on the day. The yield on the 10-year U.S. Treasury note rose 2 basis points to 4.63%. Euro zone government bond yields rose in early trade. UK two-year government bond yields rose to their highest level since May. The German 10-year government bond yield once hit 3.114%, an eight-week high, rising by about 4 basis points during the day. The dollar fell. The U.S. dollar index, which measures the dollar's performance against six major currencies, fell 0.1% to near 101.16, still close to this month's highs. Money markets currently expect the Bank of England and the European Central Bank to each raise interest rates at least once this year, and believe that the probability of another rate increase by December is about 80%. Jefferies economist Mohit Kumar said in a report that the data scheduled to be released at 20:30 Hong Kong time on Tuesday night, as well as Warsh's testimony starting at 22:00, will be the key to affecting monetary policy expectations. He predicted that Warsh would try to project policy credibility and stress that the Fed would respond based on newly released data and inflation risks. Kumar said it was too early for the recent rise in oil prices to be clearly transmitted into the inflation data. Bitcoin rebounds, gold moves higher Bitcoin edged up 0.8% to $62,619. But it remained within a tight range ahead of U.S. inflation data. Nexo analyst Dessislava Ianeva said: "Bitcoin has been stuck in the same trading range since mid-June, with $64,441 above suppressing every rebound and $58,457 below absorbing selling. Even renewed tensions with Iran have not pushed the price to break out on either side." Gold prices rose and a rebound in crude oil further reinforced market concerns about inflation. Gold futures in New York rose 0.5% to $4,024.90 in early trading. Analysts at ING Group said: "Gold remains relatively vulnerable around $4,000. The market is paying close attention to the development of the situation in the Strait of Hormuz and its impact on energy prices, inflation and interest rates." After JPMorgan Chase announced its second-quarter earnings report, its stock price fell slightly before the market opened. Excluding the impact of special items, the bank earned $6.14 per share on total revenue of $58.02 billion. Analysts polled by Refinitiv had expected earnings of $5.85 per share and revenue of $50.19 billion. It should be noted that the bank’s current profit caliber may not be completely comparable to the consensus expectations of the market. Bank of America's latest quarterly results beat market expectations. The company's earnings per share were $1.21, higher than Refinitiv analysts' consensus estimate of $1.13; total revenue of $31.7 billion also beat market expectations of $30.72 billion. However, the stock's stock price was unchanged before the market opened. Wells Fargo reported better-than-expected earnings of $2 per share on revenue of $22.62 billion, but shares still fell 1%. Analysts surveyed by Refinitiv had expected earnings of $1.72 per share and revenue of $21.84 billion. Goldman Sachs released better-than-expected second-quarter earnings, and its stock price rose 1.4% before the market opened. The company's earnings per share were $20.98, significantly higher than Refinitiv's consensus estimate of $14.48; total revenue of $20.34 billion also beat market estimates of $16.13 billion. Shares fell about 1%. Kibang Capital downgraded Apple's rating from industry standard to underweight and gave the company a target price of $250, which represents a 21% downside compared to Monday's closing price. The Wall Street institution believes that rising prices will prompt consumers to cut back on spending, and Apple's stock price may continue to be under pressure. Shares plunged 17% after the company announced preliminary second-quarter earnings that fell short of expectations. Excluding certain items, the company was expected to earn $2.93 per share, while analysts polled by FactSet expected $3.01.
Swedish network communications equipment maker Ericsson's shares fell nearly 10%. Data from the financial data platform StreetAccount showed that the company's revenue was 52.7 billion Swedish kronor, lower than market expectations of 53.94 billion Swedish kronor; the adjusted gross profit margin was 48.4%, which also fell short of the expected value of 47.8%. Masayoshi Son: The AI boom will require an annual investment of US$5 trillion. Masayoshi Son, founder of SoftBank Group, said that by 2040, global artificial intelligence infrastructure will require an annual investment of US$5 trillion to support the expansion of data centers, power supply and humanoid robots, thereby promoting the transformation of a "human-centered" work model to a new model. He noted that as AI develops into "artificial superintelligence" (ASI), the resulting revenue will justify these huge expenditures. “Artificial intelligence will revolutionize our lives – and that change will be profitable,” Son said. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed