U.S. equities pushed higher in late trading boosted by a surge in Tesla shares after better-than-expected earnings, offsetting softer economic data.
The S&P500 rose +0.99% boosted by technology +1.41% and consumer discretionary +2.25% while energy lagged -1.69% as oil prices declined following a resumption of gas to Europe through the Nord Stream 1 pipeline. The Dow Jones also rose +0.51% as did the Nasdaq Composite +1.36% and Russell 2000 +0.48% with the VIX -3.22% lower at 23.11. Shares in Tesla climbed +9.57% following better-than-expected earnings reported after the market close on Wednesday, while AT&T tumbled -7.79% after saying some subscribers were delaying bill payments while shares in Snap declined -21% in after-hours trading after reporting revenue that missed estimates, citing a slowdown in the ad industry.
In economic data, U.S. initial jobless claims showed the labour market is softening, rising by +251k compared to estimates of +240k for the week ending July 16th while continuing claims for the week ending July 9th rose to +1.384m vs +1.340m expected. Elsewhere the Philadelphia Fed Business Outlook survey declined -12.3 over the month vs estimates of a +0.8 increase while the Conference Board’s leading index declined -0.8 in June, more than the -0.5 forecast adding weight to a softer outlook for growth and concerns of a recession.
European stocks were mixed after the ECB raised rates by +0.5%, the first increase in 11 years as it attempts to confront historically high inflation. Meanwhile, traders are pricing in another hike of as much as +0.6% in September after ECB President Christine Lagarde said prior guidance on the September rate move no longer applied. The ECB also unveiled a new tool to curb fragmentation across the region as it raises interest rates, with a new bond-buying tool that is expected to be unlimited to prevent disorderly market dynamics. The Euro Stoxx 600 rose +0.44% along with the CAC +0.27% and FTSE1100 +0.09% while the DAX retreated -0.27% along with equities in Spain and Italy. The Euro rose +0.46% to 1.0227 along with the Pound +0.18% to 1.1995 with 10-year government bond yields mixed, notably rising +14.6 basis points in Italy amid the latest political drama that suggests investors remain cautious about the prospects of the anti-fragmentation tool.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
The ASX looks set to open modestly higher with ASX200 futures up +11 points or +0.17% to 6,668. The index climbed in late trading to finish +0.52% higher on Thursday boosted by financials +0.97% and health care +1.62% while energy lagged -2.83%. Lithium miners were notable performers following Tesla’s earnings with NVX rising +11.7% along with LTR +11.2%, CXO +6.50%, LKE +6.43% and PLS +3.2%. Telix Pharmaceuticals was also a notable performer gaining +20% after posting $22.5m in global sales for its Illucix cancer imaging and diagnosis product. Shares in Link Holdings also rose +12.6% after its board recommended a revised takeover from Dye & Durham of $4.81 per share. The Australian dollar is +0.68% higher overnight at 0.6935 while the 10-year government bond yield rose +2.6 basis points to 3.571% on Thursday.
Oil prices were lower overnight as gas deliveries from Russia to Germany through Nord Stream 1 resumed at around 40% capacity, the same level as before the 10-days of maintenance. Both WTI and Brent crude were -3.29% and -2.55% lower at US$96.58 and US$104.16 a barrel. Iron ore futures in Singapore finished -1.55% lower on Thursday although have reversed most of those losses trading +1.07% higher this morning at US$99. Gold rose +1.31% to US$1,718 an oz, along with silver +0.96% to US$18.86 while Bitcoin as -0.58% lower at US$23,123.
Economic data:
- Australian PMI (MoM Jul) 09:00
- U.K. Retail Sales (YoY Jun) 16:00
- Eurozone PMI (MoM Jul) 18:00
- U.K. PMI (MoM Jul) 18:30
- U.S. PMI (MoM Jul) 23:45
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
