Dow futures +0.05% at 34540
S&P futures +0.06% at 4560
Nasdaq futures +0.25% at 15880
FTSE +1.6% at 7580
Dax -0.20% at 16100
- US recession fears ease
- Tesla & Netflix report after the close
- GBPUSD plunges as UK CPI cools
- Oil edges higher ahead of stockpile data
Earnings in focus and recession fears ease
US stocks are set for a modestly higher start as investors digest the latest round of earnings and look ahead to quarterly results from big names such as Tesla and Netflix after the close.
According to FactSet, so far of the 38 companies from the S&P 500 that have reported more than 80% have posted results that are above earning expectations. This news coupled with last week's slower than expected inflation data could help bolster the case that US economy is able to avoid a hard landing, despite the steepest interest rate hiking cycle by the Federal Reserve in decades.
Investment banks have been dialing back their expectations for a mild recession this year thanks mainly to the resilience of EU S consumer. At the end of the day the jobs market is still relatively solid, people are working, being paid and spending.
On the economic calendar U.S. housing data shows that building permits declined to a seasonally adjusted rate of 1.44 million which equates to a 3.7% fall. Housing starts were also weaker, dropping by 8%.
Goldman Sachs falls after disappointing quarterly results, which saw a $504 million write-down associated to its Green Sky business. The investment banking business also saw lower deal-making volumes.
Tesla will report after the close. The EV maker reported record deliveries of 466,000 in Q2 amid strong demand after a series of price cuts and thanks to other incentives. The big question is how will this impact margins? Gross margins are expected to fall.
Netflix will also release earnings after the close as the share price trades around a 17-month high after rallying 48% across the year so far. Confidence in profitability is improving amid the password crackdown and new ad supported tier. Subscriber numbers are set to rise 1.8 million.
Nasdaq100 forecast – technical analysis
After finding support on the 20 sma around 15000 last week, the price rebounded higher, hitting a high of 16898 yesterday. The RSI is deep in overbought territory so buyers should be cautious. Immediate resistance casn ve seen at 16020 the January 12 high, ahead of 16660, the December 2021 higj. On the downside support sits at 15700 the September 2021 high and 15285 the June high. A break below here could negate the near term run higher.
FX markets – USD rises, GBP drops
The USD is edging higher for a second straight day, picking up from a 15 month low. The greenback was supported by US retail sales data yesterday which say the resilient consumer.
EURUSD is falling despite eurozone core inflation being upwardly revised to 5.5% YoY in June, this was up from 5.3% in May and ahead of the 5.4% initially forecast. The ECB is expected to raise interest rates by 25 basis points next week. However, ECB policy maker Klass Knot said that another rate hike after July was uncertain.
GBPUSD has fallen sharply after UK inflation cooled by more than expected. CPI is to 7.9%YoY in June, down from 8.7% in May. Core inflation also eased by more than expected to 6.9% from 7.1%. The data has seen the market rein in expectations for A50 basis point rate hike in August and lower the peak rate expectation to 6%.
EUR/USD -0.1% at 1.1216
GBP/USD -1% at 1.29
Oil holds steady ahead of stockpile data
Oil prices are edging higher after strong gains yesterday as the market cheers China’s pledge to bring stimulus to support the slowing economy and an optimism that the US Federal Reserve will soon stop hiking interest rates.
Yesterday China's top economic planner said it was looking to roll out policies to restore consumption, me which would support the Chinese economy an improve the oil demand outlook.
Meanwhile hopes are growing that central banks could be close to the end of their hiking cycle. The market is just pricing in one more rate hike from the Fed this year and ECB governing council member Klaas Knot said that rate hikes beyond July were by no means certain.
On the supply side, the API oil inventories showed a draw of 800k barrels, although this was less than the 2.3 million expected.
EIA stockpile data is due shortly.
WTI crude trades +0.4%t $75.85
Brent trades +0.25% at $79.90
15:50 US EIA crude oil inventories