US Futures Up on Earnings; Asia Stocks Dip Pre-Fed

27/07/2022 US equity futures rallied this morning after resilient earnings from Google parent Alphabet Inc. and an upbeat outlook from Microsoft Corp. helped alleviate some of the wider caution in markets. Contracts on the tech-heavy Nasdaq 100 added over 1%, while S&P 500 futures were up more than 0.5%. Microsoft jumped in extended trading on a strong sales forecast, while Alphabet’s revenues assuaged investors’ worst fears. Still, the mood remains edgy ahead of a much-anticipated Federal Reserve interest-rate increase, part of a global wave of monetary tightening to quell inflation that’s stoking concerns about a worldwide economic slowdown.

Asian shares are lower tracking the lower close in the U.S. Australia’s bond yields and currency declined on lower than expected inflation. The ASX 200 is up 0.36%.

Locally, the JSE closed firmer, while its global peers were mixed as investors assessed the latest US corporate earnings and wait for this week’s pivotal Federal Reserve meeting. The latest batch of corporate results has given fresh evidence of how companies continue to struggle with global economic challenges. The JSE All Share closed up 0.99 % and the Top 40 up 0.95%. SHP led the gainers up 4.71% after trading update that RMBMS says showed trends ahead of it’s estimates. FY group sales + 12% vs est + 9.4%, PT R 280. We should see a mixed start as Asia is lower, Tencent is down 1.76% but the US Futures are positive and IG Top 40 is up 73 points.

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European markets are set to open in mixed territory as investors look ahead to the latest monetary policy decision from the U.S. Federal Reserve. Like many central banks around the world, the Fed is acting aggressively to rein in inflation against a backdrop of slowing economic activity. Concerns for the global economy deepened on Tuesday after the International Monetary Fund cut its global growth projections for 2022 and 2023, dubbing the world’s economic outlook “gloomy and more uncertain.” The IMF now expects the global economy to grow 3.2% this year, before slowing further to a 2.9% GDP rate in 2023. The revisions mark a downgrade of 0.4 and 0.7 percentage points, respectively, from its April projections. It’s a busy day for earnings in Europe with Credit Suisse and Deutsche Bank reporting as well as Daimler, Danone, Carrefour and Airbus. Data releases today include GfK consumer sentiment for August, French consumer confidence for July and the Russian employment rate for June.

Overnight U.S. stocks fell after Walmart cut its earnings forecast, sending other retail shares lower and adding to concern that consumer spending might not be strong enough to keep the U.S. out of a recession. The Dow fell 228.50 points, the S&P 500 retreated by 1.15% and the Nasdaq declined about 1.87%. All of the major averages were still on pace for their best month of 2022.

In Asia, Real estate stocks in Hong Kong dragged the market lower as Asia-Pacific trades mixed. Australia’s inflation rose and investors looked forward to the Fed’s policy decision. Property firm Country Garden’s stock plunged around 14% Wednesday after it said it would raise 2.8 billion Hong Kong dollars ($360 million) by selling 870 million new shares. The shares were priced at 3.25 Hong Kong dollars, around a 12.63% discount to yesterdays close. The Hang Seng Mainland Properties index was 5.55% lower. The Hang Seng index fell 1.51%, and the Hang Seng Tech index slipped 1.65%. Heavyweight Alibaba dropped 3.83% after popping Tuesday after it announced plans for a dual primary listing in Hong Kong. The Nikkei is up 0.22% and the ASX 200 + 0.23% after the inflation report. Aussie metals and miners are down 1.23%.

Oil prices are tad higher with Brent up 0.48% and WTI up 0.83% this after data showed a larger-than-expected drawdown in U.S. crude stockpiles. After settlement on Tuesday, industry group the American Petroleum Institute said crude stocks in the United States fell by 4 million barrels last week. That is four times the 1 million barrel decline expected by analysts in a Reuters poll. Gasoline inventories fell by 1.1 million barrels compared with expectations of a build of 3.5 million barrels, the API data showed.

Precious Metals are mixed ahead of the Fed minutes, Gold trades up 0.13% at $ 1719, Platinum is flat at $ 876 and Palladium trades down 0.59% at $ 2003.

What’s left of the week :

  • Fed policy decision, briefing, today
  • US GDP, Thursday
  • Euro-area CPI, Friday
  • US consumer income, University of Michigan consumer sentiment, Friday
  • Some of the main moves in markets: