US Futures Rally on Earnings, Fed Outlook but Tencent under pressure

29/07/2022 US markets rally and equity futures follow on positive earnings from Amazon and Apple and expectations of shallower Federal Reserve monetary tightening, a prospect that’s also supporting Treasuries. Nasdaq 100 contracts added more than 1% after the US stock market hit a seven-week high overnight. Amazon jumped over 13% in extended trading, while Apple also advanced, after their revenues beat estimates. The tone was more somber in Asia, hampered by a tumble in Chinese tech shares that dragged Hong Kong toward a correction of more than 10% from a June high. A downbeat economic growth assessment from China’s top leaders and a lack of new stimulus policies contributed to the dour regional mood.

Global shares are on course for a second weekly advance, paring this year’s rout to about 16%. The risk is that the recent bout of optimism eventually gets a reality check if inflation stays stubbornly elevated, leaving interest rates higher than investors would like amid an economic downturn.

Locally, the JSE gave up majority of its earlier gains, closing up 0.27% . Mining stocks led the gainers with GFI and ANG closing up 3.27 and 2.82 percent respectively. The Rand rallied to R 16.50/$ after the U.S GDP number and has strengthened this morning to R 16.45/$.  We in for a mixed start after the U.S posted strong gains but Tencent is down 3.80% putting pressure on the local market. IG Top 40 is up 291 points.

  • SOUTH AFRICA JUNE M3 MONEY SUPPLY RISES 8.33% Y/Y; EST. +7.60%
  • $ *SOUTH AFRICA JUNE PRIVATE CREDIT RISES 7.53% Y/Y; EST. +5.86%
  • Anglo American Raised to Outperform at RBC; PT 3,400 pence

ECONOMIC DATA:

  • 2pm: June Monthly Budget Balance, est. 81b, prior -17.1b
  • 2pm: June Trade Balance Rand, est. 21.2b, prior 28.3b

European markets are set for a cautiously higher open on Friday as investors digest a fresh swathe of corporate earnings and await key economic data out of the euro zone. Investor focus in Europe on Friday will turn to second-quarter initial GDP figures and July harmonized inflation readings out of the euro zone, due at 10 a.m. London time. Corporate earnings continue to drive individual share price movement in Europe. Standard Chartered, Santander, Renault, Air France-KLM, BNP Paribas, AstraZeneca, Engie and Swiss Re were among the major players reporting before the bell today.

U.S futures are higher as Wall Street looks to finish the week higher, fueled by strong quarterly reports from key tech companies. S&P 500 futures climbed 0.63%, while Nasdaq 100 futures added 1.29%. Futures tied to the Dow Jones Industrial Average were flat. Futures were supported by gains in extended trading by two of the market’s biggest stocks. Shares of Amazon and Apple moved higher after showing strong sales growth in cloud computing and iPhones, respectively, in their most recent quarters. The move in futures comes on the heels of a second-straight rally for stocks. The Dow is now up nearly 2% for the week, while the S&P 500 the Nasdaq Composite are up 2.8%. Earnings today include Chevron, Exxon Mobil and Procter & Gamble.

In Asia,  Hong Kong’s Hang Seng index fell around 2% as tech stocks came under pressure. The benchmark index slipped 2.3%, while the Hang Seng Tech index dropped 4.25%. Hang Seng heavyweights Alibaba and Tencent 5.8% and 3.80 % respectively. Alibaba is on track for a third straight session of losses following news earlier this week that several Ant Group executives have stepped down as Alibaba partners. The ASX 200 closed up 0.80% with the Aussie miiners up 0.97%.

Out later today :

  • Euro-area CPI
  • US PCE deflator, personal income, University of Michigan consumer sentiment