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Tuesday, July 5, 2022

Opening Bell: Earnings Boost Futures, Stocks; Tesla Breaks $1Trillion Milestone

Wall Street earnings beats overshadow inflation worries
Dow and S&P hit new highs, aided by Tesla surge
Chinese markets pressured by additional property sector defaults

Key Events

US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000 advanced on Tuesday along with European stocks after positive earnings results from Wall Street overshadowed persistent inflation worries.

Oil and gold weakened, but continued trading near recent highs even as the dollar strengthened.

Global Financial Affairs

All four major US contracts moved into positive territory this morning, with NASDAQ futures—the face of growth stocks—outperforming. Contracts on the small cap Russell 2000, representing value stocks, were less robust. On Monday during the New York session, the Russell 2000 index provided the best results, illustrating the investor push and pull between value and growth shares continues.

However, yesterday all eyes were on shares of electric vehicle maker Tesla (NASDAQ:TSLA) during Wall Street trade. The stock vaulted higher, gaining almost 13% on the day after rental car company Hertz (OTC:HTZZ) announced it planned to order 100,000 Tesla vehicles by the end of 2022 for its fleet. The surge pushed the market cap of the Palo Alto-based company founded by Elon Musk past the $1trillion milestone.

Facebook (NASDAQ:FB) shares rebounded late in the session and moved higher in pre-market trade after the company reported solid user growth and a buyback promise of up to $50 billion more in stock.

Yesterday’s activity pushed the S&P 500 and Dow to new all-time highs.

On Tuesday, the STOXX Europe 600 Index climbed for a third straight day, the eighth out of 10, with personal drug and grocery shares boosting the index after Reckitt Benckiser Group (LON:RKT), maker of Strepsils and Lysol among other consumer staples, reported higher than expected third-quarter sales and raised its full year forecast. Shares rose over 5%.

Swiss UBS Group (SIX:UBSG) gained after the financial institution posted an upside profit surprise.

Earlier this morning, most regional markets in Asia gained, tracking the record-breaking rally on Wall Street. However, markets with a China focus, including the Shanghai Composite and Hong Kong’s Hang Seng slumped, pressured by the bond default of another Chinese property developer, Modern Land China (HK:1107) as investor fears continue to escalate about the much larger Evergrande Group (HK:3333)’s ability to settle its own debts.

Yields, including on the 10-year Treasury note, declined for a third straight day as investors remain confused about the inflation outlook.

Opening Bell: Earnings Boost Futures, Stocks; Tesla Breaks Trillion MilestoneUST 10Y Daily

Rates have now fallen to the bottom of a rising channel.

The dollar rose for a second day but found resistance at what could become a bearish rising flag.

Opening Bell: Earnings Boost Futures, Stocks; Tesla Breaks Trillion MilestoneDollar Daily

Should the pattern fully develop for the greenback, it would mark the end of a return-move to a small double-top.

Gold dipped on dollar strength, and perhaps as it meets resistance.

Opening Bell: Earnings Boost Futures, Stocks; Tesla Breaks Trillion MilestoneGold Weekly

Gold has been unable to move decisively past the $1,800 levels for a third week, finding resistance where it meets the neckline of an upsloping weekly H&S continuation pattern.

Bitcoin has been flat after closing yesterday under $63,000.

Opening Bell: Earnings Boost Futures, Stocks; Tesla Breaks Trillion MilestoneBTC/USD Daily

The digital token may have found resistance as it potentially forms the right shoulder of a small H&S top, after having fallen out of its rising channel. Note the high volume on the way down from the head and the low volume around the formation of the right shoulder.

Crude oil slumped towards $83 as traders considered upcoming inventories as well as talks to reintroduce Iranian crude into the market.

Up Ahead

Australia releases CPI figures on Wednesday
U.S. Wholesale Inventories and Durable Goods Orders print on Wednesday
Bank of Japan announces its monetary policy decision on Thursday
The ECB releases its interest rate decision on Thursday as well, and President Christine Lagarde holds a press conference
US GDP figures are also posted on Thursday

Market Moves

Stocks

The Stoxx Europe 600 rose 0.2%
Futures on the S&P 500 rose 0.3%
Futures on the Nasdaq 100 rose 0.5%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index rose 0.3%
The MSCI Emerging Markets Index was little changed

Currencies

The Dollar Index rose 0.1%
The euro was little changed at $1.1597
The Japanese yen fell 0.3% to 114.02 per dollar
The offshore yuan was little changed at 6.3820 per dollar
The British pound was little changed at $1.3765

Bonds

The yield on 10-year Treasuries was little changed at 1.64%
Germany’s 10-year yield was little changed at -0.11%
Britain’s 10-year yield was little changed at 1.14%

Commodities

Brent crude was little changed
Spot gold fell 0.3% to $1,802.35 an ounce

Source: Investing.com

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