Tech stocks pull back ahead of key earnings releases

The Nasdaq was the worst performing index as investors prepared for quarterly results from the big tech names.

The Nasdaq pulled back 1.28 per cent for the day and the S&P 500 lost 0.5 per cent. The Dow Jones bucked the trend to finish 0.5 per cent higher. The small cap Russell 2000 continued its upward trajectory adding 0.35 per cent on the day.

Microsoft shares were trading more than 7 per cent lower in aftermarket trading following the release of its second quarter earnings after the close. Investors looked past better-than-expected earnings and revenue and focused instead on disappointing cloud results. Microsoft’s revenue increased 15 per cent year on year. The company’s top segment, Intelligent Cloud, generated $28.52 billion in revenue. The number was up about 19 per cent but below consensus expectations.

Meta, Amazon and Apple are all due to report earnings later this week.

In other company news, CrowdStrike shares fell 9.7 per cent on reports that Delta Air Lines has hired attorneys to seek damages from the cybersecurity company and Microsoft after an outage this month led to thousands of flight cancellations. Shares of CrowdStrike are down nearly 40 per cent in July.

Merck shares dropped 9.8 per cent as investors ignored a better than expected second quarter result and focused on the disappointing full year guidance. Procter & Gamble lost 4.8 per cent after its quarterly revenue came in below consensus expectations due to disappointing demand numbers in China.

The Fed’s two-day policy meeting began on Tuesday with markets looking for any signals from the Fed Chairman Jerome Powell that a rate cut in September is a done deal. Traders have priced in a 100 per cent chance for a September rate cut, according to the CME FedWatch Tool.

In commodities news, U.S. oil and gas patch deals continued to run hot in the second quarter, topping $30 billion with big dollar tie-ups pushing values higher, according to data released on Tuesday by energy researcher Enverus. Blockbuster mergers, such as ConocoPhillips' $22.5 billion offer for Marathon Oil, remain a mainstay even as U.S. lawmakers call on regulators to "pump the brakes" on merger approvals.

Saudi Arabia's Mining Minister stated that Manara Minerals is looking at opportunities to invest in lithium production in Chile. He also added that Saudi Arabia is interested in quickly securing lithium supply as it aims to produce EV batteries. Saudi Arabia has been working to secure access to lithium and other minerals in order to diversify its oil-dependent economy.

Turning to US sectors, Technology was the worst performer closing down 2.2 per cent. The best performing sector was Energy which finished the day up 1.54 per cent.

In domestic news, all eyes will be on the June CPI and June retail sales. Both numbers are due out at 11.30am AEST. Consensus expectations are looking for CPI Q2 trimmed mean inflation of 1.0 per cent q/q and 4.0 per cent y/y. As June retail sales, expectations are looking for a 0.3 per cent rise, after last month’s 0.6 per cent increase.

Futures

The SPI futures are pointing to a 0.4 per cent gain.

Currency

One Australian dollar at 7.35am was buying 65.38 US cents.

Commodities

Gold has added 1.1 per cent. Silver has gained 2.36 per cent. Copper has lost 0.01 per cent. Oil has fallen 1.42 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE lost 0.22 per cent, Frankfurt gained 0.49 per cent, and Paris closed 0.42 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 0.15 per cent, Hong Kong’s Hang Seng lost 1.37 per cent, while China’s Shanghai Composite closed 0.43 per cent lower.

Yesterday, the Australian share market closed 0.46 per cent lower at 7953.18.

Ex-dividends

Metrics Income (ASX:MOT) is paying 1.44 cents unfranked
Metrics Master (ASX:MXT) is paying 1.32 cents unfranked

Dividends payable

Rural Funds Group (ASX:RFF)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.

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