Markets drift sideways ahead of key earnings releases & policy news

Investors remained cautious as markets hovered near flat ahead of some key big tech earnings numbers due later this week and the Fed policy statement due out on Wednesday US time.

The S&P 500 managed to stay in the green adding 0.08 per cent and the Nasdaq eked out a 0.07 per cent gain. The Dow Jones was the only one of the three key indices to finish in the red closing down 0.12 per cent on the day.

In company news, On Semiconductor popped 11.5 per cent after reporting better-than-expected earnings and revenue, making the stock Monday’s best performer in the S&P 500. Tesla surged more than 5 per cent on news that Investment Bank, Morgan Stanley, named the EV & AI giant its top pick in the auto sector citing the Company’s efforts to cut costs and manage risk. The bank also noted that Tesla is aggressively redeploying resources, technology, people and capital away from its auto business to other areas of the company.

Market focus will now shift to the upcoming earnings announcements due over the remainder of the week as Microsoft, Meta Platforms, Apple and Amazon are all set to report their quarterly results in the coming days.

On the policy front, the Federal Reserve is set to release its policy statement on Wednesday US time. The Fed is not expected to cut its benchmark interest rate, however, the market will be looking for any commentary that points to a September rate cut.

In commodities news, the International Energy Agency (IEA) stated that global consumption of coal is expected to remain largely stable through 2025 as surging electricity demand in key economies will likely offset the rapid expansion of renewables such as solar and wind. The global coal demand reached a new all-time high of 8.70B tonnes in 2023, led by strong growth in China and India. The IEA stated that the main driver was the use of coal to fill the gap created by low hydropower output and rapidly rising electricity demand.

Brent crude prices fell below US$80 a barrel, and shortly afterwards the Biden administration announced it had purchased 4.65 million barrels of crude for the nation’s emergency reserve. The US Energy Department has been slowly replenishing the Strategic Petroleum Reserve, which reached a 40-year-low following an unprecedented drawdown in the wake of Russia’s invasion of Ukraine.

Turning to US sectors, the best performer was Consumer Discretionary which closed up 1.42 per cent. The worst performing sector was Energy, which finished down 0.87 per cent for the day.

In European market news, the pan EU Stoxx 600 index closed 0.18 per cent lower as Phillips shares surged more than 15 per cent at one point after the company reported better-than-expected second-quarter earnings. Heineken shares fell over 9 per cent, after the brewing giant’s first-half profit growth came in weaker than expected.

In the Australian landscape, Rio Tinto (ASX:RIO) is reporting results at 8.30am AEST on Wednesday.

Futures

The SPI futures are pointing to a 0.7 per cent fall.

Currency

One Australian dollar at 7.30am was buying 65.49 US cents.

Commodities

Gold has lost 0.10 per cent. Silver has fallen 0.55 per cent. Copper has dropped 0.96 per cent. Oil has fallen 1.75 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE added 0.08 per cent, Frankfurt lost 0.53 per cent, and Paris closed 0.98 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei gained 2.13 per cent, Hong Kong’s Hang Seng added 1.27 per cent, while China’s Shanghai Composite closed 0.03 per cent higher.

Yesterday, the Australian share market closed 0.86 per cent higher at 7989.64.

Ex-dividends

Gryphon Capital (ASX:GCI) is paying 1.43 cents unfranked
KKR Credit Inc Fund (ASX:KKC) is paying 1.67 cents unfranked
Mirrabooka Invest (ASX:MIR) is paying 9 cents fully franked
360 Capital Mortgage (ASX:TCF) is paying 4.1667 cents unfranked

Dividends payable

Transmetro Corp Ltd (ASX:TCO)
Virgin Money UK PLC (ASX:VUK)

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

Disclaimer

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