More corporate earnings released, copper surges on Chinese optimism

The S&P 500 fell to start August, as investors navigated a raft of corporate earnings reports and assessed a fresh batch of economic data.

The broad-based index lost 0.27 per cent to finish at 4,576.73, while the Nasdaq Composite dropped 0.43 per cent to end at 14,283.91. The Dow Jones Industrial Average added 71.15 points, or 0.2 per cent, to settle at 35,630.68. Earlier in the session, the Dow touched its highest level since February 2022.

Pharmaceutical giant Merck pulled back 1.3 per cent even after reporting a smaller-than-expected loss and revenue that exceeded expectations, thanks to strong Keytruda sales. Caterpillar posted strong results, boosting shares 8.9 per cent.

Pfizer fell 1.2 per cent after posting mixed results due to plummeting Covid product sales, while Uber slid about 5.7 per cent on mixed earnings. Elsewhere, JetBlue tumbled 8.3 per cent after slashing guidance due to slowing domestic travel.

This week marks the busiest stretch of second-quarter results with more than 160 S&P 500 constituents slated to report. More than half of the companies in the broad market index have already reported, with 82 per cent topping earnings expectations, according to FactSet. This has fueled some hopes that the economy will be able to avoid a recession as inflation shows signs of cooling.

Despite the performance so far, analysts are bracing for a 7.1 per cent earnings decline from a year ago, according to FactSet, and a third consecutive quarter of falling profits.

Wall Street also assessed a fresh batch of critical economic indicators offering more insight into the state of the economy. That included job openings data that came in slightly below expectations and manufacturing data that showed a continued contraction.

In commodity-related news, we have a lot to talk about.

Fortescue Metals billionaire, Twiggy Forrest has threatened to withdraw investment from the UK due to British PM Rishi Sunak's embrace of oil and gas, criticising it as "clickbait leadership."

Global gold demand, excluding OTC trading, fell by 2 per cent year on year to 920.7 metric tons in Q2/2023, mainly due to a slowdown in central bank purchases and soft consumption in the technology sector, as reported by the World Gold Council.

Copper is on track for its largest monthly gain since January as optimism grows over Chinese demand, fueled by promises from Beijing's leadership to support the real estate sector and reduce local-government debt burden, potentially increasing the need for commodities in the leading metals consumer; however, further copper gains depend on the successful implementation of China's stimulus commitments and actual demand improvement.

On the China front, Chinese metals and mining investments overseas are set to reach a record high this year, with first-half investments and contracts in the sector surpassing $10 billion, signalling China's determination to secure resources and maintain its position as the leading producer of electric vehicles, batteries, solar panels, and wind turbines amid growing demand driven by climate change initiatives.

Finally, oil major Exxon Mobil is in talks with Tesla, Ford Motor, Volkswagen and other automakers to supply lithium for electric vehicle batteries, Bloomberg Law reported on Monday, citing people familiar with the matter.

The talks also include the likes of Samsung and SK On Co, the report added.

Turning to US sectors, all closed lower except for Industrials, which was the best performer, and Technology. Utilities was the worst performer.

Futures

The SPI futures are pointing to a 0.5 per cent fall.

Currency

One Australian dollar at 7:20 AM was buying 66.17 US cents.

Commodities

Gold lost 1.51 per cent. Silver dropped 2.59 per cent. Copper fell 2.48 per cent. Oil shed 0.53 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.43 per cent, Frankfurt lost 1.26 per cent, and Paris closed 1.22 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei added 0.92 per cent, Hong Kong’s Hang Seng fell 0.34 per cent while China’s Shanghai Composite closed flat.

The Australian sharemarket closed 0.54 per cent higher at 7451.

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

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.
Copyright 2023 – Finance News Network