Daily Markets: Big Banks Kick off Earnings Season

Today’s Big Picture

Asia-Pacific equity markets finished the day higher on the continuously improving US inflation story. Japan’s Nikkei saw some minor profit taking closing down 0.09%, and China’s Shanghai Composite ended the day close to flat, eking out a 0.04% gain. Hong Kong’s Hang Seng gained 0.33%, India’s SENSEX rose 0.77%, Australia’s ASX All Ordinaries advanced 0.83%, and Taiwan’s TAIEX added 1.30%. South Korea’s KOSPI closed 1.43% higher in a mixed day led by Finance, and Energy Minerals names.

European markets are mixed in midday trading and U.S. futures point to a mixed market open later this morning as shares of PDD Holdings (PDD) and JD.com (JD) are seeing some pre-market selling, putting pressure on Nasdaq-100 futures ahead of the open. Influencing the market open and today’s trading will be what investors learn from Big Bank earnings, including those from JPMorgan (JPM) and Citigroup (C), out this morning about the economy and the consumer. With Nokia (NOK) and Telus (TU) both revising expectations for 2H 2023 lower, which are also weighing on equity futures, we would remind readers to be on watch for earnings pre-announcements in the coming days.

Data Download

International Economy

May Industrial Production in Japan had a slight downside surprise on a MoM basis, coming in at -2.20% as compared to the -1.60% consensus estimate which contributed to a 4.2% figure for the May YoY period.

Germany's wholesale prices fell for the third consecutive month, dropping 2.9% YoY in June, , marking the steepest decline since June 2020.

Domestic Economy

At 8:30 AM ET, we’ll get another perspective on inflation courtesy of the June Import-Export Pricing data. Then at 10 AM ET, the preliminary July reading for the University of Michigan Consumer Sentiment Index will be released, and it is expected to rise to 65.5 from June’s final figure of 64.4.

Markets

Yesterday’s PPI release told a similar story to Wednesday’s CPI update, that inflation is starting to moderate. That, coupled with the news that one of the more hawkish Fed governors, Saint Louis’ James Bullard will be stepping down from his post in August to become the dean of the school of business at Purdue University, put a bounce in trader’s steps. They shifted to a more risk-off approach as Communication Services (1.47%) and Technology (1.30%) were bid up followed by Consumer Discretionary (0.94%). This was reflected in the broad indexes as the tech-heavy Nasdaq Composite (1.58%) posted the largest gain of the major indexes, followed by the Russell 2000 (0.91%), the S&P 500 (0.85%) and finally, the Dow, closing 0.14% higher. In individual names, PepsiCo (PEP) gained 2.38% after posting a strong quarter, beating revenue and EPS estimates, and raising its outlook for 2023.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 3.76%
• S&P 500: 17.46%
• Nasdaq Composite: 35.08%
• Russell 2000: 10.77%
• Bitcoin (BTC-USD): 89.41%
• Ether (ETH-USD): 67.13%

Stocks to Watch

Before U.S. equity markets begin trading today, BlackRock (BLK), Citigroup, Ericsson (ERIC), JPMorgan Chase, United Health (UNH), and Wells Fargo (WFC) are expected to report their quarterly results.

The UK’s Competition and Markets Authority extended its review for Microsoft’s (MSFT) pending acquistion of Activision (ATVI) by six weeks with the revised period ending as late as August 29. Reports indicate Microsoft and Activision are evaluating selling some of their cloud-gaming rights in the UK in order to appease the antitrust regulator that opposes the deal.

Nokia cut its 2023 sales forecast to EUR23.2 - 24.6 billion from EUR24.6 - 26.2 billion and the EUR25.0 billion consensus amid weak demand for 2H 2023 given the macro-economic environment and customers continuing to digest inventory. The company shared customer spending plans are increasingly impacted by high inflation and rising interest rates along with some projects now slipping to 2024, notably in North America.

Digital solutions company Telus (TU) lowered its 2023 operating revenue growth forecast to +9.5%-11.5% from +11.%0-14.0% citing unprecedented global macroeconomic pressures as clients aggressively address their cost structure.

Shares of Acadia Pharmaceuticals (ACAD) rose 19% after the company revealed it had obtained expanded commercial rights to the Rett syndrome medicine trofinetide, which it sells under the brand name Daybue in the United States.

Intuitive Machines shared (LUNR) climbed more than 20% after the company completed a full spacecraft test of its Nova-C lunar lander.

Reports suggest Foxconn Technology (FXCOF) is in discussions with Taiwan Semiconductor (TSM) and Japan's TMH Group for a joint venture and technology collaboration to start semiconductor fab units in India.

The Anderson Economic Group estimates a threatened strike at United Parcel Service (UPS) could be "one of the costliest in at least a century," topping $7 billion for a 10-day work stoppage. The think tank factored into its thinking that ~340,000 union-represented UPS workers handle about a quarter of U.S. parcel deliveries and serve virtually every city and town in the nation.

IPOs

Near-term the calendar for such activity looks rather thin. Readers looking to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

We’ve made it to the end of the trading week, and there are no companies slated to report their quarterly results after equities stop trading. As we get ready to move deeper into the current earning season, readers should be watching for earnings pre-announcements, both positive and negative. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Monday, July 17

• US: Empire State Manufacturing Index – July

Tuesday, July 18

• US: Retail Sales – June
• US: Industrial Production & Capacity Utilization -June
• US: Business Inventories – May
• US: NAHB Housing Market Index – July

Wednesday, July 18

• UK: Car Registrations, Consumer Price Index, Producer Price Index – June
• Italy, France, Germany: Car Registrations – June
• Eurozone: Consumer Price Index - June
• US: Weekly MBA Mortgage Applications
• US: Housing Starts & Building Permits – June
• US: Weekly EIA Crude Oil Inventories

Thursday, July 20

• Germany: Producer Price Index – June
• Eurozone: Consumer Confidence - July
• US: Weekly Initial & Continuing Jobless Claims
• US: Philadelphia Fed Index – July
• US: Existing Home Sales – June
• US; Leading Indicators – June
• US: Weekly EIA Natural Gas Inventories

Friday, July 21

• Japan: Consumer Price Index – June
• UK: Retail Sales - June

Thought for the Day

“During inflation, Goodwill is the gift that keeps on giving.” ~ Warren Buffett

Disclosures

• Ericsson (ERIC), Nokia (NOK) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
• PepsiCo (PEP) is a constituent of the Tematica BITA Big Spenders & Savers Index
• Microsoft (MSFT) is a constituent of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks Economy Earnings Central Banks