The U.S. stock market earnings season kicked off this week, with corporate profits also likely to come under pressure amid growing fears of a recession due to aggressive interest rate hikes by the Federal Reserve. U.S. stocks opened lower on Monday (11th).
Before the deadline,Dow Jones Industrial Averagedown more than 150 points or nearly 0.55%,Nasdaq Composite Indexdown nearly 220 points or nearly 1.9%,S&P 500 Indexfell more than 1%,Philadelphia SemiconductorThe index fell 2.5%.
Price pressures, a wave of monetary tightening and a global slowdown continue to cast a shadow over the market. Outside estimates, the US consumer price index (CPI) to be released this week may be close to 9%, or a 40-year high, paving the way for the Fed to raise interest rates sharply in July. Meanwhile, corporate earnings are on the horizon, revealing recession fears that sent global stock markets plunging by $18 trillion in the first half of the year.
In Asian markets, Chinese stocks suffered their worst day in about a month, as a resurgence of the coronavirus outbreak and new fines by tech giants prompted investors to flee, sending Asian shares down 1%. Separately, Shanghai reported its first local infection of the Omicron BA.5 variant, warning the risk was “very high”, sparking fears of more lockdowns as China remains committed to eradicating the pathogen.
US dollar indexBack near the highest level since 2020,EURThe fall against dollar parity resumed.dollar againstJPYThe exchange rate breached 137.00, the highest since 1998, touching 137.28 at one point, with the Bank of Japan maintaining a dovish stance.
In other news, Britain’s race to replace Boris Johnson as prime minister heats up.GBPThe exchange rate fell.
On the energy front, Russia’s main gas pipeline will be closed on Monday for 10 days of maintenance. Germany and its allies are bracing for Russian President Vladimir Putin to use the opportunity to permanently cut off financial flows in retaliation for Western support for Ukraine.
Elsewhere, oil prices fell in volatile trade on Monday, reversing most of the previous session’s gains, as markets braced for China’s massive response to the coronavirus outbreak in anticipation of a drop in demand, more than a supply crunch.
Deadline, due in SeptemberBrent CrudeFutures fell 2.94% to $103.87 a barrel; West Texas crude futures, which expire in August, fell 3.5% to $101.09 a barrel, both approaching the 100 yuan mark.
As of 21:00 on Monday (11th) Taipei time:
Stocks in focus:
Twitter (TWTR-US) fell 5.57% to $34.76 a share in early trade
Tesla CEO Musk decided on Friday to terminate the $44 billion Twitter acquisition. It is rumored that Twitter has hired a heavyweight law firm to sue Musk as soon as this week to force completion according to the agreed price and terms The $44 billion deal.
Uber(UBER-US) fell 1.95% to $21.91 a share in early trade
A recent investigation report by the International Consortium of Investigative Journalists (ICIJ) stated that Uber is using unscrupulous channels to expand its global market territory. In accordance with its own laws, and further receive various preferential treatment.
Lululemon(LULU-US) fell 2.55% to $285.90 a share in early trade
Sportswear brand Lululemon was downgraded to “Underperform” from “Hold” by Jefferies, mainly due to increased competition and a easing of demand surge related to the new crown epidemic, while another Sportswear company Under Armour (UAA-US) for the same reason, the stock’s rating was downgraded from “Buy” to “Hold”.
Today’s key economic data:
- The U.S. Conference Board Employment Trends Index reported 119.38 in June, from 118.88 previously
Wall Street Analysis:
Jonas Goltermann, senior market economist at Capital Economics, said that the economic outlook in Europe shows few signs of easing, U.S. inflation data may hit a new high this year, the Fed will continue to raise interest rates aggressively, and risks remain biased toward the U.S. dollar, adding thatEURThe pair will hit parity against the U.S. dollar in the near future, possibly breaking above that level to some extent.
Chris Weston, head of research at Pepperstone Group, wrote in a note that U.S. CPI will be “the core driver of risk this week” and that 9% growth is possible, which “should keep U.S. Treasury yields higher.” “.
Only the unexpected weakness in these data will dispel expectations for a 3-yard (75 basis point) Fed rate hike on July 27, said Ray Attrill, head of foreign exchange strategy at NAB. After last week’s June nonfarm payrolls report, the Fed’s rate hike expectations rose to 74 basis points from about 71 basis points.
Ellen Lee, a portfolio manager at Causeway Capital Management LLC, said companies, especially retailers, said they had seen consumer weakness, which could hit revenue in the second half of the year.