- Alphabet posts stellar revenues
- Shanghai Composite signals upward reversal after China unveils growth measures
- Yuan extends losses after hitting lowest level in over a year on PBOC loan injection
- Oil remains under pressure as strong dollar offsets Trump’s threat to Iran
Key Events
European equities and futures on the S&P 500, Dow and NASDAQ 100 took their cue from a bullish Asian session on Tuesday, as a batch of positive company results led by Alphabet(NASDAQ:GOOGL)'s earnings beat helped investor sentiment and China introduced measures to support its economy amid global trade tensions. Should upbeat earnings results resume in the North American session, US stocks may be on track to challenge their record highs.
Google's parent company trounced estimates yesterday as it posted second-quarter revenues of $26.24bn, higher than analysts' forecast of $25.58bn. The internet giant shrugged off the impact of a $5bn fine by EU anti-competition regulators, driving its shares 3.6 percent higher after-hours.
Technically, the price is forming a bullish falling flag, complete with an upside breakout.
The pan-European STOXX 600 climbed higher with miners and banks, as UBS Group (SIX:UBSG) posted a second-quarter profit beat.
The euro was boosted by upbeat Manufacturing PMI figures from Germany (57.3 vs 55.5 forecast), the continent’s economic engine that has so far defied mounting worries of a disruption to trade.
Global Financial Affairs
Earlier, Asian trade shifted to risk-on after Chinese officials said they will pursue a more vigorous fiscal policy to boost domestic demand and counter any potential trade war-driven drop in exports.
The stimulus package would include corporate tax cuts and infrastructure spending, signaling support to growth won't just be entrusted to monetary policy from the People's Bank of China, which already cut reserve ratios three times this year and introduced a host of measures for the private sector, particularly for small business.
Although the Chinese cabinet was cited saying it will adopt a more proactive fiscal policy, the official line is still that of a prudent and neutral stance, according to Credit Suisse analysts.
These signals were nonetheless hawkish enough to push China’s Shanghai Composite 1.61 percent higher, for an aggregate three-day jump of 4.03 percent, outperforming its regional peers. Technically, the third-day rally, posting three long, solid candles formed a three advancing white soldiers pattern, demonstrating a sign of strength ahead, as it indicates an upward reversal. Also, the price closed above the downtrend line since late May.
Hong Kong's Hang Seng also leaped 1.44 percent, for a total three-day surge of 2.35 percent. Technically, the index extended an upside breakout of a downtrend line since June 7, as it advances toward the potential neckline of a double-bottom reversal pattern.
Japan's TOPIX gained 0.47 percent, ending a three-day losing streak. Technically, the jump follows yesterday's bullish, inverted hammer, after the preceding day's high-wave candle signaled a potential reversal, as bulls were questioning the selloff.
Meanwhile, the yuan extended a decline after hitting its lowest level in more than a year as the PBOC injected $74bn worth of loans into the country's banking system on Monday, in its biggest-ever batch of medium-term funding. Technically, the USD/CNY is being driven back by supply, confirming a resistance above Friday's shooting star, for the second day.
During US market trade on Monday, gains in bank shares boosted an otherwise underwhelming session, following warnings from G20 financial leaders that trade tensions threaten to halt the first synchronized global growth in a decade. Consumer discretionary stocks were dragged down by losses in Amazon.com (NASDAQ:AMZN), after President Donald Trump renewed his campaign against the e-retailer.
In other news, WTI crude oil is hovering around $68 per barrel, after seesawing intraday yesterday: the commodity price jumped after Trump threatened Iran's President Hassan Rouhani, but was dragged lower by a strengthening dollar.
Up Ahead
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Earnings season continues:
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AT&T (NYSE:T), due today, after market close, $0.85 EPS forecast, VS $0.79 same quarter the previous year
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Facebook (NASDAQ:FB), due Wednesday after market close, $1.75 EPS forecast VS $1.32 same quarter last year
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Advanced Micro Devices (NASDAQ:AMD), due Wednesday after market close, $0.1 EPS predicted VS $-0.01 same quarter previous year
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Qualcomm (NASDAQ:QCOM), due Wednesday after market close, $0.58 ESP forecast, VS $0.7 same quarter last year
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Amazon.com (NASDAQ:AMZN), due Thursday after market close, $2.49 EPS forecast, VS $0.4 same quarter last year
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Intel (NASDAQ:INTC), due Thursday, after market close, $0.99 EPS forecast, VS $0.72 same quarter last year
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Twitter (NYSE:TWTR), due Friday before market open, $0.07 EPS forecast, VS $-0.02 same quarter last year
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Visa (NYSE:V), due Wednesday after market close, $1.08 EPS forecast, VS $0.86 same quarter last year
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Turkey decides on interest rates on Tuesday
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The European Central Bank’s policy decision comes out on Thursday
- Canada's federal government Budget Balance for April is released Friday.
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US gross domestic product due on Friday is forecast to have increased 4 percent at an annualized rate in the second quarter, the most since 2014.
Market Moves
Stocks
- Canada's S&P/TSX Composite fell 0.20 percent on Monday.
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The STOXX Europe 600 climbed 0.3 percent.
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Futures on the S&P 500 gained 0.1 percent.
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The MSCI All-Country World Index rose 0.2 percent to the highest level in more than five weeks.
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The MSCI Emerging Market Index gained 0.6 percent to the highest level in more than a month.
Currencies
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The Canadian loonie was up 0.17 per cent against the U.S. greenback early Tuesday, trading at 0.7604.
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The Dollar Index fell 0.02 percent, giving up a 0.21 advance.
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The euro gained 0.1 percent to $1.1699.
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The British pound climbed 0.2 percent to $1.3122.
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The Japanese yen edged 0.1 percent higher to 111.20 per dollar, reaching the strongest level in two weeks.
Bonds
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Canada’s 10-year yield was up early Tuesday at 2.234, a 0.54-percent increase.
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The yield on 10-year Treasuries gained one basis point to 2.96 percent, the highest level in almost six weeks.
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Germany’s 10-year yield climbed one basis point to 0.42 percent, the highest level in almost six weeks.
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Britain’s 10-year yield inched three basis points higher to 1.298 percent, the highest level in two weeks.
Commodities
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The Bloomberg Commodity Index fell 0.1 percent.
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West Texas Intermediate crude dropped 0.1 percent to $67.83 a barrel.
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LME copper gained 0.5 percent to $6,163.50 per metric ton, the highest level in more than a week.
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Gold gained less than 0.05 percent to $1,224.78 an ounce.