The strongest to the weakest of the major currencies

The AUD is the strongest and the GBP is the weakest as the North American session begins. The GBP is continuing the decline started yesterday after the lower than expected CPI data.

The AUD is being pushed up better jobs data in Australia. In summary:

  • The Employment Change in Australia showed an addition of 32.6K jobs, more than double the expected 15.4K, but lower than the previous 76.5K.
  • The Unemployment Rate in Australia decreased slightly to 3.5%, lower than the expected 3.6% and equal to the previous rate of 3.5%. The rate is just above the cycle low and all time low of 3.4%

Also in Australia overnight, the National Australia Bank's Quarterly Business Confidence index was at -3, a slight improvement from the previous -4.

Much of the news today is focused on the stock earnings . Yesterday the Dow industrial average rose for the 8th consecutive day. The S&P index and the Dow industrial average have risen 7 of the last 8 trading days. Today NASDAQ futures are implying a lower opening. The Dow is higher. The S&P is modestly lower.

After the close last night, Tesla and Netflix both saw drops in their shares following mixed Q2 results. Tesla's revenues hit a record high of $24.93 billion due to recent price cuts aimed at boosting sales and countering increasing competition in the electric vehicle market. However, these price cuts also led to a decline in Tesla's gross profit margin and, after CEO Elon Musk suggested further price reductions, the company's shares fell. Netflix, on the other hand, successfully increased its subscriber count by cracking down on password sharing, adding 5.9 million subscribers and surpassing Wall Street estimates. Despite this, softer-than-expected revenue of $8.2B and a lower Q3 projection resulted in a drop in Netflix shares. Tesla is trading down -3.45%. Netflix shares are down -5.48%

Uh oh.....Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, reported Q2 earnings that exceeded expectations, but its net profit fell by over a fifth to 181.80B Taiwan dollars. CEO C.C. Wei indicated that the recent surge in AI-related demand may not be sustainable and is insufficient to counterbalance the cyclical nature of the business. Consequently, TSMC cut its annual revenue guidance, forecasting a 10% decline in 2023 compared to a previous estimate of a single-digit drop. This tempered outlook contrasts with Nvidia, a major TSMC client, which earlier projected increased semiconductor demand due to the growing need for computing components to drive AI programs. PS NVIDIA shares are down -1.00% in premarket trading.

On the earnings front this morning:

  • American Airlines Group Inc reported Q2 earnings per share (EPS) of $1.92, beating expectations of $1.58, and revenue of $14.05bn, surpassing expectations of $13.74bn. The company also increased its full-year EPS forecast to $3.00-$3.75. We know the airlines story.... higher prices/full flights.
  • Philip Morris International Inc reported adjusted Q2 EPS of $1.60, higher than the anticipated $1.47, and revenue of $8.967bn, surpassing the $8.65bn expectation. The full-year adjusted EPS forecast was set at $6.13-$6.22.
  • Travelers Companies Inc reported Q2 EPS of $0.06, falling short of the expected $2.08. Revenue was $10.1bn, slightly above expectations. They also raised their dividend to $1.00 per share, up 7.5%. Travelers is a Dow stock. Shares are down -1.58%.
  • Blackstone Inc posted Q2 EPS of $0.79, below the estimated $0.93. Revenue came in at $2.81bn, beating the $2.41bn prediction.
  • DR Horton Inc reported Q2 EPS of $3.90, significantly beating the $2.79 expectation. Revenue was $9.7bn, exceeding the expected $8.39bn. Full-year revenue is projected at $34.7-$35.1bn. The US needs new housing and doing ok despite the higher rates (for now at least)
  • Johnson & Johnson reported Q2 adjusted EPS of $2.80, surpassing the $2.62 expectation, and revenue of $25.53bn, above the expected $24.63bn. Johnson & Johnson's CFO stated that the company is in a strong position entering H2. J&J is a Dow stock. Shares are trading up 1.35%

So far, the earnings season has been positive, with a majority of firms surpassing Wall Street estimates. This trend has fostered optimism that the U.S. economy might manage a soft landing following a series of significant interest rate increases by the Federal Reserve.

The economic calendar today will be highlighted by the weekly jobless claims which have been moving back to the downside of late indicative of a steady/better jobs market. The Philly Fed manufacturing index will also be released. Leading index will be released at 10 AM. Last month the index reached the lowest reading since July 2020, and fell for the 14th consecutive month, the longest streak since 2009. That recession is just around the corner....again.

8:30 am:

  • US Unemployment Claims: Expected to be 239K, compared to the previous 237K.
  • US Philly Fed Manufacturing Index: Expected to be -10.1, improving from the prior -13.7.

10:00 am:

  • EU Consumer Confidence: Projected to remain the same at -16.
  • US Existing Home Sales: Expected to be 4.21M, slightly down from the previous 4.30M.
  • US CB Leading Index month-on-month: Expected to be -0.6%, an improvement from the previous -0.7%.

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading up $0.32 or 0.43% at $75.61
  • Spot gold is trading trading up $4.87 or 0.25% at $1981.04
  • Silver is trading up $0.07 or 0.32% $25.19
  • Bitcoin is trading at $30,309. That is near the high of $30,414. The low price this week reached $29,868 on Tuesday

In the premarket for US stocks, the major indices are trading mixed. Yesterday, the Dow rose for the 8th consecutive day. The S&P and NASDAQ both rose and are up 7 of the last 8 trading days. The NASDAQ is under pressure today. The S&P is marginally lower. The Dow is higher

  • Dow Industrial Average is trading up 43 points after rising 109.28 points yesterday
  • S&P index is -6.8 points after yesterday's 10.74 point rise
  • NASDAQ index is trading down 83 points after rising 4.38 points yesterday

In the European equity markets, the major indices are higher:

  • German DAX, +0.26%
  • France's CAC, +0.37%
  • UK's FTSE 100, +0.68%
  • Spain's Ibex, +0.64%
  • Italy's FTSE MIB, +0.28% (delayed).

In the Asian Pacific market today, markets closed mixed:

  • Japan’s Nikkei 225, -1.23%

  • China’s Shanghai Composite, -0.92%

  • Hong Kong’s Hang Seng, -0.13%

  • Australia’s S&P/ASX 200, +0.02%

In the US debt market, yields are lower in early US trading

  • 2-year yield 4.813%, +5.8 basis points. A year yield is down from 5.118% before the US CPI data earlier this month
  • 5-year yield 4.050% +8.0 basis points
  • 10-year yield 3.791% +4.9 basis points. The 10 year yield is down from 4.094% .
  • 30-year yield 3.858% +2.0 basis points. The 30 year yield is down from 4.086%

In the European debt market, benchmark 10-year yields are mixed:

European benchmark 10 year yields