Markets start Tuesday on a cautious footing
European markets are a bit subdued this morning but are still showing positive movements.
The FTSE100 is up 7 points at 7,088. The DAX follows, rising around 30 points to hit 15,554. France’s is showing good momentum at 6,718, an increase of around 50 points.
Markets will be reacting to big European earnings releases with BP, Standard Generale, Standard Chartered, and BMW due to report today.
BP, off the back of the stronger oil market 2021 is enjoying so far, is tipped to report strong earnings season this quarter. Preliminary reports suggest net profits of $2.8bn – a substantial reversal from the energy firm’s $6.8bn losses in Q1 2020. BP has announced a $1.4bn buyback programme on the back of its $2.4bn cash surplus. Dividends have been given a 4% boost. BP will now pay 5.46 cents per share going forward.
In Asian trading, however, yet another government crackdown on an industry it finds distasteful has caused a slump in Chinese online gaming stocks. Shares in Ten Cent, Netease, and Bilibili had fallen 7%, 7.96% and 6.28% respectively in mid-afternoon trading. Consequently, the Hong Kong Hang Sech tech index had pulled back 1.48%.
Chinese state media has dubbed online games as “opium” and could move to regulate the sector further. Watch this space.
The Reserve Bank of Australia surprised no one earlier today by keeping its base rate at 0.1%, even with rising COVID-19 delta variant case numbers hitting the nation. Governor Lowe seemed upbeat, saying the Australian economy is recovering faster than anticipated but did note the Delta variant has interrupted recovery. Aussie GDP growth is forecast to be lower in the next quarter.
Bond-buying will be trimmed down to AU$4bn in the first week before September.
The decision sent the Australian dollar to a daily high of $0.7408.
Looking at US pre-market activity, worries of slowing growth fed into a broad sell-off across the markets on Monday, leaving futures relatively strong on Tuesday. At the time of writing, the Dow Jones had pushed upwards 107.50, whereas the Nasdaq and S&P 500 had shown more modest, but still positive, movements.
A drop in Treasury Yields was recorded. The 10-year treasury note benchmark dropped 1.15%, mainly driven by PMI data showing US factory output slowing in July.
On Wall Street, Alibaba and Activision Blizzard are the key large caps reporting today. It’s been a successful earnings season this quarter so far for S&P 500 listed firms. According to Factset, 88% of S&P 500 companies recorded positive earnings in Q2 – the highest percentage since tracking began in 2008.
Check our US earnings season calendar for more information on which companies are still to report.
Oil prices on key benchmarks pulled back this morning, possibly in response to the rising number of Delta variant cases worldwide, and a slowdown in Chinese, US, and UK manufacturing in July. WTI is currently trading at around $71.55, whereas Brent is lower at $73.18.