- Overnight, Nasdaq and S&P 500 experienced their biggest declines since February and April, respectively, following a strong July driven by better-than-expected earnings and hopes for a soft landing for the U.S. economy.
Key Earnings Reports Today
- Apple (AAPL.O) is expected to report the largest third-quarter drop in revenues since 2016 due to slowing iPhone sales.
- Amazon.com Inc (AMZN.O) is expected to report a more than 8% rise in second-quarter revenue, supported by a recovery in advertising and e-commerce businesses.
- Risk sentiment has been dampened by higher long-term U.S. yields after strong private employment data and the announced refunding of the U.S. government's maturing debt.
- U.S. 10-year yields stood at 4.0856% in Asia, close to a nine-month peak of 4.1260% hit overnight. 30-year yields were up 2 basis points at 4.1847%, nearing the highest level since November.
- The U.S. dollar was strong in Asia, reaching a one-month high of 102.63 against major peers, fueled by robust private payrolls data. The U.S. nonfarm payrolls report is due on Friday.
Asian Market Update
- Asian shares fell for a third consecutive day, following losses on Wall Street, with speculation that the Federal Reserve will maintain its tight policy for longer.
- Equity benchmarks in Japan, Australia, and Hong Kong all declined, while mainland China markets were relatively stable. Taiwan’s markets were closed due to a typhoon.
- Evergrande Property Services Group Ltd., a unit of the highly indebted developer, slid by about half in Hong Kong as trading resumed for the first time since March 2022.
U.S. Equity Futures
- U.S. equity futures inched higher in Asia after the S&P 500 dropped 1.4% on Wednesday, its worst day since April. The Nasdaq 100 fell 2.2%, and Qualcomm Inc. suffered due to a tepid revenue forecast.
- The VIX index, known as Wall Street’s “fear gauge,” rose to the highest level since May.
Interest Rates and Inflation
- The Bank of England is forecast to raise its benchmark interest rate by 25 basis points to 5.25% later on Thursday. Speculation also grows that it will signal an increase in the pace of bond sales to reduce its market footprint.
- UK inflation remains high, and the interest rate rise aims to control price rises, although there are concerns about potential economic impacts.
- PayPal Holdings Inc. reported a decrease in profits in the second quarter due to setting aside more money to cover souring loans to merchants.
- Shopify Inc. reported sales and profit for the second quarter that surpassed analyst expectations.
- Investors are keenly watching Apple Inc. and Amazon.com Inc. earnings due on Thursday, with expectations for Apple to report a third consecutive year-over-year revenue decline.
- Oil prices rose after a two-day selloff. West Texas Intermediate approached $80 a barrel, despite a drop on Wednesday amid broader risk-off sentiment.
- Crude's sell-off came even after a record drop in US crude inventories, indicating tightness in the market amid falling OPEC output.
Upcoming Economic Events
- China Caixin Services PMI on Thursday
- Eurozone S&P Global Eurozone Services PMI and PPI on Thursday
- Bank of England rate decision on Thursday
- US initial jobless claims, productivity, factory orders, and ISM Services on Thursday
- Eurozone retail sales on Friday
- US unemployment rate and non-farm payrolls on Friday
Forex Trading for Beginners
That's the morning briefing for August 3, 2023! Remember to stay updated with the latest developments to make informed trading decisions. Happy trading! 📈💼
Forex Trading for Beginners .Trading and investing carry financial risks and could lead to partial or complete loss of funds. Invest only what you can afford to lose and seek advice from an independent financial advisor if you have doubts about your investment choices.