News & Analysis

Overnight on Wall Street: Wednesday 22 July 2020

July 22, 2020

By Deepta Bolaky
@DeeptaGOMarkets

Equity Markets

The vaccine optimism continues to drive the momentum in the stock market. Global stocks edged higher on Tuesday buoyed by the heightened expectations of a vaccine sooner than later. European stocks also found support in a historic move when the EU leaders reached a pandemic package deal and budget.


Source: Bloomberg

Wall Street ended mixed despite vaccine updates and better-than-expected earnings reports. Nasdaq fell in the negative territory as tech stocks retreated from yesterday’s highs:

  • Dow Jones Industrial Average added160 points or 0.6% to 26,840.
  • S&P 500 rose by 5.5 points or 0.2% to 3,257.
  • Nasdaq Composite lost 87 points or 0.8% to 10,680.

On the earnings front, Coca-Cola Co and Philips Morris International reported earnings before the bell while Snap Inc reported its quarterly updates after the market close:

  • Coca-Cola Co’s share price rose by 2.3% to $47.20 on Tuesday despite a fall of 28% in net revenue to $7.2 billion and a decline in EPS by 32% to $0.41. The Company was optimistic about improving demand as lockdowns ease. 
  • Philip Morris International share price rallied by 4.2% to $75.92. The Company reported earnings and revenue that beat analysts’ estimates:
    • Diluted EPS of $1.25, down by 16.1%; down by 12.1%. An adjusted diluted EPS of $1.29, down by 11.6%; down by 7.5%.
    • Net revenues down by 13.6%; down by 9.5%.
  • Snap Inc fell in extended-hours despite upbeat reports:
    • Daily Active Users increased by 17% year-over-year to 238 million
    • Second-quarter revenue increased 17% year-over-year to $454 million
    • Second-quarter operating cash flow improved 31% year-over-year to $(67) million

Currency Markets

In the FX space, the US dollar slipped against all major currencies on the back of broad optimism and amid a relatively subdued economic calendar.


Source: Bloomberg Terminal

The Aussie dollar emerged the best-performing currency in the G10 group. In the Asian session, the local currency was driven by a less-dovish RBA minutes and the possibility of the RBA lowering interest rates. In a speech about COVID-19, the Labour Market and Public Sector Balance Sheets, the Governor kept the door open for a rate cut. After struggling to rise above the 0.70 level, the AUDUSD pair bolstered higher near 15-month high above 0.71 level on the dollar weakness.

AUDUSD (Daily Chart)


Source: GO MT4

The EURUSD pair rallied to 1.15 level as the EU leaders strike a historic deal to support the Eurozone economy. 

EURUSD (Daily Chart)


Source: GO MT4

Commodities

he positive vaccine updates and OPEC+ output cuts have boosted crude oil prices despite a bearish oil report. API Weekly Crude Oil Stock increased to 7.544M in July 17 from previous -8.322M. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading higher around $41.96 and $43.90, respectively.

Gold

Gold rallied to the highest level since 2011 despite the overall positive risk sentiment. Given the ongoing uncertainty, investors are hedging with safe-haven assets. As of writing, the XAUUSD pair is currently trading at $1,843.

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • Westpac Leading Index and Retail Sales (Australia)
  • BoC Consumer Price Index (Canada)
  • Housing Price Index and Existing Home Sales (US)
Thursday, 23 July 2020 
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
05.4230.2440.031000
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
002.7860001.41

  • Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs. Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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