Overseas Markets Falter as Focus Turns To Big Tech Earnings

Yesterday’s big market rally which saw the NASDAQ gain 2.6% and several tech stocks bounce back from recent declines like a 13% pop for Nvidia, appears to be ending as quickly as it started. Upward momentum failed to continue trough overseas trading as the Nikkei fell 2.5%, the Hang Seng lost 0.25%, the CAC and Dax both dropped 0.9% and the FTSE dipped 0.1%. The US is trying to keep the party going with index futures up 0.1%-0.6% but overall yesterday’s market pop is looking more like month-end window dressing and less like a turnaround.

Yesterday’s US Dollar decline has also reversed. Although Fed Chair Powell did leave the door open to a potential September rate cut, the FOMC held interest rates yesterday, disappointing some traders as the US Dollar has rebounded 0.2%-0.6% overnight against the other majors and also against Bitcoin which is down 1.8%. Gold is up 0.3%. The Bank of England cut its benchmark rate by 0.25% to 5.00%, its first rate cut since 2020.

The reaction to last night’s technology earnings has been all over the map. Despite all four companies beating the street on earnings, in premarket action today, Meta Platforms is up 8.6%, ARM Holdings is down 10.0%, Qualcomm is down 1.6%, and Lam Research is down 2.7%. After the close today, results are due from Apple*, Amazon.com, Intel, and Booking Holdings*. Big Oil earnings start to roll out tomorrow morning.

One market which continues to build in yesterday’s rally is US Crude Oil which is up another 0.6% today as Middle East tensions continue to increase and US inventories continue to decline. Copper, however, has already started to drop back, falling 1.25% so far today indicating traders remain concerned about the economy and the outlook for resource demand.   

Manufacturing PMI reports have been rolling out overnight. The UK did particularly well coming in above 50 and above expectations. Canadian Manufacturing PMI (previous 49.3) is due at 9:30 am EDT, followed by US ISM Manufacturing PMI (street 48.8) at 10:00 am. Tomorrow morning, US nonfarm payrolls (street 175K vs previous 206K) and average hourly earnings (street 3.7%) cap off a busy week for economic news.

*Shares of Apple and Booking Holdings are held in portfolios managed by SIA Wealth Management.

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