Tuesday July 31st

31-07-2018

US stocks set for a higher open ahead of Apple earnings

U.S. stock index futures rose on Tuesday as investors braced for the release of Apple's latest quarterly results. Around 7 a.m. ET, Dow Jones Industrial Average futures rose 42 points, indicating a gain of 44.17 points, while Nasdaq 100 and S&P 500 futures pointed to slight gains. Apple is scheduled to release its latest quarterly figures after the close. The company's results will be released after other major tech companies published mixed earnings reports. Last week, Facebook reported weaker-than-expected revenue and disappointing global daily active users, a key metric for the company. Netflix, meanwhile, posted weaker-than-forecast subscriber growth for the previous quarter. Alphabet and Amazon reported stronger-than-expected results, however. The mixed numbers out of these companies has led to a steep sell-off in tech as investors lose faith in the so-called FANG trade. Over the past three sessions, the tech sector has lost 5.4 percent. Dow-components Procter & Gamble and Pfizer both posted better-than-expected earnings before the bell Tuesday. Pfizer traded flat in the premarket, but Procter & Gamble lost more than 2 percent. A slew of economic data is also due. Consumer spending rose a solid 0.4% in June as foreshadowed by last Friday’s strong report on U.S. economic growth in the second quarter. Gross domestic product surged 4.1% in the period from April to June. Economists polled by MarketWatch had forecast a 0.5% increase in spending. Incomes also rose 0.4%. The PCE index, the Federal Reserve’s preferred inflation gauge, rose a scant 0.1%, the government said Tuesday. So did the core rate that strips out food and energy. The rate of inflation over the past 12 months flat-lined at 2.2% in June. Although that matches a six-year high,Inflation appears to have crested, at least temporarily, after a prolonged upturn. Followed by the S&P/Case-Shiller House Price Index at 9 a.m. ET, Chicago purchasing managers' index at 9:45 a.m. ET, consumer confidence at 10 a.m. ET and the Dallas Fed's Texas service sector outlook survey at 10:30 a.m. ET. The Federal Open Market Committee (FOMC) will commence its two-day summer meeting Tuesday. A policy decision is set to be announced Wednesday afternoon, which should reveal whether the Fed decides to change its stance in August. Investors are not expecting a rise in interest rates, however, but discussion on trade or where the Federal Reserve is thinking of heading could be talked about. The meeting follows the publication of much economic data and the news that President Donald Trump was "not thrilled" about rising interest rates, expressing concern that the Fed could upset the economic recovery. Asian shares closed narrowly mixed on Tuesday as investors digested the Bank of Japan's decision to keep policy steady. The mixed showing also came on the back of Wall Street posting losses amid weakness in the technology sector. The Nikkei 225 moved into positive territory on the back of the Bank of Japan's policy decision. The benchmark closed higher by 0.04 percent, or 8.88 points, at 22,553.72, despite most sectors finishing in negative territory. Meanwhile, the Kospi ended the day higher by 0.08 percent at 2,295.26 after trading both above and below the flat line. Elsewhere, Hong Kong's Hang Seng Index edged lower by 0.5 percent by 3:00 p.m. Chinese shares ended the day in different directions following the release of official manufacturing PMI that slightly missed expectations. The Shanghai Composite tacked on 0.26 percent to close at 2,876.40 while the Shenzhen Composite inched down by 0.02 percent to 1,576.41. Oil prices fell on Tuesday, with Brent futures set for their biggest monthly loss in two years, as oversupply concerns rose after a Reuters survey showed OPEC output rose in July to its highest for 2018. September Brent crude futures fell 25 cents, or 0.3 percent, to $74.72 a barrel by 0654 GMT after rising nearly 1 percent on Monday. The September contract expires later on Tuesday and the more-active October contract was down 0.3 percent at $75.35. U.S. West Texas Intermediate crude futures (WTI) were down 24 cents, or 0.3 percent, at $69.88 a barrel, after rising more than 2 percent in the previous session. For the month, Brent futures are set to drop about 6 percent, the most since July 2016, while WTI futures set to decline 5.8 percent, the biggest monthly drop since October 2017. Gold slipped on Thursday, heading for a fourth consecutive month of losses, as a stronger dollar and rising U.S. interest rates continue to weigh, pushing speculators to hold record short or sell positions. The dollar was flat versus a currency basket, following a three month streak of gains, with the U.S. Federal Reserve set to reaffirm the outlook for further gradual rate rises at the end of its two-day rate review through Wednesday. The U.S. central bank has raised benchmark lending rates twice this year and signalled two more increases by year's end. Higher rates tend to boost the dollar, making dollar-priced gold more expensive for holders of other currencies. "The increase in U.S. interest rates so far has undermined a number of emerging market currencies. This general instability is seen as deflationary, and doubtless has encouraged (gold) speculators to take record short positions," said Alasdair Macleod, head of research at GoldMoney.com. Spot gold fell 0.1 percent to $1,220.43 an ounce, heading for a fourth monthly decline that would mark its longest losing streak since 2013. U.S. gold futures were 0.2 percent lower at $1,219.30 an ounce.