Daily Markets: Investors Closely Watching Technical Levels

Today’s Overview

Asia-Pacific stock indices ended today’s session lower overall, except for China’s Shanghai Composite, which ended the day almost unchanged with a 0.09% gain. The aggressive stance of the global central bank and China’s willingness to shut down parts of its economy to combat covid played a role in concerns about future growth. India’s Sensex fell 0.28%, Japan’s Nikkei declined 0.71%, Hong Kong’s Hang Seng lost 0.83%, while Australia’s ASX All Ordinaries and South Korea’s KOSPI they ended with a drop of 1.37% and 1.39%, respectively. Taiwan’s TAIEX led the way, down 1.82% on weakness in healthtech names. By midday, Central European stock indices including Nordics have broadly fallen and US futures point to a tepid open later this morning.

With September being a notoriously challenging month for the stock market, investors are closely watching technical support levels as they grapple with the prospects of not only higher interest rates, but more signs of slowing growth, restricted spending and cost reduction measures. Those developments and the prospect of additional measures are raising concerns about further downward revisions to corporate earnings expectations. While this morning’s trading will be fueled by the latest economic data, renewed concerns about Europe’s energy supply and the prospect of skyrocketing interest rates in Canada, the focus this afternoon will be on of Apple (AAPL) iPhone update expected. As that event winds down, attention could quickly shift back, this time to the Fed’s latest Beige Book report ahead of Fed Chairman Powell’s appearance tomorrow at the Cato Institute’s 40th Annual Monetary Conference. . What that iteration of the Beige Book says about inflationary pressure and the aggregate speed of the economy reported by the Fed’s regional banks will likely dictate how stocks end up trading today.

data download

International economy

China’s exports grew 7.1% year-on-year to $314.92bn in August, below market forecasts of 12.8% and much slower than July’s 18% jump. Imports to China rose 0.3% year-on-year to $235.53bn in August, falling short of the expected 1.1% figure and much slower than the 2.3% growth recorded in the previous month.

According to data counted by Nomura, ~12% of China’s total GDP is affected by covid, down from 5.3% about a week ago, leading the company to cut its 2022 GDP forecast for the country to 2.7% from 2.8% at the end of August.

Japan’s index of leading economic indicators fell to 99.6 in July after a downwardly revised finish of 100.3 in June.

The third revision of GDP for the second quarter of 2022 in the euro area showed that the economy grew by 4.1% year-on-year, higher than the previous revision of +3.9%. On a quarter-on-quarter basis, GDP increased by 0.8%, up from 0.6% in the second estimate, with Germany growing by a meager 0.1%, France by 0.5% and Italy and Spain by 1.1%. .

Russian President Vladimir Putin has threatened to cut off energy supplies if price caps are imposed on Russia’s oil and gas exports. For context, Russia is the world’s second largest oil exporter behind Saudi Arabia, the world’s leading exporter of natural gas and wheat. Europe typically imports around 40% of its gas and 30% of its oil from Russia.

The Bank of Canada is widely expected to announce a 75 basis point rate hike today after its 100 basis point rate hike in July. And later this week, the European Central Bank is expected to upload a series of rate hikes to tackle inflation with a 75 basis point rate hike seen as likely on Thursday, September 8.

Domestic economy

We have a slow day of economic data for the US economy. At 7:30 a.m. ET the weekly mortgage applications index will be released, followed by the latest Fed Beige Book at 2 p.m. Given the upcoming Fed monetary policy meeting and expectations that currently call for another 75 basis point rate hike, the anecdotal collection of economic commentary that is the Beige Book will likely receive a more scrutiny than in more normal times.

markets

It appears that the bank holiday weekend did not offer the markets enough time to rest, reflect and accept the current state of affairs as the major indices continued to trade lower. The S&P 500 fell 0.41%, the Dow Jones lost 0.55%, the Nasdaq Composite fell 0.74% and the Russell 2000 closed 0.96%. Real estate was the big winner yesterday, while industrials, utilities and health care names made small gains.

Here’s how the leading market indicators stack up so far this year:

  • Dow Jones Industrial Average: -14.29%
  • S&P 500: -18.00%
  • Nasdaq Composite: -26.21%
  • Russell 2000: -20.17%
  • Bitcoin (BTC-USD): -59.34%
  • Ether (ETH-USD): -57.55%

Actions to watch

Before trading in US-listed stocks begins, G-III clothing (GIII), child (LITTLE BOY) Y Rev Group (REVG) will be among the companies issuing their latest quarterly results and guidance.

of Apple The “Far Out” event will begin at 1 pm ET. Like last year, the company is expected to launch new iPhones and Apple Watches at the event, and expectations call for another event in October for its new iPad and Mac models before the holiday shopping season.

Brands Newell (N.W.L.) cut its outlook for both the current quarter and the 2022 balance, citing a larger-than-expected pullback in retail orders. According to the company, “we are taking decisive action to mitigate the impact of these challenges by further tightening our belts on cash and cost management and adjusting our supply plan.”

Actions of UniPath (PATH) tumbled in the aftermarket after the company lowered its revenue expectations for its third quarter due to “macro and currency volatility.” The company now sees its third quarter revenue in the range of $243-$245 million vs. the consensus of $269.5 million.

In a filing with the SEC, To go (AVYA) shared that it has authorized a reduction in effect, which along with incremental cost-cutting actions unrelated to downsizing, “will put in place more than $250 million of annual cost reductions” allowing it to realize the higher end of plans shared on July 28 that target cost reductions of between $225-$250 million.

At the Code Conference, alphabet (GOOGLE) CEO Sundar Pichai shared that he wants to make the company 20% more efficient as it grapples with economic uncertainty, slowing ad spending and years of quick hires. Now to see if this is a precursor to the company announcing a downsizing in the coming weeks.

Continuing with this episode of economic uncertainty, Samsung (SSNLF) he now sees the drop in chip sales stretching into next year. The Wall Street Journal reports The following from Kyung Kye-hyun, who heads Samsung’s semiconductor unit and serves as the company’s co-CEO: “The second half of this year is looking bad, and for now, next year doesn’t really seem to show any momentum.” clear for much improvement.”

Metaplatforms (GOAL) shared scored lower last night after a report by Information that Instagram can significantly reduce shopping features as it focuses on the short-form video business. Yesterday, CEO Mark Zuckerberg announced that Meta will hold its annual virtual reality conference, Connect, on October 11.

Citing the improvement in US airline traffic, United Airlines (UAL) now sees its revenue for the current quarter up 12% vs. 3Q19 and its previous outlook of +11%.

Weston lamb (LW) announced that it will expand its French fries processing capacity in Argentina with the planned construction of a new manufacturing plant in Mar del Plata, Buenos Aires, which is expected to produce more than 200 million pounds of frozen French fries and other potato products. by year.

IPO

As of now, no IPOs are scheduled to list this week. Readers who want to delve deeper into the upcoming IPO schedule should visit Nasdaq Latest and Upcoming IPO Page.

After today’s market close

AeroVironment (AVAV), American Eagle (AEO), Casey’s General (CASY), Couchbase (BASE), Dave & Buster’s (PLAY), Descartes (DSGX) and GameStop (GME) are expected to report quarterly results after the stock stops to quote today. . Those looking for more information on which companies are reporting when, head over to Nasdaq Earnings Calendar.

on the horizon

Thursday, September 8

  • Japan: GDP – Q2 2022
  • Japan: Economy Watchers Current Index – August
  • Eurozone: Decision on rates of the European Central Bank and press conference
  • US: Initial and continuing weekly jobless claims
  • US: EIA Weekly Natural Gas Inventories
  • US: EIA Weekly Crude Oil Inventories
  • US: Consumer Credit – July

Friday, September 9

  • China: Consumer Price Index, Producer Price Index – August
  • Japan: Machine Tool Orders – August
  • US: Wholesale Inventories – July

Thinking of the day

“Investors should buy stocks like they buy groceries, not like they buy perfume.” benjamin graham

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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