Early Morning Call: USD edges back ahead of Jackson Hole Symposium

Macro overview

Indices in Europe have showed gains this morning, following the lead of yesterday’s US session and Asia-Pacific region overnight.

In Germany, the final reading of gross domestic product (GDP) showed the economy has expanded by 0.1% quarter-on-quarter (QoQ), 1.7% year-on-yaer (YoY).

At 9am, economists expect Germany Ifo business climate to fall further to 86.8 in August which would set a new two-year low.

In the UK, the CBI distributive trades survey is out at 11 am. This is the UK's oldest business survey and it measures the health of the UK retail sector.

A bit later at 1.30pm, the second estimate of US GDP is expected. Economists anticipate a contraction of 0.8% QoQ, and weekly initial jobless claims.

Jackson Hole

The 45th Jackson Hole Economic Policy Symposium starts today, and this year the title is "Reassessing Constraints on the Economy and Policy."

The main headlines are likely to be on the debate around how deep, far-reaching and entrenched inflation appears to be. This time last year central bankers were asking whether inflation would last any length of time.

Other issues closer to the title of the conference will be about the emergence of economic constraints during the pandemic and how supply considerations have returned to centre stage. The full agenda will be published later today by the Kansas City Federal Reserve.

Earnings overview

Hays PLC posted a full-year 32% increase in fees. Operating profit rose 128% to £210.1 million. The recruiter proposed a year core dividend of 2.85 pence and a special dividend of 7.34 pence per share.

In the US, NVIDIA Corp (All Sessions) fell in extended trading, after posting earnings and revenue that missed Wall Street expectations. Adjusted earnings per share (EPS) came in at $0.51, versus the expected $0.53. Revenue reached $6.7 billion, lower than analysts’ expectations of $6.83 billion, but in line with the group’s own forecast.

Last May NVIDIA cut its revenue guidance to $6.70bn from 8.10bn. The chipmaker said that the miss was because of lower sales of its gaming products, primarily graphics cards for PCs, which are facing "challenging market conditions."

On its outlook, NVIDIA said it expected $5.9 billion in sales in its fiscal third quarter (Q3), versus Refinitiv consensus estimates of $6.95 billion.

Nordstrom Inc shares fell 10% in extended trading after the clothing retailer cut its annual revenue and profit forecast. The company said decades-high inflation was squeezing consumer spending on its high-end clothing and footwear.

A few retailers are due to report quarterly earnings today. Analysts are especially awaiting Gap Inc, after the US market closes. They anticipate a loss of five cents per share. Sales of the clothing retailer are expected at $3.82bn. But they also expect an update on the group's strategy, and on the recruitment of a new head after Sonia Syngal stepped out as CEO in July.

The group's executive chairman has since been covering as interim president and CEO, while the company looks for a permanent replacement.

Also in the retail sector, investors will be attentive to reports from Dollar Tree Inc, Dollar General Corpand Abercrombie & Fitch Co.

Peloton Interactive Inc, meanwhile, is expected to post a loss of 76 cents per share on revenue of $682mn. Yesterday Peloton shares jumped after the group revealed it will now sell its exercise bike and other fitness accessories on Amazon.com Inc (All Sessions).

Commodities

Yesterday afternoon the EIA revealed a drop in US crude and fuel inventories last week. Crude inventories fell by 3.3 million barrels, compared with analysts' expectations of a 933,000 barrel drop.

The inventory decline would have been larger were it not for another Strategic Petroleum Reserve release of more than eight million barrels.

US gasoline stocks fell by 27,000 barrels, while distillate stockpiles fell by 661,000 barrels.