Early Morning Call: AUD/USD still rising; mining sector under pressure

Equities outlook

It was a mixed session for equity markets in the Asia-Pacific region, following a fall of the three main US indices yesterday.

Japan’s Nikkei closed higher, while Hong Kong’s Hang Seng posted the worst performance.

In Australia, minutes of the Reserve Bank of Australia's (RBA) July policy meeting revealed that there was a need for more tightening, and even with recent hikes, interest rates were still too low to constrain inflation expectations amid a strong labour market. The central bank raised rates by 50-basis points (bps) at its last meeting, to 1.35%.

In the UK, the unemployment rate remained at 3.8% in May. Economists were expecting an increase to 3.9%. April's employment change came in much higher than expected: 296,000, versus expectations of 170,000.

BHP Group PLC (LSE)'s iron ore output missed expectations in the three months to June 30. Iron ore production reached 71.7 million tonnes, falling short of a consensus estimate of 76 million, and the 72.8 million it reported a year ago.

Like Rio Tinto PLC last week, BHP warned that inflationary pressures, supply chain and labour market issues will continue through fiscal year 2023, but added that China is expected to contribute positively to growth.

In the US, IBM Corp (All Sessions) posted earnings of $2.31 per share, four cents better than analysts' expectations. Revenue came in at $15.54 billion. The group reiterated its full-year forecast but warned the market that both currency headwinds and impact from exiting Russia operations have put pressure on IBM's near-term results. The impact of a strong dollar on its sales could be to the tune of $3.5bn.

Today, the market is waiting for reports from Johnson & Johnson (All Sessions) before the opening bell. Earnings per share are forecast to fall by around 4% year-on-year (YoY) to $2.55. Revenue is expected to rise by 2.4% YoY to $23.80bn.

Other companies also reporting before the bell are Halliburton Co, Manpowergroup Inc and Hasbro Inc.

Tonight, it will be Netflix Inc (All Sessions)'s turn to post its quarterly report. For the second quarter (Q2), analysts anticipate earnings of $2.96 per share on revenue of $8.03bn.

Last quarter, the group suffered a loss in subscribers for the first time in over a decade. Subscriptions were down by 200 000, leading Netflix to miss out on revenue. Analysts expect another loss in subscribers in Q2 by as much as two million.

Commodities

On the commodity market, oil prices have settled overnight, after a sharp rise in yesterday’s session due to the fall of the dollar.

Industrial metals reacted similarly on Monday, but copper, zinc, aluminium and lead resumed their downward trend overnight.