Early Morning Call: Nasdaq poised for 5th week of gains, now at 13-month high
APAC equity markets mostly rose overnight, following the lead of US indices.
APAC overview
APAC equity markets mostly rose overnight, following the lead of US indices.
In Australia, retail sales were unchanged in April from March, when they rose 0.4%. Analysts had looked for 0.2% growth. Like the rest of the planet, Australian consumers are facing high living costs and rising interest rates. Last month they spent more on winter clothes and in department stores, but curbed spending on food and dining out, which registered declines of 0.1% and 0.2% respectively. Household goods fell 1%.
Hong Kong's Hang Seng is closed for a holiday.
Major economic overview
In the UK, retail sales increased by 0.5% in April compared to March, beating expectations of a 0.3% rise, and following a 1.2% drop in March.
In the US, the market awaits core PCE price index, durable goods orders, and personal income and spending. Days away from the US debt ceiling deadline, US President Joe Biden and top congressional republican Kevin McCarthy seem to be getting closer to a deal. If the two sides were to fail to reach an agreement, it would lead to a default in US debt. A third outcome would be that money could be made available to cover an extension to talks.
The US dollar is poised for weekly gains for a third straight week.
Earnings
Gap shares jumped 16% in extended trading last night as the retailer surprised the market with a profit for the first quarter (Q1). It posted earnings of 1 cent per share, beating the Street's expectations of a 15 cent loss. Revenue was broadly in line at $3.28 billion. The quarterly merchandise margin increased by 610 basis points. Investors not only welcomed this strong set of earnings: Gap inventory volumes declined for a second consecutive quarter, by 27% from a year earlier.
Costco Wholesale missed estimates. The retailer reported a quarterly profit of $2.93 per share, missing analysts’ expectations of $3.29. Total revenue for the third quarter was $53.60Bln, $1Bln less than anticipated.
Commodities
Oil prices are showing modest gains this Friday. Oil analysts await the Baker Hughes oil rig count at 6pm. Last week, total rig count fell by 11 to 720, a drop entirely due to the number of oil rigs in operation, down to 575, the lowest since June 2022.
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