The GBP edges lower after UK inflation data

U.S. retail sales

The USD was up on Wednesday morning, from the 15-month low against a basket of currencies it hit on Tuesday after core retail sales saw strong gains in June. Headline U.S. retail sales rose less than expected in June, with a 0.2% increase during the month. Data for May was also revised higher to show sales gaining 0.5% instead of 0.3% as previously reported. The GBP fell as the consumer price index rose less than expected by 7.9% in June year-on-year (YoY).

Rio Tinto

Rio Tinto, as the world's second-largest miner behind BHP, can be considered a bellwether for the global economy, and looking at the group's operational report, prospects aren't so great. The world's biggest iron ore producer shipped 79.1 million metric tons down slightly from a year earlier and short of an estimate of 81 million metric tonnes. It, however, said it was on track for full-year shipments in the upper half of its forecast range of 320 million to 335 million metric tons. Prices of iron ore have eased over the second quarter.

ASML

At the same time, the miner warned of rising operational costs, so we could expect a real squeeze on margins. ASML posted a second-quarter net profit of €1.9 billion, beating analysts' expectations, who had seen a net profit of €1.82 billion. Revenue came in at €6.74 billion, compared with €5.4 billion a year ago. ASML raised its full-year sales growth forecast to 30%, up from a previous forecast of 25%.

Goldman Sachs

Over in the US, Goldman Sachs is due to report quarterly earnings before the market opens. While it is fairly normal for analysts to differ, we have rarely had such a spread in earnings expectations. Some expect earnings as low as 33 cents; others see the Earnings per share (EPS) reaching $4.99.

The market agrees on one thing; Goldman Sachs is not different from its peers. It has to deal with a drop in investment banking fees and a slowdown in stock and bond trading. But what could explain this unusual spread of analysts' expectations is whether the investment bank will tidy up its books. Goldman Sachs could take a write-down on GreenSky which was acquired last year for £2.2 billion, the home improvement lending business is already for sale. Last week, Semafor said there's a chance Goldman's will take a $2 billion write-down.

Tesla

Tesla is scheduled to release its quarterly report tonight after market close. The street expects earnings of 79 cents per share on revenue of $24.29 billion. In the same quarter a year ago, the electric car maker posted EPS of almost 76 cents and revenue of just under $17 billion.

This illustrates very well the shift in strategy Elon Musk put in place at the beginning of the year. To be able to compete with cheaper Chinese EV makers, Musk said Tesla needed to prioritise sales over profits.

Netflix

Also expected after the market closes is Netflix. This quarter could mark a turning point in the group's history, as we will see whether the big strategy shift is bearing fruit. Netflix customers are no longer able to share passwords, and every household now must have its own. Margins could be affected by the number of people who decide to switch to the ad-tier offer.

For the April-June period, Netflix is expected to post earnings of $2.84 per share, which would be lower than the $3.20 posted for the same quarter a year ago. Revenue is forecast to reach a new record of $8.27 billion.