Early Morning Call: Indices mostly higher; BA cancels more flights; gold at 9-month low

Indices outlook

Indices in the Asia-Pacific region mostly rose overnight, led by a similar performance stateside.

Markets seem to appreciate the clarity and consistency of the message delivered by financial leaders. The Federal Reserve (Fed) minutes reiterated yesterday that a “more restrictive stance” in policy will be suitable until inflation targets are reached. The document said that “participants recognised that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2% as critical to achieving maximum employment on a sustained basis.”

In terms of what's expected, members said the July meeting would likely see another 50- or 75-basis point (bps) move. International Monetary Fund (IMF) director, Kristalina Georgieva, while warning of a possible global recession, expressed her support towards central bank actions by saying that slower economic growth may be a "necessary price to pay", as there is a pressing need to restore price stability.

In Europe, equity markets opened in positive territory, following a solid performance yesterday. France’s CAC 40 outperformed main indices in the region, closing 2.03% higher.

In Australia, trade surplus widened in May to a record high of $16 billion, easily beating market forecasts of a $10.7bn surplus. Exports rose more than imports, helped by soaring commodity prices. Exports increased by 9.5% month-on-month (MoM) to a fresh record of $58.4bn, while imports increased by 5.8% MoM, also to a new record of $42.4bn. The Australian dollar reacted positively to the news.

In Germany, industrial production rose by 0.2% in May on a month-on-month basis, below economists’ expectations of 0.4%. At 1.30pm look out for initial jobless claims. Economists expect 230,000 new claimants for last week, a figure that has been creeping up since the March low. The last four weeks' data has been oscillating between 231,000 and 232,000.

Equities

Persimmon released a trading update showing total revenue of £1.69bn for the first six months of the year (H1), lower than the £1.84bn of H1 last year, with forward sales marginally higher than last year.

Currys' adjusted profit before tax rose to £186 million, while like-for-like revenue fell 3%. The group proposed a final dividend of 2.15 pence, taking total dividend to 3.15 pence, up 5%.

British Airways (BA) has cut a further 10,300 short-haul flights between August and October, which means the airline will drop almost 30,000 flights during the summer season.

In the US, Levi Strauss & Company is reporting tonight after market close. Analysts expect a mixed report. On one hand, the company has seen recent robust demand for its products as people return to the shops.

But on the other, given the worsening economic situation, consumers are poised to tighten their spending on discretionary products, which include clothing and accessories. Earnings per share (EPS) is expected at 23 cents on revenue of $1.43bn but, as with other earnings, it's likely to be all about the outlook.

Commodities

On the commodity front, gold recorded a second day of heavy losses yesterday. The precious metal is trading higher this morning, but remains at levels not seen since October 2021.

Oil prices are rising this morning, paring some of yesterday afternoon’s losses. The American Petroleum Institute (API) yesterday evening reported an increase in crude oil stocks of 3.8 million barrels last week, when oil analysts had expected a decrease of 1.1 million barrels.

Gasoline inventories fell by 1.8 million barrels, while distillate stocks fell by 635,000.