Early Morning Call: APAC digests China inflation data
APAC digests China consumer inflation data which has risen at the highest pace in two years; US CPI expected later today. Coinbase shares plunge along with trading volumes. Elon Musk to sell more Tesla shares.
APAC equity markets
APAC equity markets traded lower overnight, as did the New York Stock Exchange and Nasdaq yesterday. Hong Kong’s Hang Seng led the losses as tech stocks underperformed.
In China, consumer price index (CPI) increased 2.7% in July on a year-on-year (YoY) basis. This is the fastest pace since July 2020, but lower than the 2.9% expected. This rise was essentially due to a pickup in food prices, up 6.3% year-on-year from 2.9% in June. Core CPI, which excludes food and energy, rose by 0.8%, slower than the 1% rise in June.
China producer price index (PPI) eased to its weakest since February 2021: 4.2% year-on-year, after a 6.1% uptick in June. Analysts had expected an increase of 4.8%.
In Japan factory gate prices eased in July. Producer price index rose by 8.6% year-on-year in July 2022, following a 9.4% growth in June. This latest reading was the softest since last December.
US consumer price index is due later today. Economists expect the index to ease to 8.7% in July YoY, from 9.1% the previous month.
Equity markets overview
In Europe, equity markets followed the lead of the US and APAC.
In the UK, the insurance sector remains in the spotlight, with half-year (H1) reports from Prudential PLC, Aviva PLC and Admiral Group PLC. Deliveroo Holdings PLC - A is consulting on leaving the Netherlands market after failing to gain a strong local position, and as loss before tax widened in the first quarter (Q1).
TUI AG (LSE) posted a third quarter (Q3) operating loss of €27 million due to air traffic disruptions across Europe. Excluding additional costs of €75 million, adjusted operating profit stood at €48 million for the third quarter, its first positive result since the COVID-19 crisis started.
Royal Mail PLC, also prone to disruptions, has warned that the four days of strikes planned in August and September would lead to a loss in the UK for the 2022-23 full year.
Yesterday after the US closing bell, Coinbase Global Inc (All Sessions) reported a larger-than-expected loss in the second quarter (Q2), sending its shares down in extended hours trading. The cryptocurrency exchange posted a loss of $4.98, more than double what analysts had anticipated. Revenue also fell short of estimates at $808m. Trading volumes more than halved to $217 billion in the second quarter, which Coinbase expects to fall further this current quarter.
Walt Disney Co (All Sessions) earnings are expected at 98 cents for its fiscal third quarter, about 20% higher than the same quarter a year ago. Revenue is forecast to come just shy of $21 billion, nearly $3bn higher than Q3 2021. Investors will be particularly attentive to the group’s outlook and its long-term strategy. Investments are needed and some analysts fear that dollar strength, which is likely to have had an impact on earnings and revenue, may have forced the group to make some adjustments.
Tesla Motors Inc (All Sessions) shares could move at the open of the all-sessions market on the IG platform this morning. This as its CEO, Elon Musk, sold more shares in Tesla amid the Twitter Inc (All Sessions) legal battle. The electric car maker's boss announced in a tweet that he had sold $6.9 billion worth of Tesla shares, even though he said in April there were no plans to sell more after having $8.5 billion worth of shares in the company back then.
According to legal experts, if Musk loses his battle against Twitter, he could conceivably have to sell more Tesla shares.
Commodities
On the commodity markets, oil prices are trading lower this morning.
Last night, the American Petroleum Institute reported a crude oil stocks increase of 2.16 million barrels for last week. Oil analysts had expected a small drop on 400,000 barrels.
Distillate stocks also increased by 1.38 million barrels. Gasoline inventories fell by 627,000.
Gold briefly rose above $1800 yesterday afternoon, for the first time in five weeks.
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