European stock futures took a hit as investors absorbed key earnings reports from major companies following a lackluster start to results from the “Magnificent Seven” mega-cap technology firms. Earnings releases from corporate giants such as Tesla Inc. and Alphabet Inc. were deemed inadequate to justify the recent surge in global equities, leading to a dip in Asian shares and US stock futures.
Deutsche Bank AG reported its first quarterly loss in four years due to a slowdown in trading and a charge related to a legacy issue at its Postbank retail unit. In contrast, BNP Paribas SA saw a rise in profit in the second quarter, driven by a surge in equities trading revenue.
Eli Lee, Chief Investment Strategist at Bank of Singapore Ltd., noted that investors are now searching for opportunities to lock in profits, especially after the strong performance in global equities so far this year. While tech earnings are expected to remain resilient in the coming weeks, there may be some volatility in equity markets.
Alphabet saw a decline in US trading after their CEO hinted at the need for patience to see tangible results from AI investments. Tesla also experienced a drop of up to 7% after missing profit estimates and postponing its Robotaxi event to October. Shares of Tesla suppliers and electric vehicle peers in Asia also saw declines.
Due to Typhoon Gaemi, trading on Taipei’s stock exchange was suspended, which meant that shares of tech giant Taiwan Semiconductor Manufacturing Co. were not traded.
The yen strengthened against the dollar, reaching its highest level since early June, as traders positioned themselves for a potential interest rate hike by the Bank of Japan in the coming months. The New Zealand dollar weakened to its lowest level in nearly three months, as lower bond yields in the country deterred carry trade investors.
In China, most shares fell amid economic challenges and geopolitical risks. However, the balance of short trades on China’s stock exchanges dropped to its lowest level in over four years, following new measures to curb short-selling that were implemented by Chinese authorities.
Looking ahead, upbeat earnings on Wall Street could provide a much-needed boost for equities after a strong first half of the year. However, market volatility is expected to increase in the lead-up to the US presidential election, with pressure on Big Tech stocks and a significant drop in United Parcel Service Inc. shares contributing to market uncertainty.
As for other market indicators, treasuries remained steady in Asia as investors awaited US debt auctions and manufacturing PMI data. Meanwhile, oil prices rose after a report indicated a decline in US crude inventories for the fourth consecutive week, and gold maintained its advance ahead of key US economic data forecasted to support the case for interest rate cuts.
Key events to watch this week include the Canada rate decision, US new home sales, S&P Global PMI, IBM and Deutsche Bank earnings, Germany IFO business climate, US GDP, initial jobless claims, durable goods data, US personal income, PCE, and consumer sentiment.
In summary, while global markets navigate through various challenges and uncertainties, staying informed and proactive in monitoring key events and trends across different asset classes will be crucial for investors to make sound financial decisions.
Stay tuned to Extreme Investor Network for more updates and insights on the latest market developments!