Commodities
Nasdaq: the red Snap signal is lit before the rally
Major U.S. stock indices closed on the third consecutive day of growth, but today this rally has a chance to break.
Although the capitalization of Snap (owner of the social network Snapchat) reached only $27 billion yesterday afternoon, after falling more than 5 times, the company has already twice brought down the stocks of corporations valued at hundreds of billions and even trillions of dollars. In May, the collapse was triggered by the announcement that Snap would not meet its revenue and earnings targets. Now the reason was the Q2 report, published after the end of the main trading session.
It was worse than even the downwardly revised forecasts. The loss per share was 2 cents, not one. Revenue fell to $1.11 billion versus an expected $1.14 billion.
Shares of Snap, along with other battered tech stocks, were among the leaders yesterday, adding 5.42% at the close. But within minutes of the report, they collapsed 27.83% on the post-market.
Snap attributed the results to weakening demand on its online advertising platform. It cited a tougher economy, an iOS update in 2021, and increased competition. The company said that even quite healthy businesses have been cutting back on its operations because of cost pressures from inflation. At the same time, it said it wasn’t giving third-quarter forecasts because it’s incredibly difficult to forecast right now.
The market habitually extrapolated this situation to other companies, as it did in May. In particular, this led to a drop in shares of Alphabet, which has a capitalization of more than $1.5 trillion, by almost 3%. Shares of other technological giants also plummeted.
Meanwhile, Thursday was the third straight day of gains for major U.S. indices. The S&P 500 rose 0.99%, the Dow Jones Industrial Average rose 0.51% and the Nasdaq Composite rose 1.36%. Some analysts were already expressing hope that the “bottom” of the market had passed. But the latest events make it doubtful.
In many respects, growth was connected with cases when the statements exceeded downward revised forecasts. But gradually their weight is diminishing. According to Refinitiv, on Tuesday, of the 48 S&P 500 companies that reported earnings, 89.2% exceeded forecasts. On Wednesday, after 60 reports, they were 78.3%. And yesterday morning, when 91 companies already reported, that share dropped to 78%.
Some disappointments turn out to be very noticeable, although they are not always related specifically to the Q2 results. For example, AT&T stock fell 7.6% yesterday after its annual cash flow forecast fell – the 3-month results beat expectations. Shares of American Airlines fell 7.4% due to an anticipated slowdown in growth. Carnival lost more than 11% after it announced it had placed an additional share issue. United Airlines, on the other hand, fell just below expectations, with its stock plummeting by more than 10%.
Nevertheless, the market was generally up yesterday. Today, it’s going to be more difficult. Snap isn’t the only one with bad surprises after the close of the main trading session.
Shares of toy maker Mattel fell 2.8% as it said its earnings were hurt by a sharp rise in the dollar. Capital One Financial lost 4.9% after disappointing results. Intuitive Surgical shares plummeted 12.6% for a similar reason. And Boston Beer also lost 8.4% due to a decline in its annual outlook.
At the same time, the impact of Snap on the quotes of other companies on Thursday evening expanded like circles on water. Social networks were falling. For example, Pinterest stock was losing more than 7 percent. Advertising and related technology companies were selling off. In particular, Trade Desk stock was down about 7%.
A lot of other companies, from Apple and Microsoft to Walmart and Target, also rode this wave, albeit not as badly (down within a percent). Futures on major U.S. indices went into the red zone. So Friday does not promise to be an easy day. But Twitter is just reporting today, and whether the fall will accelerate or slow down may be determined by this very company.
Investing.com– Gold prices fell slightly in Asian trade on Tuesday but remained close to recent peaks as traders awaited key U.S. inflation data for more cues on the Federal Reserve’s plans to begin cutting interest rates.
The yellow metal benefited from safe haven buying following a severe risk-off move across markets last week, which was triggered by concerns over slowing economic growth.
Spot prices came within spitting distance of a record high on Friday, but then pulled back as the advanced ahead of this week’s inflation reading.
fell 0.1% to $2,502.07 an ounce, while expiring in December fell 0.1% to $2,531.0 an ounce by 00:22 ET (04:22 GMT).
Gold steady with Inflation, Fed meeting in sight
Focus this week is squarely on inflation data, due on Wednesday, for more cues on the U.S. economy.
Any signs of cooling inflation are likely to spur increased bets on lower interest rates in the coming months- a scenario that bodes well for gold.
Wednesday’s inflation reading comes just a week before a , where the central bank is widely expected to cut interest rates by 25 basis points.
Expectations of the September cut were also a key driver of gold’s recent gains, given that the cut is likely to kick off an easing cycle by the Fed.
Lower rates bode well for gold, given that they reduce the opportunity cost of investing in the yellow metal.
Other precious metals fell on Tuesday, having largely lagged gold in recent weeks. fell 0.1% to $945.0 an ounce, while fell 0.2% to $28.590 an ounce.
Copper edges lower, Chinese trade data brings little cheer
Among industrial metals, prices retreated on Tuesday, taking little support from data that showed some economic resilience in top importer China.
China’s unexpectedly grew in August on strength in the country’s . But laggard offset cheer over this trend, given that they signaled sluggish demand in the country.
China’s overall copper imports shrank 12.3% year-on-year in August, although they were still in positive territory for the first eight months of the year.
The soft import data came following a string of weak readings on China’s economy over the past week, which raised concerns over slowing growth in the world’s biggest copper importer.
The data, coupled with a broader risk-off move in global markets, saw copper nursing steep losses over the past week.
Investing.com– Oil prices steadied in Asian trade on Tuesday as traders sought to gauge the impact of Tropical Storm Francine on U.S. oil production, while concerns over sluggish demand remained in play.
Prices were nursing steep losses from the prior week amid renewed concerns that global oil demand will slow, especially following middling economic readings from top importer China. The prospect of oversupply and increased production also weighed.
But oil prices rebounded on Monday as sentiment improved.
expiring in November were flat at $71.86 a barrel, while steadied at $67.90 a barrel by 22:37ET (02:37 GMT).
Tropical storm Francine set to batter Gulf of Mexico
A slew of oil companies were seen stopping production and refining activities in the Gulf of Mexico as Tropical Storm Francine made its way towards the U.S. mid-South.
The storm is expected to potentially strengthen into a hurricane before making landfall, and is expected to lash the upper Texas and Louisiana coasts with heavy rain and gale winds this week.
The storm could potentially cause extended disruptions in the energy-rich Gulf of Mexico, reducing crude supplies in North America and presenting a tighter near-term outlook for oil markets.
This notion offered oil markets some support, helping them recover a measure of bruising losses logged last week.
Oil battered by demand concerns, China woes
Oil prices were nursing steep losses in recent sessions as markets fretted over slowing demand, especially in top crude importer China.
A string of weak economic readings from the country for August drummed up concerns over slowing growth, as did signs that increasing electric vehicle adoption was also denting fuel demand.
Beyond China, caution over U.S. interest rates also weighed on oil markets, especially ahead of key inflation data due later this week.
The inflation reading comes just a week before a Federal Reserve meeting, where the central bank is widely expected to cut interest rates by 25 basis points.
By Ahmad Ghaddar
LONDON (Reuters) -Oil prices gave up the previous day’s gains on Tuesday as a weaker demand outlook offset U.S. supply disruptions from Tropical Storm Francine and global oil oversupply risks that continue to weigh on the market.
futures were down 95 cents, or 1.3%, at $70.89 a barrel by 1214 GMT. U.S. West Texas Intermediate crude lost 96 cents, or 1.4%, to $67.75.
Both benchmarks had risen about 1% on Monday.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report on Tuesday that global oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from previously projected growth of 2.11 million bpd.
OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd.
The weakening global demand prospects and expectations of oil oversupply kept the market suppressed.
Chinese data on Monday showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.
And while data released on Tuesday showed China’s exports grew at their fastest in nearly 1-1/2 years in August, imports disappointed against a backdrop of depressed domestic demand.
“The message from China is simple but loud and reverberates throughout the globe,” said PVM Oil analyst Tamas Varga, adding that the country is struggling to encourage spending and boost sluggish demand.
Meanwhile, the U.S. Coast Guard ordered the closure of all operations at Brownsville and other small Texas ports on Monday evening as Tropical Storm Francine barrelled across the Gulf of Mexico. Corpus Christi port remained open with restrictions.
The tropical storm is forecast to strengthen significantly and become a hurricane on Tuesday, according to the National Hurricane Center (NHC).
Exxon Mobil (NYSE:) said it shut in output at its Hoover offshore production platform while Shell (LON:) paused drilling operations at two platforms. Chevron (NYSE:) also began shutting in oil and gas output at two of its offshore platforms.
The U.S. Energy Information Administration is due to publish its short-term energy outlook, with forecasts for the global market and oil output.
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