The news shaping the markets today

UK defence secretary Ben Wallace said the country plans to supply several artillery guns and over 1,600 anti-tank weapons to Ukraine. The US dollar traded slightly lower after the news.

Japan’s services PMI fell to 51.2 in July, from a final reading of 54.0 in June, exerting pressure on the JPY/USD forex pair.

Australia’s flash services PMI declined to 50.4 in July, versus 52.6 in the previous month, which sent the AUD/USD pair lower in forex trading this morning.

UK’s GfK consumer confidence indicator held steady at a record low of -41 in July. The news exerted pressure on the GBP/USD forex pair.

South Korea’s producer prices increased 9.9% year-over-year in June. This being the highest producer inflation since October 2008, sent the KRW/USD pair lower in forex trading this morning.

What’s happening: Shares of AT&T fell on Thursday, despite the company reporting better-than-expected Q2 results.

What happened: AT&T reported significant growth in subscriber adds but reduced its full-year guidance for free cash flows by around $2 billion.

Although the company reported a decline in overall revenues for the quarter, sales at one of its major segments grew significantly.

How were the results: The Dallas, Texas-based company reported a decline in sales and earnings for the quarter ended June 30, but both metrics still topped market views.

• Operating revenues declined by 17.1% year-on-year to $29.64 billion, but surpassed the consensus estimate of $29.56 billion.
• Adjusted earnings came in at 65 cents per share, down 27% from the year-ago quarter, but exceeded Street expectations of 61 cents per share.

Why it matters: AT&T increased prices of some of its old plans during June, while warning that prices could be raised again due to high inflation in the US.

The company added over 800,000 post-paid wireless subscribers during the quarter, along with 316,000 new fibre broadband customers.

AT&T’s standalone mobility service revenues rose 4.6% year-on-year to $10.5 billion. The mobility segment’s operating income grew 3.4% year-over-year to $6.2 billion, with margins at 31.2%. The Business Wireline segment’s operating margins came in at 12.7%. The company recorded operating cash flows of $7.7 billion and free cash flows of $1.4 billion.

“As a result of our higher-than-forecasted customer growth, we’re increasing our Mobility service revenue guidance to 4.5-5% growth for the full year. We’re also decreasing full-year free cash flow guidance to the $14 billion range to reflect heavy investment in growth and working capital impacts related to timing of collections,” CEO John Stankey said during the earnings call.

For the full year, the company reiterated its adjusted earnings forecast between $2.42 and $2.46 per share.

How shares responded: AT&T’s shares declined as much as 11% during the regular trading session, representing the biggest decline since 2002. The stock made some recovery after the release of results but ended lower by 7.6% to close at $18.92 on Thursday.

What to watch: Investors will keep an eye on rising inflation levels and the impact of rising plan prices on the company’s subscriber adds.

The markets today

European stocks will be in focus today ahead of a basket of economic reports from the common bloc

Context: European stocks settled mostly higher on Thursday, following a policy decision from the ECB.

Details: The ECB increased rates by 50 basis points at its latest meeting, announcing its first interest rate hike in 11 years. The central bank’s rate increase brings its deposit rate to 0%, after being in the negative zone since 2014.

The UK released data showing inflation surging to another new 40-year high in June amid continued rise in food and energy prices.

Italy’s Prime Minister Mario Draghi announced his resignation, following a collapse in support in the governing coalition. Early elections are now expected to take place in September or October.

Investors focused on earnings reports from several large EU companies. Roche reported a good performance for the first half of the year, confirming a healthy trend in the diagnostics division. ABB reported strong growth in the second quarter, with a positive trend in most of its customer segments. SAP announced 34% growth in Cloud revenues and backlog in the segment of more than €10 billion.

The pan-European Stoxx 600 rose 0.44% to close at 424.39 on Thursday, with financial services stocks leading the gains. Oil and gas stocks were among the worst performers, down around 2%.

London’s FTSE 100 gained 0.09%, while CAC 40 added 0.27%. The DAX 40 bucked the trend and fell 0.27% to close at 13,246.64.

What to watch: Investors await the release of economic data on manufacturing PMI, services PMI and composite PMI from the Eurozone today. The S&P Global manufacturing PMI, which declined to 52.1 in June, is expected to drop further to 51 in July. The services PMI is projected decline to 52 in July from 53 in June, while the composite PMI is expected to ease to 51 in July from 52 in the previous month.

Other Markets: US indices closed higher on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.51%, 0.99% and 1.44%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

UK’s retail sales, manufacturing PMI, services PMI and composite PMI, France’s manufacturing PMI, services PMI and composite PMI, Germany’s manufacturing PMI, services PMI and composite PMI, Central Bank of Russia’s interest rate decision, Mexico’s inflation, India’s foreign exchange reserves, Canada’s retail sales, US manufacturing PMI, composite PMI services PMI and Baker Hughes total rigs, China’s foreign direct investment, Turkey’s total motor vehicles production, as well as Argentina’s leading economic index.

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