The news shaping the markets today

Russia’s President Vladimir Putin had a meeting with Turkish President Recep Tayyip Erdogan and Iranian President Ebrahim Raisi, during his second foreign trip since the invasion of Ukraine. With hopes of some resolution, the safe-haven US dollar declined slightly this morning.

The People’s Bank of China maintained its one-year loan prime rate unchanged at 3.7%, sending the CNY/USD forex pair slightly lower.

Australia’s Westpac-Melbourne Institute Leading Economic Index fell by 0.2% year-over-year in June, following a 0.1% decline in the previous month. However, the AUD/USD pair rose in forex trading this morning.

Bitcoin prices surpassed the $23,000 level for the first time in over a month, with improving investor risk appetite globally.

Colombia’s trade deficit widened to $2.25 billion in May, from $1.28 billion in the year-ago month. The COP/USD pair remained flat in forex trading this morning.

What’s happening: Shares of Johnson & Johnson fell on Tuesday, despite the company reporting better-than-expected results for its second quarter.

What happened: Although Johnson & Johnson reported healthy profits for the quarter, it lowered its guidance for the full year citing the strength in the US dollar, which erodes the value of its global revenues.

The company reported a decline in sales in most of its segments but one of its major divisions provided support to its overall sales during the quarter.

How were the results: The New Brunswick, New Jersey-based company reported growth in sales and earnings for the second quarter.

• Net sales rose 3% year-over-year to $24.02 billion, surpassing market expectations of $23.81 billion.
• Adjusted earnings came in at $2.59 per share, up 4.4% year-over-year, beating the consensus estimate of $2.57 per share.

Why it matters: Johnson & Johnson managed to surpass Street expectations due to increased demand for its cancer drug and covid-19 vaccine.

The company’s covid-19 vaccine sales more than doubled from last year to $544 million, while sales of its cancer drug Darzalex came in at $1.99 billion, ahead of market expectations of $1.84 billion.

Medical Devices sales fell 1.1% to $6.89 billion, with pandemic-related mobility restrictions in some regions offsetting growth. The Consumer Health segment’s sales declined 1.3% to $3.8 billion, while Pharmaceuticals generated sales of $13.32 billion, up 6.7% in the quarter.

J&J, along with other major US multinational companies, has warned that a stronger greenback could negatively impact overseas revenues. The US dollar index, which measures the US dollar’s performance versus a basket of six major currencies, has climbed over 12% year to date and hit a two-decade high earlier this month.

Management reduced their sales guidance for fiscal 2022 from $94.8-$95.8 billion to $93.3-$94.3 billion, and the adjusted earnings projection from $10.15-$10.35 per share to $10.00-$10.10 per share.

How shares responded: Johnson & Johnson’s shares fell 1.5% to close at $171.69 on Tuesday, following the release of quarterly results. The stock has gained around 4% over the past six months.

What to watch: Investors will keep an eye on the spread of covid-19 infections. Markets will also continue monitoring the US dollar.

The markets today

Crude oil will be in focus today ahead of the EIA’s (Energy Information Administration) data on crude inventories

Context: Crude oil settled higher on Tuesday, extending gains from the previous session.

Details: Oil prices began Tuesday’s session on a negative note but recovered sharply as the session progressed. A weaker US dollar and continued supply concerns lend support to oil prices.

The US dollar index fell around 0.6% to 106.68 on Tuesday. Supply gaps are unlikely to be filled soon by output increased by the OPEC+ nations, despite the US looking to bring more crude to the market. US President Joe Biden’s visit to Saudi Arabia last week did not yield any breakthroughs for higher oil output.

However, growing fears related to a slowdown in global economic growth as the major central banks hike rates and covid-19 restrictions in China kept a lid on oil prices.

The American Petroleum Institute announced late Tuesday that said crude oil stockpiles in the country had increased by 1.860 million barrels in the week ended June 15, following a rise of 4.762 million barrels in the previous week.

WTI crude for August delivery gained $1.62 to close at $104.22 per barrel on the NYMEX on Tuesday, while September Brent crude rose $1.08 to settle at $107.35 per barrel on ICE Futures Europe. Both US and Brent oil had climbed more than 5% on Monday.

In another energy trading, August gasoline gained 4 cents to $3.31 a gallon, while August heating oil fell 3 cents to $3.63 a gallon. August natural gas declined 21 cents to $7.26 per million British thermal units on Tuesday.

What to watch: Traders await the release of the EIA’s data on crude oil stockpiles. US crude inventories had expanded by 3.254 million barrels in the week ended July 8 and are expected to rise by 0.333 million barrels in the latest week. US gasoline stockpiles are projected to decline by 0.733 million barrels, while distillate stockpiles are expected to increase by 1.2 million barrels in the recent week.

Other Markets: European trading indices closed higher on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 1.01%, 2.69%, 1.79% and 1.38%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

UK’s inflation rate, headline rate of input prices, producer prices change and retail prices, Turkey’s consumer confidence indicator, Eurozone’s current account and consumer confidence indicator, South Africa’s inflation rate, Italy’s construction output and current account, Turkey’s total motor vehicles production and government debt, US MBA mortgage applications and existing home sales, Canada’s inflation and producer prices, Russia’s producer price inflation, China’s foreign direct investment, as well as Argentina’s balance of trade and economic activity estimator.

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