The news shaping the markets today

Russia said a strike on Ukraine’s Black Sea port of Odessa had destroyed a Ukrainian warship along with weapons from the US. Despite continued geopolitical tensions, the US dollar index traded slightly lower.

US S&P Global services PMI declined to 47 in July, from 52.7 in the previous month. The figure missed market estimates of 52.6 and sent the Nasdaq 100 index lower by around 225 points on Friday.

Canada’s retail sales grew by 0.3% in June, according to preliminary estimates. The CAD/USD forex pair remained under pressure due to strength in the US dollar.

Ireland’s wholesale prices rose 6.2% year-over-year in June, compared to the six-year high of 7.3% in the previous month. However, the EUR/USD pair declined slightly in forex trading this morning.

Russia’s central bank cut its key interest rate by 150bps to 8% at its recent meeting, exerting pressure on the RUB/USD forex pair.

What’s happening: Shares of Verizon Communications fell on Friday, despite the company reporting better-than-expected revenues for its second quarter.

What happened: Investors grew concerned about Verizon’s bottom-line, especially after the company trimmed its profit forecast for the full year.

Although the largest US wireless carrier reported growth in revenues at most of its segments, one major division posted a decline.

How were the results: The New York-based company reported its flat sales for the second quarter.

• Sales came in at $33.79 billion, slightly ahead of the consensus estimate of $33.77 billion.
• Adjusted earnings declined by 4.4% year-on-year to $1.31 per share, missing Street expectations of $1.32 per share.

Why it matters: US inflation soaring to multi-decade highs impacted Verizon’s business during the second quarter. The company was forced to raise the prices of its plans in June and warned that it may need to raise prices again in case costs continue to rise.

Although the wireless carrier added merely 12,000 new post-paid subscribers during the quarter, it was better than the loss of 36,000 subscribers reported in the first three months of the year. However, the net adds missed markets expectations of 150,800 by a wide margin.

Last week, the company’s rival AT&T had reported upbeat Q2 earnings but cut its full-year cash flow projections.

Verizon’s total wireless service revenues surged 9.1% year-over-year to $18.4 billion. While total consumer revenues grew 10.5% year-over-year to $25.6 billion, total business revenues came in at $7.6 billion, down 1.8% from a year earlier.

Management lowered their full-year guidance for wireless service revenue growth to 8.5%-9.5%, from the earlier projected 9%-10%. The company also sees service and other revenue growth of (1)% to 0%, compared to the previous forecast of 0%.

The full-year guidance for adjusted earnings was also reduced to $5.10-$5.25 per share, from the earlier range of $5.40-$5.55 per share.

How shares responded: Verizon’s shares fell 6.7% to close at $44.45 on Friday, recording their biggest loss in 14 years. The stock has lost 16% over the past six months.

What to watch: Investors will continue monitoring rising inflation levels and announcements by the company to increase the price of its plans.

The markets today

Crude oil will be in focus today after closing lower on Friday

Context: Oil futures fell on Friday, with WTI prices settling below $100 per barrel.

Details: Demand for gasoline are showing signs of faltering during the mid-summer driving season in the US.

The EIA (Energy Information Administration) said last Wednesday that US gasoline inventories had risen by 3.5 million barrels last week compared to expectations of an increase of 400,000 barrels.

However, prospects of tight supply are expected to limit the downside in oil prices in the near term.

WTI crude for September delivery declined $1.65, or 1.7%, to close at $94.70 per barrel on the NYMEX, on Friday. However, prices for the September contract gained around 0.1% for the week.

September Brent crude fell 66 cents, or 0.6%, to close at $103.20 per barrel on ICE Futures Europe, gaining 2% from the front-month settlement level a week earlier. October Brent declined $1.10, or 1.1%, to $98.38 per barrel.

In other energy trading, August gasoline added 2.3% to $3.2228 a gallon, with gains of 0.3% for the week, while August natural gas rose 4.6% to $8.299 per million British thermal units, surging more than 18% last week.

What to watch: Investors await the release of crude oil stockpile data from the API (American Petroleum Institute) and EIA (Energy Information Administration) this week. US crude oil inventories had fallen by 0.446 million barrels in the week ended July 15, compared to an increase of 3.254 million barrels in the prior period.

Other Markets: US indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.43%, 0.93% and 1.77%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Saudi Arabia’s balance of trade, Turkey’s manufacturing confidence index, capacity utilization rate and total motor vehicles production, Germany’s Ifo business climate indicator, Ifo current conditions and Ifo expectations, UK’s CBI industrial trends orders and CBI’s quarterly gauge of manufacturing optimism, Brazil’s FGV consumer confidence, Mexico’s overall index of economic activity, Brazil’s current account, foreign direct investment and Central Bank of Brazil’s focus market readout, as well as US Chicago Fed national activity index and Dallas Fed manufacturing index.

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