Apple shares spike after strong Q2 print

The news shaping the markets today

Russia’s military forces have taken over Ukraine’s second-biggest power plant in the eastern Donetsk region. The news sent WTI crude oil prices higher this morning.

The Macau Monetary Authority raised its base rate by 75 basis points to 2.75%, representing the fourth rate hike this year. Despite this, the MOP/USD forex pair remained under pressure.

Australia’s retail sales grew by 0.2% to another record high of A$34.24 billion in June, following 0.7% growth in May, which sent the AUD/USD pair higher in forex trading this morning.

Hong Kong’s Monetary Authority boosted the base rate by 75 basis points to 2.75%, announcing the fourth rate increase this year. However, the HKD/USD forex pair remained flat after the news.

New Zealand’s ANZ Business Outlook Index rose to -56.7 in July, from -62.6 in the previous month, lending support to the NZD/USD pair in forex trading this morning.

What’s happening: Shares of Meta Platforms fell in after-hours trading on Wednesday, following the company’s release of downbeat results for its second quarter.

What happened: Meta Platforms (earlier known as Facebook) reported mixed user growth results for the quarter.

The company also issued a weak outlook for the third quarter and warned of rising costs due to inflation.

How were the results: The Menlo Park, California-based company reported its first-ever quarterly decline in sales, which also missed market views.

• Total revenues declined 1% to $28.8 billion, from $29.1 billion in the previous year, and fell short of the consensus estimate of $28.9 billion.
• Earnings came in at $2.46 per share for the second quarter, missing Street expectations of $2.61 per share.

Why it matters: Strength in the US dollar adversely impacted the social media giant’s results, as a substantial portion of its revenues is generated in foreign currencies, which brought in lower dollars.

With Alphabet recently reporting growth in quarterly revenue, investors were even more disappointed with the earnings call of Meta Platforms.

The company’s core business showed signs of competitive pressure from TikTok. Despite this, Meta Platforms said its short video product, Reels, was recording more than $1 billion in annual revenues.

Monthly active users on the company’s social media platform, Facebook, rose 1% year-over-year to 2.93 billion in the quarter, but still missed Street expectations. However, daily active users surpassed market views, coming in at 1.97 billion, up 3% year-over-year.

The Reality Labs unit posted sales of $452 million, down from $695 million in the first quarter.

The company’s operating profit margin shrank to 29% in the second quarter, from 43% in the earlier period, amid a sharp rise in costs.

Meta Platforms said it had repurchased shares worth $5.08 billion during the second quarter.

Management guided to a decline in Q3 revenues to $26-$28.5 billion, which would represent the second straight year-over-year decline. The figure was short of analyst projections of $30.52 billion.

How shares responded: Shares of Meta Platforms fell 4.7% to $161.70 in after-hours trading, following the release of quarterly results. The stock had gained 6.6% during the regular trading session. The company’s shares have lost around 50% year to date.

What to watch: Investors will continue monitoring the US dollar, activities of Meta’s competitors, and further growth in the company’s expenses due to inflation.

The markets today

Crude oil will be in focus today after closing higher on Wednesday

Context: Oil futures moved higher on Wednesday, following the release of US government data on crude supplies.

Details: Oil prices rose in early trading on Wednesday, after the EIA (Energy Information Administration) reported a decline in US crude, gasoline and distillate supplies for the latest week.

US crude inventories contracted by 4.5 million barrels in the week ended July 22, much higher than analyst projections of a decline of 800,000 barrels. On Tuesday, the API (American Petroleum Institute) also reported a decline in US crude stockpiles of 4 million barrels last week. Gasoline supplies are down 3.3 million barrels, while distillate supplies declined by 800,000 barrels last week.

The gains in oil prices were capped by concerns around a slowdown in global economic growth, with most central banks around the world adopting aggressive monetary tightening policies. The Federal Reserve raised its interest rates by another 75bps late Wednesday.

Natural gas futures recorded losses on Wednesday after rising for three straight sessions. Natural gas prices had settled at a seven-week high on Tuesday after Russia’s Gazprom announced plans to reduce flows through the Nord Stream 1 pipeline to Germany to 33 million cubic meters.

WTI crude for September delivery gained $2.28 to close at $97.26 per barrel on the NYMEX on Wednesday. Brent crude for September delivery rose 93 cents to $107.55 per barrel on ICE Futures Europe.

In another energy trading, August gasoline gained 7 cents to reach $3.44 a gallon, while August heating oil added 13 cents to $3.73 a gallon. August natural gas bucked the trend and dropped 31 cents to $8.69 per million British thermal units.

What to watch: Traders await the release of the EIA’s data on natural gas supplies due today. Working gas held in storage facilities in the US had risen by 32 bcf (billion cubic feet) during the week ending July 15, compared to a 58 bcf increase in the prior week.

Other Markets: European trading indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.57%, 0.53%, 0.75% and 0.47%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

France’s producer price inflation, Spain’s unemployment rate, retail sales and business confidence, Turkey’s economic confidence index, inflation report, foreign exchange reserves and Central Bank of Turkey’s MPC meeting summary, Italy’s industrial sales, Eurozone’s economic sentiment indicator, industrial confidence indicator, selling price expectations, services confidence indicator, consumer confidence indicator and consumer inflation expectations, South Africa’s producer price inflation, Canada’s CFIB’s Business barometer long-term optimism index, Mexico’s unemployment rate, India’s money supply M3, Brazil’s producer prices and net payrolls, Germany’s inflation rate, Canada’s average weekly earnings, US GDP growth rate, initial jobless claims, continuing jobless claims, natural gas stocks change and Kansas City Fed’s manufacturing production index, Argentina’s consumer confidence, Saudi Central Bank’s interest rate decision, as well as China’s foreign direct investment.