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Friday, July 01, 2022
A missile strike on an apartment building in the southern Odessa region of Ukraine killed ten people. The ongoing Russia-Ukraine war sent WTI crude oil prices higher this morning.
China’s Caixin general manufacturing PMI rose to 51.7 in June, from 48.1 in the previous month and surpassed market expectations of 50.1. This was also the first expansion in factory activity in four months and lent support to the CNY/USD forex pair.
Japan’s manufacturing PMI fell to 52.7 in June, following a reading of 53.3 in the previous month. Despite this being the weakest figure in four months, it still represented growth in the factory output and sent the JPY/USD higher in forex trading this morning.
South Korea reported a trade deficit of $2.5 billion in June, compared to a year-ago surplus of $4.37 billion. This being the third consecutive month of deficit exerted pressure on the KRW/USD forex pair.
Singapore’s private home prices accelerated 3.2% during the three months to June, after a 0.7% rise in the prior period. However, the SGD/USD pair remained under pressure in forex trading this morning.
What’s happening: Shares of Micron Technology fell in after-hours trading on Thursday, despite the company reporting upbeat earnings for its third quarter.
What happened: Although Micron reported healthy sales growth for the quarter, it issued disappointing guidance citing several concerns.
However, the largest US maker of memory semiconductors projected a recovery in orders in the ongoing quarter.
How were the results: The Boise, Idaho-based company reported double-digit growth in sales for the quarter ended June 2.
Why it matters: Several chipmakers have been seeing a decline in demand for memory chips due to the spike in inflation levels and growing concerns around recession. The ongoing crisis in Ukraine has also impacted consumer spending on mobiles and computers, which is one of the major users of chips.
Research firm TrendForce projected a 3%-8% decline in DRAM chip prices in the third quarter. DRAM chips contribute around two-thirds of Micron’s overall revenues.
“Recently, the industry demand environment has weakened, and we are taking action to moderate our supply growth in fiscal 2023,” Micron CEO Sanjay Mehrotra said during the earnings call. He expects a recovery in orders “sometime in fiscal year 2023.”
Management projected fiscal fourth-quarter revenues between $6.8 billion and $7.6 billion, significantly below the consensus estimate of $9.05 billion. The company also guided to earnings between $1.43 and $1.83 per share, versus analyst views of $2.62 per share.
How shares responded: Micron’s shares declined 1.4% to $54.50 in after-hours trading, following a 1.3% downturn during the regular trading session on Thursday. The stock has tumbled around 42% year to date.
What to watch: Investors will continue monitoring surging inflation, global economic growth and the Russia-Ukraine crisis.
Context: European markets closed lower on the last trading day of the first half of the year.
Details: Traders shorted European stocks amid rising inflationary pressures and no hopes of an end to the Russia-Ukraine crisis in the near term. Global central banks looking to aggressively increase interest rates also kept investors on the sidelines.
Economic data from the region failed to give direction to investors. France’s consumer price index rose by 5.8% year-over-year in June, following 5.2% in May, sending the CAC 40 lower by 1.8% on Thursday.
Germany’s retail sales grew 0.6% in May, recovering from a 5.4% decline in April. Eurozone’s unemployment rate eased to a record low of 6.6% in May, from 6.7% a month ago.
UK’s current account deficit widened to £51.7 billion in the first quarter of 2022, rising sharply from £7.3 billion in the previous period. London’s FTSE 100 fell 1.96% to close at 7,169.28 on Thursday.
The pan-European Stoxx 600 index fell 1.5% to close at 407.20 on Thursday, with all sectors ending in the negative zone. Banking shares were among the worst performers. Uniper was among the worst performing stocks on the index, with its shares declining around 14% on Thursday after the German energy company withdrew its financial projections for 2022.
The benchmark index lost around 9% in the second quarter, representing the worst three-month period since the outbreak of the pandemic in 2020. The index is also down around 16.6% year to date.
What to watch: Traders await the release of economic data on manufacturing PMI, inflation rate and consumer price index for the Eurozone today. The S&P Global manufacturing PMI is expected to decline to 52 in June, from 54.6 in May. The bloc’s annual inflation rate, which rose to a record high of 8.1% in May, is expected to accelerate to 8.4% in June.
Other Markets: US indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.82%, 0.88% and 1.33%, respectively.
| Technical Levels | News Sentiment |
| USD/CHF – 0.9548 and 0.9554 | Negative |
| USD/CAD – 1.2879 and 1.2887 | Negative |
| Gold – 1804.05 and 1806.10 | Positive |
| Copper – 3.6575 and 3.6808 | Positive |
| S&P 500 – 3772.40 and 3796.40 | Positive |
| Futures at 0400 (GMT) | ||
| EUR/USD (1.0466, -0.18%) | Dow ($30,651, -0.42%) | Brent ($109.56, 0.5%) |
| GBP/USD (1.2143, -0.29%) | S&P500 ($3,775, -0.38%) | WTI ($106.18, 0.4%) |
| USD/JPY (135.34, -0.26%) | Nasdaq ($11,491, -0.33%) | Gold ($1,806, -0.1%) |
Russia’s manufacturing PMI and money supply M2, France’s government budget value, manufacturing PMI and car registrations, Turkey’s manufacturing PMI, Spain’s manufacturing PMI and total vehicle sales, Italy’s manufacturing PMI, car registrations and inflation rate, Germany’s manufacturing PMI, Brazil’s IPC-Fipe inflation, producer prices, balance of trade, manufacturing PMI and industrial output, UK’s mortgage approvals, mortgage lending, consumer credit, manufacturing PMI and net lending to individuals, South Africa’s manufacturing PMI and total vehicle sales, Mexico’s manufacturing confidence index, foreign exchange reserves and manufacturing PMI, India’s balance of trade, value of loans, value of deposits and foreign exchange reserves, US manufacturing PMI, ISM manufacturing PMI, construction spending and Baker Hughes crude oil rigs, as well as Argentina’s tax revenue.
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