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Tuesday, June 14, 2022
Russia’s military forces have increased their grip on Ukraine’s eastern city of Sievierodonetsk, which has cut off the final routes for evacuation of citizens. The news sent the safe-haven US dollar index higher this morning.
Investor risk appetite was hit by rising geopolitical tensions and inflation fears. Bitcoin tumbled below the $22,000 level this morning, declining to its weakest mark since December 2020.
Australia’s NAB business confidence index fell to a four-month low of 6 in May, from 10 in the previous month. However, the recent reading remained above the long-run average, lending support to the AUD/USD forex pair.
New Zealand’s food price inflation accelerated to 6.8% year-over-year in May, from 6.4% in the earlier month. Despite this, the NZD/USD pair rose in forex trading this morning.
Brazil’s trade surplus narrowed to $4.9 billion in May, from $8.5 billion in the year-ago month. The latest reading was above market expectations of $4.6 billion, which lent support to the BRL/USD forex pair.
What’s happening: Shares of Oracle Corp jumped in the after-hours session on Monday, following better-than-expected results for its fiscal fourth quarter.
What happened: Several tech companies, including Microsoft and Salesforce, experienced the negative impact of sharp currency fluctuations.
Despite around 50% of its overall sales being outside the Americas, Oracle managed to beat revenue expectations.
How were the results: The Austin, Texas-based company reported growth in sales for its fiscal fourth quarter, with both top- and bottom-line metrics surpassing market views.
Why it matters: The US dollar has been on an upturn and surged to its strongest level since April 2020 on Monday, amid prospects of aggressive rate hikes by the Federal Reserve due to curb inflation. As a result of currency volatility, Oracle’s quarterly revenues contracted by 5% on a quarterly basis.
Oracle completed its $28.3 billion acquisition of Cerner last week, with the transaction expected to be accretive to the company’s earnings in fiscal year 2023.
Oracle projected revenue growth of as much as 19% and adjusted profits between $1.04 and $1.08 per share in the current quarter, following the Cerner deal. The profit projection came lower than analyst expectations of $1.13 per share.
Although Oracle has been looking to expand its cloud segment, revenues from the segment rose merely 19% to $2.9 billion in the latest quarter. Oracle expects its cloud revenues to grow as much as 25% in the current quarter and by more than 30% during the fiscal year.
The company said its sales growth is being driven by the Fusion and NetSuite cloud applications. Management further suggested that there could be a “major increase” in demand for the infrastructure cloud business.
Oracle’s cloud license and on-premise license sales climbed 18% to $2.54 billion last quarter, while sales of the Fusion application gained 20%.
However, the company warned of a $100 million hit per quarter during fiscal 2023 due to its services being suspended in Russia.
The company’s board declared a quarterly cash dividend of 32 cents per share.
How shares responded: Oracle’s shares climbed 15% to $73.68 in extended trading on Monday, following the release of quarterly results. However, the stock had hit a 52-week low ahead of the earnings report.
What to watch: Traders will keep an eye on US dollar movements as well as the integration of the Cerner acquisition.
Context: Oil futures closed higher on Monday, after recording losses earlier during the session.
Details: China increased covid-19 testing after a resurgence of cases in Beijing. Concerns around China increasing restrictions kept oil prices in check during Monday’s session.
A continuously rising US dollar also exerted pressure on crude prices, as a stronger greenback makes assets more expensive for foreign currency buyers. The ICE US dollar index, which measures the greenback’s performance versus a basket of six major peers, breached the 105 mark on Monday.
During the trading session, fears around restrictions in China eased and were replaced by concerns around supply disruptions, which lend support to oil prices later in the session.
WTI crude for July delivery gained 26 cents to close at $120.93 per barrel on the NYMEX, after dipping to an intraday low of $117.47. August Brent crude climbed 26 cents to settle at $122.27 per barrel on ICE Futures Europe, after hitting a low of $118.93 earlier in the session. Both WTI and Brent crude fell to their weakest intraday levels since June 7 during Monday’s session, after having jumped to three-month highs last week.
In other energy trading, July gasoline declined 13 cents to $4.04 a gallon, retreating from its record high levels recorded last week. July natural gas futures shed 24 cents to reach $8.61 per million British thermal units on Monday.
What to watch: Traders await the API data on crude oil stockpiles in the US, which had risen by 1.845 million barrels in the week ended June 3, following a decline of 1.181 million barrels in the prior week.
Other Markets: European trading indices closed lower on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 1.53%, 2.43%, 2.67% and 2.41%, respectively.
|Technical Levels||News Sentiment|
|GBP/USD – 1.2128 and 1.2152||Positive|
|AUD/USD – 0.6923 and 0.6943||Positive|
|Gold – 1825.24 and 1826.84||Positive|
|Copper – 4.2021 and 4.2086||Positive|
|Nikkei 225 – 26385.50 and 26467.00||Positive|
|Futures at 0400 (GMT)|
|EUR/USD (1.0417, 0.10%)||Dow ($30,629, 0.42%)||Brent ($122.46, 0.2%)|
|GBP/USD (1.2157, 0.19%)||S&P500 ($3,772, 0.48%)||WTI ($121.13, 0.2%)|
|USD/JPY (134.25, -0.13%)||Nasdaq ($11,398, 0.62%)||Gold ($1,827, -0.2%)|
Germany’s consumer prices, ZEW indicator of economic sentiment and ZEW current conditions index, UK’s unemployment rate, claimant count change and employment change, India’s wholesale price inflation rate, Eurozone’s ZEW indicator of economic sentiment, US NFIB small business optimism index, producer price inflation, Redbook index and IBD/TIPP economic optimism index, Canada’s new motor vehicle sales and manufacturing sales, Brazil’s industry confidence indicator, China’s foreign direct investment, as well as Argentina’s inflation rate.