Global Courant
US Treasury yields are rising as investors weigh their interest rate decisions
US Treasury yields were higher on Tuesday as the Federal Reserve meeting approaches and investors consider the outlook for interest rate decisions from central banks in major global economies expected this week.
At 4:27 a.m. ET, the 10 year treasury traded more than two basis points higher at 3.8845%. The 2 years treasury the yield was up more than two basis points last year to 4.8619%.
Hong Kong markets are up 4% as real estate stocks recover
Hong Kong’s Hang Seng index rose more than 4% on Tuesday, led by real estate stocks that rallied after China pledged more support for its beleaguered real estate sector.
Real estate developer Longfor group jumped nearly 20% and was the biggest winner on the index while property management company Country Garden Services Holdings increased by 17.54%.
Hong Kong technology names were also among the top gainers on the index, with the Hang Seng Tech index rising 4.57% and led by electric vehicle manufacturers. Chinese EV maker Xpeng saw a gain of 12.75% while Nio climbed 9.79%.
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Stocks in motion: Unilever up 5%, Dassault Systemes down 5%
Earnings were the main driver of individual stock price action in Europe on Tuesday.
Unilever Shares were up 5% in early trading and led the Stoxx 600 after the British consumer goods company beat analysts’ expectations by reporting a 7.9% increase in underlying sales in the second quarter.
At the bottom of the European blue chip index, Dassault Systems fell 5% after its second-quarter earnings report, in which the French software company reported a slowdown in growth in its 3D and cloud businesses.
—Elliot Smith
A lukewarm opening for European equities
The pan-European Stoxx 600 index hovered around the flatline in early trading, with mining stocks rising 2.8% while healthcare stocks fell 0.8%.
South Korea’s economy grows by 0.9% in the second quarter
South Korea’s gross domestic product grew 0.9% year-on-year in the second quarter of 2023, according to preliminary estimates.
This was unchanged from the 0.9% in the first quarter and beat economists’ estimate of 0.8% polled by Reuters.
On a quarterly basis, South Korea’s GDP grew by 0.6%, the fastest quarterly growth since the second quarter of 2022.
— Lim Hui Jie
At the start of earnings season, companies are up but their stocks are missing, says JPMorgan
It’s still early in the season for Q2 reporting, but so far the majority of both US and European companies are beating analysts’ estimates, but their stocks are underperforming, according to JPMorgan.
“Of the initial reports, with 70 S&P 500 results and 90 in Europe, the majority beat consensus forecasts,” Mislav Matejka, head of global and European equity strategy at JP Morgan, said in a note to clients early Monday. “The sample set is relatively small, but the stock price’s reaction to the beats is worse than usual.”
In addition, JPMorgan looked at companies issuing profit warnings ahead of Q2 earnings, and stocks within that group are down 10% or more, with the exception of some energy and chemical stocks, likely due to their poor performance in the first half of July.
The bottom line is that JPMorgan doesn’t expect Q2 results to give the market a big boost compared to Q1 for a number of reasons. “Stock price reactions in general could be more muted this time around, or at least positive momentum might have no legs,” Matejka wrote. “Going into the first quarter, sentiment and positioning were cautious, but the stock market was strong at the start of the second quarter reporting season, suggesting that buyer expectations are higher, even if analyst forecasts are subdued. It is also questionable whether expectations will be raised based on the quarterly numbers, as some momentum was lost as we progressed through the quarter, and the Chinese data stream continues to disappoint.”
— Scott Schnipper, Michael Bloom
Stock futures open flat on Monday
US stock futures opened little changed on Monday.
Futures linked to the Dow Jones Industrial Average lost just 5 points, or 0.01%. Meanwhile, S&P 500 futures and Nasdaq 100 futures rose 0.02% and 0.03%, respectively.
— Hakyung Kim
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