Stock Market Today
Futures in the United States are trading flat today as investors await the release of corporate earnings reports, which begin today. This week will undoubtedly be critical for investors as they assess how firm performance compares to inflation and the rising Delta coronavirus variant.
All eyes will be on the banking sector to set the tone for the next few weeks as banks prepare to publish earnings for their second quarter. The coronavirus pandemic turned out to be a blessing in disguise for banks, generating massive profits in 2020. However, the reduction in national lockdowns as a result of the government’s effective vaccination programme would result in lower year-over-year earnings for banks.
The biggest drag would be a drop in trading revenue, which is expected to decline by nearly 28% for top investment banks. Similarly, loan growth is expected to be low because consumers and businesses alike are still flush with trillions of dollars in cash released by the US government in the form of stimulus.
Goldman Sachs and JPMorgan will kick off the season by releasing their results before the opening bell today. The two banks ended yesterday’s sessions 2.3% and 1.4% higher, respectively. Citigroup, Morgan Stanley, Bank of America, and Wells Fargo all finished the day higher as well.
Investors should keep in mind that the report on consumer prices in the United States is also scheduled to be released today. The figures are expected to remain high due to rapid economic recovery, higher product prices, and supply chain issues.
Having said that, according to the Federal Reserve’s mantra, inflation is expected to be short-term, as evidenced by lower-than-expected payroll data released in recent days. Furthermore, investors should be aware that problems such as supply chain issues have already been priced into stock markets.
The Dow Jones Industrial Average rose 0.36%, while the S & P 500 index rose 0.35%.The Nasdaq, the tech-savvy index, rose by 0.21%, and the Russell 2000, the small-cap index, increased by 0.08%.
Over the weekend, billionaire Richard Branson made history by gliding through space, paving the way for long-awaited space travel. The company is aiming for wealthy customers who are willing to pay exorbitant prices for the experience of a lifetime. Amazon founder Jeff Bezos is set to take off next week.
Following the successful launch, Virgin Galactic Holdings filed to raise nearly $500 million through the issuance of shares. Following the announcement, the company’s stock price plummeted to its lowest level in nearly seven months. Investors are concerned that the company is likely facing capital constraints, forcing it to turn to financial markets to raise additional funds.
Following crackdowns and strict controls, the ill-famed digital assets have been in a slump as they navigate through a correction phase. The largest crypto exchanges such as Coinbase and Binance have posted a 40% decline in trading volumes in June.
On the other hand, the future outlook for cryptocurrencies remains positive because institutional investors are heavily invested in the advancement of block chain technology, and, according to various reports, future generations are more likely to shift towards digital assets as they find them easier to use with the constant advancement of technology.
Gold and the U.S. Dollar
Investors should keep a close eye on economic reports due this week, as they may provide hints about future changes in monetary policy. Today’s inflation figures are expected to remain hot, prompting hawks to consider raising interest rates sooner. In anticipation of such a scenario, the dollar index was trading higher on Monday, while gold prices fell. Gold is currently trading near $1,811 per ounce.
However, not everything is negative because inflation is expected to be temporary, reducing pressure for a policy rate hike. Investors should scrutinise Jerome Powell’s appearance this week to see how his tone relates to future economic forecasts.
Crude oil futures fell yesterday on concerns about an increase in cases caused by the Delta variant, which is forcing various countries to resume social curbs. The increase in cases and an unequal distribution of vaccinations has created a massive disparity, threatening a quick global economic recovery, with some countries celebrating the end of the pandemic while others facing a wildfire of cases. According to a Reuters survey, 69 countries are experiencing a surge in infections, with cases reaching 478,000 per day.
As the number of cases grows, countries may be forced to revert to lockdowns, reducing demand for oil. Furthermore, the impasse between OPEC+ members has raised uncertainity relating to future oil supply.
Brent crude oil settled at $75.26 per barrel, gaining 0.13%, and U.S. West Texas Intermediate futures settled at $74.23 per barrel, surging 0.18%.
Asian Stock Markets
Stock market indices are on the rise in Asia as stock traders await China’s trade data for June. The Nikkei 225 index in Japan jumped 0.78% in morning trade, and the Shanghai Composite Index rose nearly 0.33%. As of 10:51 p.m. EST, the ASX 200 index rose 0.39%, and Seoul’s Kospi had increased 0.72%. Hong Kong’s Hang Seng index hopped 1.72%.