U.S. Stocks Gain as Taiwan Tensions Ease

Morning Markets

September S&P 500 futures (ESU22) this morning are up +0.64%.  An easing of U.S.-China tensions is boosting stocks after House Speaker Pelosi left Taiwan without incident.  Also, better-than-expected quarterly earnings results from CVS Health and PayPal are boosting the overall market. 

The U.S. Treasury announced this morning that it would auction $98 billion of notes and T-bonds at its Aug quarterly refunding next week, down -$5 billion from the May refunding and the fourth consecutive refunding the Treasury has cut the size of its long-term Treasury issuance. 

Energy stocks may push higher today with oil prices up more than +1.7% after OPEC+ announced that it would boost its crude production target for September by only 100,000 bpd, well below the 600,000 bpd it announced for July and August.  The added production will most likely be met by Saudi Arabia and the United Arab Emirates, the only members among the 23-nation alliance that have excess production capacity.

The Euro Stoxx 50 is up +0.70%.  Gains in European bank stocks are leading the overall market higher today, led by a 3% jump in Societe Generale SA after it reported better-than-expected Q2 revenue and profits and announced new revenue targets.  Limiting the upside in European stocks is weakness in automakers, led by a more than -5% fall in BMW AG after the company said inflation and higher interest rates are hitting consumers and reducing new orders.

Eurozone economic data today was mixed for stocks.  On the negative side, Eurozone June retail sales unexpectedly fell -1.2% m/m, weaker than expectations of no change and the sharpest decline in 6 months.  Also, Eurozone June PPI rose +1.1% m/m and +35.8% y/y, stronger than expectations of +1.0% m/m and +35.7% y/y.  On the positive side, The Eurozone July S&P Global composite PMI was revised upward by +0.5 to 49.4 from the originally reported 49.4.  Also, German June exports rose +4.5% m/m, stronger than expectations of +1.0% m/m.

China’s Shanghai Composite closed down -0.71% today after China hit Taiwan with sanctions over the visit of House Speaker Pelosi to Taiwan.  China halted some trade with Taiwan and planned military drills around the island.  A further deterioration of relations between China and Taiwan could hurt manufacturing and roil supply chains.  China also warned airlines operating in Asia to avoid flying in areas around Taiwan where it is conducting military exercises 

The China July Caixin services PMI unexpectedly rose +1.0 to a 15-month high of 55.5, stronger than expectations of a decline to 53.9.

Japan’s Nikkei Stock Index closed up +0.53%.  A rally in electronics makers led Japanese stocks higher after Iriso Electronics jumped 20% after reporting better than expected quarterly earnings and after Morgan Stanley upgraded the stock.  Also, Japanese food makers rose after Nichirei jumped more than +6% after the company announced price hikes that should boost profits. 

The Japan July Jibun Bank services PMI was revised downward by -0.9 to 50.3 from the previously reported 51.2.

Pre-Market U.S. Stock Movers

CVS Health Corp (CVS) climbed more than +3% in pre-market trading after reporting that Q2 comparable sales rose +8.0%, much stronger than the consensus of +1.4%, and raised guidance on its full-year adjusted EPS estimate to $8.40-$8.60 from a prior view of $8.20-$8.40, above the consensus of $8.35. 

PayPal (PYPL) jumped more than +10% in pre-market trading after reporting Q2 adjusted EPS of 93 cents, better than the consensus of 86 cents, and raised its full-year adjusted EPS of $3.87-$3.97 from a prior view of $3.81-$3.93, above the consensus of $3.83.

Atlas Air (AAWW) rallied more than +9% in pre-market trading on a Bloomberg report that an investor group led by Apollo has agreed to acquire the company for $102.50 a share.

Moderna (MRNA) climbed nearly +3% in pre-market trading after reporting Q2 revenue of $4.75 billion, stronger than the consensus of $4.02 billion.

Sofi Technologies (SOFI) climbed nearly +10% in pre-market trading after reporting Q2 adjusted net revenue of $356.1 million, above the consensus of $339.8 million.

Gilead Sciences (GILD) jumped +7% in pre-market trading after reporting Q2 revenue of $6.26 billion, well above the consensus of $5.84 billion, and raised its full-year product sales estimate to $24.5 billion-$25.0 billion from a prior estimate of $23.8 billion-$24.3 billion, better than the consensus of $24.12 billion.

Match Group (MTCH) sank more than -20% in pre-market trading after reporting Q2 revenue of $794.5 million, below the consensus of $804.1 million.

SolarEdge Technologies (SEDG) fell -2% in pre-market trading after reporting Q2 revenue of $727.8 million, weaker than the consensus of $731.9 million.

Today’s U.S. Earnings Reports (8/3/2022)

CVS Health Corp (CVS), BorgWarner Inc (BWA), Yum!  Brands Inc (YUM), Pinnacle West Capital Corp (PNW), Exelon Corp (EXC), Regeneron Pharmaceuticals Inc (REGN), Trane Technologies PLC (TT), Charles River Laboratories Int (CRL), Moderna Inc (MRNA), NiSource Inc (NI), AmerisourceBergen Corp (ABC), Entergy Corp (ETR), Generac Holdings Inc (GNRC), CDW Corp/DE (CDW), PPL Corp (PPL), DISH Network Corp (DISH), Booking Holdings Inc (BKNG), Qorvo Inc (QRVO), Clorox Co/The (CLX), DXC Technology Co (DXC), Lincoln National Corp (LNC), Host Hotels & Resorts Inc (HST), Lumen Technologies Inc (LUMN), MGM Resorts International (MGM), Albemarle Corp (ALB), Atmos Energy Corp (ATO), Realty Income Corp (O), MetLife Inc (MET), APA Corp (APA), Allstate Corp/The (ALL), McKesson Corp (MCK), Marathon Oil Corp (MRO), ANSYS Inc (ANSS), Ingersoll Rand Inc (IR), FleetCor Technologies Inc (FLT), Ceridian HCM Holding Inc (CDAY), eBay Inc (EBAY), Fortinet Inc (FTNT).

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