APAC APAC APAC

APAC Daily Digest: What is happening in markets and what to consider next – August 9, 2022

Equities 5 minutes to read
Saxo-Strats
APAC Strategy Team

Summary:  Revenues misses and weaker-than-expected guidance from Nvidia and others dragged technology names and stirred some concerns about potentially more downward earnings revision from other companies. Moderation of U.S. consumers’ inflation expectations helped provide a bid for long-end treasuries and brought the yield curve further inverted.


What is happening in markets?

  

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) 

U.S. equities pared a 1% rally in the morning and finished moderately lower, S&P 500 -0.12%, Nasdaq 100 -0.37%.  Tech giant Nvidia (NVDA:xnas) reported preliminary Q2 revenues of US$6.7 billion, missing the expected US$8.1 billion by 17%. The company said demand for its video game processors being weak and the challenging market conditions will persist in Q3.  Share prices of Nvidia fell 6.3%. Palantir Technologies (PLTR:xnys) plunged 14% after reporting guidance expecting slower growth.  The news sparked some concerns among investors’ about more earnings downgrades for the technology sectors.

U.S. 2-10 yield curve getting more inverted

U.S. treasuries started to rally during London hours, as German bunds and gilts gained, and traded well bids, especially the longer end of the curve, throughout the U.S. session. The long-end was help by moderation of U.S. consumers’ expectations of incoming inflation. In the New York Federal Reserve Banks’s consumer survey, U.S. consumer expectations for inflation over the coming 1 year fell to 6.2% in July  (vs 6.8% in June) and expectations for inflation over the coming 3 years fell to 3.2% in July (vs 3.6% in June), the lowest since April 2021.  In the survey, consumers’ 5-year inflation expectations came down to 2.3% in July (vs 2.8% in June). The 10-year yield declined 7bps to 2.76%.  As the 2-yield was down only 2bps to 3.21%, the 2-10 year yield spread further inverted to -45bps, approaching its -56bps low in 2000. 

Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg)

Stocks traded in Hong Kong and mainland bourses finished Monday moderately lower, Hang Seng Index -0.77%, CSI300 -0.2%.  Chinese internet, online education and Chinese property stocks traded in Hong Kong were mostly down.  Hang Seng Tech Index (HSTECH.I) lost 1.8%, Alibaba (09988:xhkg) -4.4%, Tencent (00700:xhkg) -2.7%, Xiaomi (0181:xhkg) -3.6%, JD.COM (09618:xhkg) -3.3%. After the market close, a report from Bloomberg saying that India, the largest overseas market of Xiaomi, is going to restrict the company from selling smartphones cheaper than 12,000 rupees (USD150).  Cathay Pacific (00293:xhkg) gained 1.4% following Hong Kong’s announcement of cutting inbound travelers’ hotel quarantine to 3 days from 7 days.  In the mainland, the lockdown of Hainan, a southern resort island, triggered some buying of traditional Chinese medicine and Covid-treatment related names. 

Australian dollar rallied against the U.S. dollar

DXY (DXU2) finished Monday trading 0.2% lower.  Among the G10 currencies, the Australian dollar was the top performer and rallied 1.1% versus the greenback.  Euro and JPY were little changed against the U.S. dollar.

Crude oil prices (CLU2 & LCOV2)

WTI Crude gained 1.6% to USD90.45, being helped by stronger Chinese import figures.

What to consider?

Nvidia preannounced weaker-than-expected revenues

Nvidia pre-announced preliminary Q2 revenues coming at USD6.7 billion (-19% QoQ, +3% YoY), 17% below the company's prior guidance and below market expectations.  Weaknesses in the processors for the gaming industry, and to lesser extents, the data center and professional visualization industries dragged down revenues.  

Softbank's Vision Funds suffered large losses

Softbank reported a net loss of 3.16 trillion yen and its Vision Funds business segment reported pretax losses of JPY2.33 trillion. The pre-exit unrealized losses in the Vision Funds 1 & 2 were USD10.9  billion for listed stocks and USD8.9 billion for unlisted stocks.  The company announced smaller additional share buyback authorization of 400 billion yen and said that the company may not use all of it in the coming 12 months.

For a week-ahead look at markets – tune into our Saxo Spotlight.

For a global look at markets – tune into our Podcast.

 

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.