Opening Bell: Stock Bulls Return With Earnings And China’s Stimulus

Key Events

European equities and futures on the , and took their cue from a bullish Asian session on Tuesday, as a batch of positive company results led by Alphabet’s (NASDAQ:) earnings beat helped investor sentiment and China introduced measures to support its economy amid global trade tensions. Should upbeat earnings results resume in the North American session, US stocks may be on track to challenge their record highs.

Google’s parent company yesterday as it posted second-quarter revenues of $26.24bn, higher than analysts’ forecast of $25.58bn. The internet giant the impact of a $5bn fine by EU anti-competition regulators, driving its shares 3.6 percent higher after-hours.

Technically, the price is forming a bullish falling flag, complete with an upside breakout.

The pan-European climbed higher with miners and banks, as UBS Group (SIX:) posted a .

The was boosted by upbeat figures from Germany (57.3 vs 55.5 forecast), the continent’s economic engine that has so far defied mounting worries of a disruption to trade.

Global Financial Affairs

Earlier, Asian trade shifted to risk-on after Chinese officials said they will pursue a more vigorous fiscal policy to boost domestic demand and counter any potential trade war-driven drop in exports.

The stimulus package would include corporate tax cuts and infrastructure spending, signaling support to growth won’t just be entrusted to monetary policy from the People’s Bank of China, which already cut reserve ratios three times this year and introduced a host of measures for the private sector, particularly for small business.

Although the Chinese cabinet was cited saying it will adopt a more proactive fiscal policy, the official line is still that of a prudent and neutral stance, according to Credit Suisse analysts.

Shanghai Composite Daily Chart

Shanghai Composite Daily Chart

These signals were nonetheless hawkish enough to push China’s 1.61 percent higher, for an aggregate three-day jump of 4.03 percent, outperforming its regional peers. Technically, the third-day rally, posting three long, solid candles formed a three advancing white soldiers pattern, demonstrating a sign of strength ahead, as it indicates an upward reversal. Also, the price closed above the downtrend line since late May.

Hong Kong’s also leaped 1.44 percent, for a total three-day surge of 2.35 percent. Technically, the index extended an upside breakout of a downtrend line since June 7, as it advances toward the potential neckline of a double-bottom reversal pattern.

Japan’s gained 0.47 percent, ending a three-day losing streak. Technically, the jump follows yesterday’s bullish, inverted hammer, after the preceding day’s high-wave candle signaled a potential reversal, as bulls were questioning the selloff.

USD/CNY Daily Chart

Meanwhile, the extended a decline after hitting its lowest level in more than a year as the PBOC injected $74bn worth of loans into the country’s banking system on Monday, in its biggest-ever batch of medium-term funding. Technically, the USD/CNY is being driven back by supply, confirming a resistance above Friday’s shooting star, for the second day.

During US market trade on Monday, gains in bank shares boosted an otherwise underwhelming session, following warnings from G20 financial leaders that trade tensions threaten to halt the first synchronized global growth in a decade. stocks were dragged down by losses in Amazon.com (NASDAQ:), after President Donald Trump renewed his campaign against the e-retailer.

In other news, is hovering around $68 per barrel, after seesawing intraday yesterday: the commodity price jumped after Trump threatened Iran’s President Hassan Rouhani, but was dragged lower by a strengthening .

Up Ahead

  • Earnings season continues:

    • AT&T (NYSE:), due today, after market close, $0.85 EPS forecast, VS $0.79 same quarter the previous year

    • Facebook (NASDAQ:), due Wednesday after market close, $1.75 EPS forecast VS $1.32 same quarter last year

    • Advanced Micro Devices (NASDAQ:), due Wednesday after market close, $0.1 EPS predicted VS $-0.01 same quarter previous year

    • Qualcomm (NASDAQ:), due Wednesday after market close, $0.58 ESP forecast, VS $0.7 same quarter last year

    • Amazon.com (NASDAQ:), due Thursday after market close, $2.49 EPS forecast, VS $0.4 same quarter last year

    • Intel (NASDAQ:), due Thursday, after market close, $0.99 EPS forecast, VS $0.72 same quarter last year

    • Twitter (NYSE:), due Friday before market open, $0.07 EPS forecast, VS $-0.02 same quarter last year

    • Visa (NYSE:), due Wednesday after market close, $1.08 EPS forecast, VS $0.86 same quarter last year

  • Turkey decides on on Tuesday

  • The European Central Bank’s comes out on Thursday

  • US due on Friday is forecast to have increased 4 percent at an annualized rate in the second quarter, the most since 2014.

Market Moves

Stocks

  • The STOXX Europe 600 climbed 0.3 percent.

  • Futures on the gained 0.1 percent.

  • The rose 0.2 percent to the highest level in more than five weeks.

  • The gained 0.6 percent to the highest level in more than a month.

Currencies

  • The Dollar Index fell 0.02 percent, giving up a 0.21 advance.

  • The euro gained 0.1 percent to $1.1699.

  • The climbed 0.2 percent to $1.3122.

  • The edged 0.1 percent higher to 111.20 per dollar, reaching the strongest level in two weeks.

Bonds

  • The yield on Treasuries gained one basis point to 2.96 percent, the highest level in almost six weeks.

  • Germany’s yield climbed one basis point to 0.42 percent, the highest level in almost six weeks.

  • Britain’s yield inched three basis points higher to 1.298 percent, the highest level in two weeks.

Commodities

  • The fell 0.1 percent.

  • West Texas Intermediate crude dropped 0.1 percent to $67.83 a barrel.

  • LME gained 0.5 percent to $6,163.50 per metric ton, the highest level in more than a week.

  • gained less than 0.05 percent to $1,224.78 an ounce.

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