Market Update – July 21

USDIndex down to 106.62. BoJ stuck to its ultra-accommodative policy stance. Asian markets traded mixed. European and US futures are higher now after paring earlier losses in the wake of reports that the Nordstream 1 pipeline was re-opened as planned. (NASDAQ +1.58%). European markets will wait for the ECB and news on the new anti-fragmentation tool, which may be needed quickly after Italian PM Draghi lost the confidence vote yesterday, with three of his coalition partners withdrawing support. Draghi is likely to resign this morning.

Earnings: Tesla reported adjusted earnings of $2.27 per share on $16.93 billion in revenue in Q2 2022 (+42% revenue). Automotive margins decreased from last quarter and a year ago, impacted by inflation and more competition for EV components. Shares of Alcoa and CSX jumped in extended trading after the companies beat expectations. United Airlines (-6% stock price) reported that it returned to profitability during the second quarter, but results came in below expectations.  Shares of Carnival were under pressure after the cruise company announced that it was selling an additional $1 billion of stock.

ECB Preview: There is a lot riding on today’s ECB meeting, where Lagarde is not just expected to finally lift rates, but also to unveil details of a new “Transmission Protection Mechanism”. There were source stories this week confirming what the minutes to the last meeting and comments since then have made pretty clear, namely that the hawks at the council will be pushing for a 50 bp move.

USDIndex has dropped to 106.62.
EquitiesUSA100 climbed 1.58%, while the USA500 and USA30 rose 0.59% and 0.15%, respectively. Nikkei and ASX managed gains of 0.37% and 0.5% respectively.
Yields 10-year Treasury yield meanwhile is up 2.6 bp at 3.05%.
Oil consolidating between $98-$100. US crude stocks dip, gasoline builds as demand slackens – EIA, Libya’s NOC say production resumes at several oilfields. Canada Keystone export pipeline at reduced rates for third day.
Gold drifts at $1685.
FX MarketsEURUSD got a boost from news of gas deliveries to 1.0230. USDJPY has lifted to 138.62. Cable at 1.1960. NZD is looking weak.

Biggest FX Mover @ (06:30 GMT) EURGBP (+0.56%) retests 3-day high at 0.8540. MAs aligned higher, MACD histogram & signal line at 0, RSI 61 and rising.

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Andria Pichidi

Market Analyst

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