Welcome to the ASX Stocks at Breakfast
The Australian share market is expected to rise on the last week of the trading session,
tracking strong cues from Wall Street which jumped to a seven-week high despite weak gross
domestic product (GDP) data in the US. The contraction in the US economy has raised hopes
among investors about a less hawkish US Federal Reserve. On the other hand, domestic mining
and energy shares are expected to climb on robust commodity prices.
The latest ASX Futures indicate that the benchmark ASX 200 index would open 45 points or 0.65%
higher on Friday. On Thursday, the ASX 200 rose 1% to 6,889.7 points. Although inflation
has risen to 6.1% in Australia. In the USA recessions have always involved more unemployment
however the US unemployment rate decreased to 3.6% from January highs of 4%. Some believe
the looming recession could very well be a “white-collar” one being termed a milder
"growth recession," The downturns seem more structural being impacted by the Ukraine Russia
conflict and energy crisis rather than cyclical. Tech stocks have been reporting this week.
Apple and Amazon have been topping estimates with strong Q3 estimates.
Amazon and Apple posted better than expected sales, reassuring investors that the tech
giants will be able to weather slowdowns in global economies.
Amazon forecast in a trading update that higher fees for its Prime membership would boost
its bottom line, while Apple said demand for its all important iPhone remained strong.
Apple's profits dropped almost 11% from a year ago to $19.4bn (£15.9bn), as it wrestled
with Covid-19 lockdowns in China, while Amazon lost $2bn, hit by changes to the value of
its investment in electric carmaker Rivian Automotive.
Alphabet GOOGL is still up today 1.03% although Q2 reported earnings that came in below expectations,
it’s up 3.04% over the last 5 days. Google is currently priced at $1143.22
It could be that Snap Inc drastic fall on Friday of close to 30% after the announcement
of low Q2 earnings could have softened the blow for the disappointing earnings report
from it’s parent company Google. Snap Inc is currently priced at $9.67 being 12.88%
down over the last 5 days.
The company reported second-quarter revenue of $69.69 billion, up 13% year over year.
Net income was $16 billion, or $1.21 per share. Wall Street analysts forecast earnings per
share of $1.27, according to FactSet, with revenue of $69.87 billion. Operating income
of $19.4 billion was below expectations of $20.14 billion
US economy contracted from April to June to fall for a second straight quarter. The second
quarter GDP of US fell at a 0.9% annualised rate, higher than the expectations of economists
and first-quarter contraction of 1.6%. In the US, the Dow Jones jumped 1%, the S&P 500
surged 1.2%, and the NASDAQ ended 1.1% higher.
In Europe, the Stoxx 50 rose 1.2%, the FTSE was flat, the DAX surged 0.8%, and the CAC
ended 1.3% higher.
MSCI's gauge of stocks across the globe gained 1.24%.
Bond yields
On Thursday, bond yields declined following the release of US GDP growth data. The two-year
Treasury yields fell further on Thursday after dipping under 3% on Wednesday. Benchmark 10-year
notes’ yield last fell to 2.6723%, from 2.732% late on Wednesday. The yield on 30-year
bond last dipped to 3.0219%, from 3.002%.
Oil prices remain mixed
On Thursday, oil prices remained mixed as recession concerns weighed on prices. Traders
were also concerned after the International Monetary Fund (IMF) said that if Russia completely
cuts off supplies by year-end, the region could face zero economic growth in 2023.
WTI closed at US$96.42 per barrel, down 0.86%.
Brent crude settled up 0.49% at US$107.14.
Gold prices inch higher
Gold prices rose on concerns over the state of US economy.
Spot gold added 1.3% to US$1,756.59 an ounce.
Meanwhile, iron ore futures hit four-week highs on Thursday, extending their rally to
a fifth session. The prices were boosted by rebounding steel margins in China and hopes
of solid economic recovery for China in the third quarter.
In Crypto Bitcoin and Ethereum were both
up today Bitcoin is at $23,7