Nasdaq Futures Hit Fresh Record High

Daily Analysis - 19/07/2017

Tech Benchmark Logs Longest Winning Streak Since 2015

Nasdaq futures scaled fresh heights on Wednesday, lifted by a 13.00% surge in Netflix shares. The streaming giant added 5.2 million new subscribers during the second quarter, helping push the company’s valuation higher while a Facebook stock surge to a record intraday high bolstered the benchmark’s returns.

US Homebuilder Confidence at 8-Month Low

On the economic data front, homebuilder confidence in the United States fell to its lowest point in eight months, hurt by rising costs for construction materials. The National Association of Home Builders reported that its housing-market index dropped by two points to 64 in July - the worst reading since November of last year.

Separately, the Labor Department said US import prices slipped for a second consecutive month in June amidst further declines in petroleum prices, indicating near-term inflation could remain benign. Import prices dipped -0.20% last month after edging -0.10% lower in May. In the 12-months through June, import prices gained 1.50% to record their smallest increase since last November. In the meantime, Nasdaq futures are currently hovering around the key psychological level of 5900 following the surge higher in Netflix and Facebook shares on Tuesday.

UK Inflation Rate Unexpectedly Falls

The pace of British inflation surprisingly eased last month for the first time since October, reducing pressure on the Bank of England to lift interest rates. Consumer prices gained 2.60% in June compared to a year ago according to figures compiled by the Office for National Statistics, down from an almost four-year high of 2.90% recorded back in May. Apart from missing the consensus estimate of a 2.90% annualized increase, the slowdown was largely driven by a decrease in motor fuels prices.

Sterling lost half a cent against the US dollar following the report as investors trimmed their expectations of rate hike. A separate Reuters poll of economists showed the Central Bank was likely to keep rates on hold throughout 2017 and 2018 as Brexit negotiations kick off and uncertainty remains high. GBPUSD was last seen trading around the 1.3035-mark ahead of the European open.

IBM Reports 21^st Straight Quarterly Revenue Decline

Tech major IBM posted second quarter numbers, with year-over-year sales down for the 21^st quarter in a row as the company struggles to revive its top line results. Revenue came in at $19.29 billion, missing the consensus analysts’ estimate of $19.46 billion. Excluding one-time items, second quarter earnings stood at $2.97 per share compared to the average analysts’ estimate of $2.74 per share.

IBM reiterated its full year 2017 earnings guidance of at least $13.80 per share, in-line with its projection from the first quarter and topping comparably Wall Street forecasts of $13.68 per share. IBM has been committing big investments to artificial intelligence, cognitive computing and cloud computing over the last few years. Yet, a long-awaited pick-up in sales from these “strategic imperatives” continues to elude the company. Shares are down -7.00% since the start of year, and were last seen around $154.00.

Corn Prices Stage a Rebound

Corn futures reversed from a strong support area early Wednesday amid concerns that hot and dry weather across the United States corn belt region could lower overall yields. The US Department of Agriculture in its weekly crop conditions report said 40.00% of corn crop was undergoing the “silking” portion of its pollination phase. With temperatures remaining high and moisture below average, the potential yield from the corn plants could be reduced per warnings contained within the report.

Investor sentiment was further hurt when the USDA assessed 64.00% of corn crop in good to excellent state, a drop from 65.00% a week ago. Corn futures for September delivery are currently hovering around $379.00. The market remains volatile, with corn likely to scale a mount back to the $390.00 level that was reached on Tuesday.