Robust Earnings See US Stocks Rally

Daily Analysis - 07/08/2018

NASDAQ Futures Record 3-Session Winning Streak

NASDAQ futures edged higher on Monday, led by gains in Facebook. Shares of the social networking giant rallied 4.50% amid reports that the company is in talks with banks to incorporate users' financial information with its Messenger platform. On the corporate earnings front, Tyson Foods reported better than expected quarterly profits before the opening bell, sending its shares 3.00% higher. According to data from FactSet, 80.00% of the S&P 500 companies that have reported through Friday have posted stronger than forecast earnings. This, in turn, has lifted overall sentiment in the US equity market, helping investors shrug off worries about the ongoing US-China trade standoff.

British Pound at 11-Month Low

The British Pound tumbled to an 11-month low against the US Dollar on Monday, dented by renewed fears of a hard “Brexit” in March 2019. Sterling cemented its position as the world’s worst performing major currency after UK Trade Minister Liam Fox warned there was a 60-40 likelihood of Britain exiting the European Union next March without a concrete deal in place. The Pound has now lost 2.50% against the greenback over the past one month. The latest bout of weakness comes just days after the Bank of England hiked interest rates for only the second time since the 2008 financial crisis.

South Africa’s Rand Loses Ground

The South African Rand retreated against the US Dollar on Monday as a dip in market risk appetite hurt emerging market assets. Investors opted for haven assets as trade tensions rose further between Washington and Beijing. Chinese state media condemned US President Donald Trump’s trade policies on Monday, further fuelling concerns that the tariff spat may soon spill over into a full-blown trade war. The Rand has been volatile over the past week, breaking through the 13.10000 barrier to a seven-week peak before slipping back to near the 13.50000-zone against the US dollar, an inflection point that investors are focusing on to determine the currency’s longer-term trend.

Copper Slides On Growing Chinese Demand Concerns

Copper prices fell 1.20% on Monday, hurt by demand concerns in China amidst its escalating trade dispute with the United States. China is the world’s biggest industrial metals consumer, accounting for approximately 48.00% of global refined copper consumption. Futures for September delivery slumped to as low as $2.7065 a pound in the previous session, before plotting a modest recovery. Sentiment was somewhat restored as the union at BHP’s Escondida copper mine in Chile postponed the start of a proposed strike after the company formally appealed for a period of government mediation.