Shares, bonds bounce as oil skid offers inflation relief

TECH EARNINGS TO TEST BULLS

Equities took comfort in the drop in oil and yields, sending S&P 500 futures up 0.8 per cent, while Nasdaq futures jumped 1.3 per cent. In Europe, EUROSTOXX 50 futures and DAX futures both rose 0.6 per cent, while FTSE futures added 0.1 per cent.

Japan’s Nikkei edged up 0.4 per cent, while South Korea’s chip-heavy index gained 0.6 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 per cent.

About one-third of S&P 500 companies are due to report this week, with earnings on track to boast a 26.5 per cent increase on last year, according to LSEG IBES data.

With expectations so high and mounting unease over the vast cost of AI capex, even blockbuster results may not be enough to please investors on the day.

The massive sums involved were underlined by a WSJ report that Nvidia was in talks to provide a roughly US$250 billion backstop for OpenAI as part of a data centre project.

Companies reporting include tech darlings Microsoft, Meta Platforms, Amazon, Apple and Qualcomm, along with a host of industrial, defence and healthcare stocks.

Data highlights include US advance Q2 GDP, where growth is seen picking up to an annualised 1.5 per cent after a soft start to the year. The June PCE price index, personal income and consumption, weekly jobless claims, Q2 employment cost index and July Michigan consumer sentiment round out the diary.

The euro zone’s schedule includes flash Q2 GDP, July economic sentiment, consumer confidence, flash inflation and June unemployment. 

The pullback in oil helped 10-year Treasury yields fall 4 basis points to 4.63 per cent, and nudged the dollar broadly lower. The euro added 0.2 per cent to US$1.1390, while the dollar dipped 0.2 per cent on the yen to 163.66.

In commodity markets, the drop in yields helped non-interest-paying gold climb 1.4 per cent to US$4,110 an ounce.