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The Reserve Bank of New Zealand left its official cash rate at 5.50%, as expected, and Governor Orr said that it should not be assumed that another rate hike will be made.
Reserve Bank of New Zealand Leaves Rates Unchanged 5.50%, Restrictive Rates Seen
Major European indices trade on a mostly lower note.
STOXX Europe 600: -0.1%,
Germany’s DAX: UNCH,
U.K.’s FTSE 100: -0.5%,
France’s CAC 40: -0.1%,
Italy’s FTSE MIB: -0.6%,
Spain’s IBEX 35: +0.2%.Eurozone’s Q2 GDP 0.3% qtr/qtr, as expected (last 0.0%); 0.6% yr/yr, as expected (last 1.1%).
Q2 Employment Change 0.2% qtr/qtr, as expected (last 0.6%); 1.5% yr/yr (expected 1.4%; last 1.6%).
June Industrial Production 0.5% m/m (expected -0.1%; last 0.2%); -1.2% yr/yr (expected -4.2%; last -2.5%)Italy’s Deputy Prime Minister Tajani is reportedly lobbying for a watered down version of the 40% bank windfall profit tax plan.
The Netherlands entered a technical recession after Q2 GDP contracted 0.3% following a 0.4% contraction in Q1.
U.K.’s July CPI -0.4% m/m (expected -0.5%; last 0.1%); 6.8% yr/yr, as expected (last 7.9%). Core CPI 0.3% m/m (expected 0.2%; last 0.2%); 6.9% yr/yr (expected 6.8%; last 6.9%). July Input PPI -0.4% m/m (expected 0.0%; last -1.3%) and Output PPI 0.1% m/m (expected -0.2%; last -0.2%)
British lenders are lowering their mortgage rates as inflation expectations recede.
Jack Henry (JKHY 157.79, -10.52, -6.3% ): beats by $0.15, beats on revs; guides FY23 EPS above consensus, revs above consensus
CAVA Group (CAVA 50.83, +4.44, +9.6%): reports Q2 (Jun) results, beats on revs, comps of +18.2%; expects FY23 comps of +13-15%
Mercury (MRCY 30.43, -3.41, -10.1%): misses by $0.41, misses on revs; guides FY23 EPS in-line, revs in-line; appoints new CEO; appoints Bill Ballhaus as CEO, effective immediately
H & R Block (HRB 37.17, +1.82, +5.2%): beats by $0.17, beats on revs; guides FY24 EPS above consensus, revs in-line; 10% dividend increase
Agilent (A 122.50, -3.15, -2.5%): beats by $0.07, reports revs in-line; guides FY23 EPS below consensus, revs below consensus
Target (TGT 134.63, +9.58, +7.7%): beats by $0.37, misses on revs; guides Q3 EPS below consensus; lowers FY24 EPS and comp guidance; Q2 comps -5.4% versus guidance of low single digit decline
dLocal Limited (DLO 20.22, +4.72, +30.5%): beats by $0.02, beats on revs; reaffirms FY23 revs and EBITDA guidance; names MELI exec Pedro Arnt as co-CEO
JD.com (JD 33.98, -1.99, -5.5%): beats by RMB0.44, beats on revs
TJX (TJX 88.54, +2.77, +3.2%): beats by $0.08, beats on revs; guides Q3 EPS in-line
Tesla (TSLA 227.64, -5.32, -2.3%): cuts prices in China for the second time this week, according to Bloomberg
JCoinbase Global (COIN 81.40, +2.22, +2.8%): secures approval to bring federally regulated crypto futures trading to eligible US customers
Tower Semi (TSEM 30.00, -3.78, -11.2%): Intel (INTC) announces termination of Tower Semiconductor acquisition
Intel (NASDAQ:INTC) and Tower Semiconductor (NASDAQ:TSEM) mutually agreed to terminate the proposed acquisition of Tower as they were unable to get the required regulatory approvals in a timely manner.
Intel (INTC) will pay a termination fee of $353M to Tower (TSEM).
“Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy,” said Intel (INTC) CEO Pat Gelsinger. “We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025.”
Intel’s (INTC) foundry unit’s revenue had increased over 300% Y/Y in Q2.
The company also highlighted its recent deals with Synopsys (SNPS) and U.S. Department of Defense, as well as a multigeneration agreement with Arm (ARMHF).
The termination of the Tower (TSEM) was expected, after the companies failed to win Chinese approval before the deadline expired, which was the main obstacle to completing the deal.
Total housing starts increased 3.9% month-over-month in July to a seasonally adjusted annual rate of 1.452 million units (consensus 1.446 million) and building permits increased 0.1% month-over-month to a seasonally adjusted annual rate of 1.442 million (consensus 1.460 million).
The key takeaway from the report is that the increase in starts and permits, albeit modest, was driven by single-family units, which are badly needed in a supply-constrained existing home market.
Treasury yields have climbed off their overnight lows in response to the data.
The 2-yr note yield, at 4.89% earlier, is down two basis points from yesterday to 4.93%. The 10-yr note yield, at 4.17% earlier, is up one basis point to 4.22%.
Retailers are an early pocket of strength after Target (TGT 131.74, +6.70, +5.4%) and TJX Cos. (TJX 88.46, +2.70, +3.2%) reported earnings.
The SPDR S&P Retailer ETF (XRT) is up 0.4%.
Total industrial production increased 1.0% month-over-month in July (consensus 0.3%) following a downwardly revised 0.8% decline (from -0.5%) in June.
The capacity utilization rate jumped to 79.3% (consensus 79.0%) from a downwardly revised 78.6% (from 78.9%) in June. Total industrial production was down 0.2% yr/yr. The capacity utilization rate of 79.3% was 0.4 percentage point below its long-run average.The key takeaway from the report is that most major market groups recorded growth in July, demonstrating that there was a pickup in activity that fits with an economy that continues to operate in a growth mode despite the Fed’s rate hikes.
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