In a welcome respite from whingeing, Wall Street was closed for the Juneteenth public holiday, allowing a little oxygen back into the US futures market, which is trading higher on Tuesday morning Sydenham time.
Yeah, tough times for fans of directionless growth driven by cheap money, with the S&P500 giving away 5.8%, the Dow Jones shedding 4.8%, and the Nasdaq also a trimmer, actually worryingly svelte 4.8% down. In fact the Dow just delivered its biggest weekly percentage fall since circa October 2020.
After a third straight week of hasty retreats, all three Wall Street indices are bleak, blue and bruised.
Cryptocurrencies have also steadied into some self-healing and restrospective time alone after the recent mad-ass selling. Bitcoin is trading around $US20,107.24 after dropping below $US18,500 over the US long wweekend.
As always, the most speculative, high-growth targets for investors cop the worst of the current volatile winds of change.
Most under the pump are the hands-down pandemic winners and these remain the top shelf tech stocks – the Nasdaq has already been cleft of more than a full third, or 34% of its body weight. Oh, and crypto.
On this front the almost 70% Bitcoin has lost from its November peak last year looks like a good measurement of its speculative nature as an investment fullstop.
In any case, the Americans really are having a hard time trying to reconcile last week’s stiffer-than-anticipated rate hike out of The Fed.
T’was the biggest hike Stateside in almost 30 years and, similar to the tricksy move by our own governors at the RBA the week before, the extra basis points totally blindsided markets and economists alike with its ferocity. But to fight the power of inflation, there’s not a whole lot of other tools available to central bankers right now.
With that in mind, all eyes are on this week’s new US economic data (for a more thorough look and feel, always lean on Eddy ‘The Indicator’ Sunarto). The week before us settles down a bit in this regard:
US existing home sales for May
US national activity index for May
Testimony by US Federal Reserve chairman Jerome Powell
US purchasing manager surveys for June
US current account for the March quarter
US consumer sentiment for June
US new home sales for May
Existing home sales, new home sales and some PMIs speak more to growth rather than inflation, so the doubts over inflation might be replaced by those over a recession – either way, you’d reckon it’s risk-off for another week over there.
Major tech names reporting this week
The big one this week for market-watchers is FedEx which is one of those stocks that serves nicely as a proxy for the broader state of the nation.
FDX shares are down now circa 11% for 2022 thus far, a bit of a hit, but the performance craps on the S&P 500’s 24% losses. Certainly the logistics giant is confident enough to spring a cracking surprise last week of a boost to its annual dividend – hoisted by well over half, some 53% to $1.15 a share – helping kick shares 15% higher following the announcement.
Wall Street expects the star of the Tom Hanks hit, Castaway, to bring in EPS of $6.88, and revenue of $24.5bn, after last year’s quarter of $5.01 per share EPS on revenue of $22.6 billion.
The markets have priced in Accenture to deliver a US$2.85 per share (EPS) return this week, on revenue of just above US$16bn.
That’ll be a handsome beat on the same quarter last year when the IT consultant and outsourcing specialist delieverd earnings of $2.40 a share off the back of another decent $13.3bn of quarterly revenue
Despite nothing less than a year of robust sales and earnings, Accenture’s another US software provider whose share price has been brutalised in the sell-down. Last quarter ACN grew revenue and EPS by 25%, while the share price has crashed by a full third in just six months.
Also talking first quarter fiscal this week is former giant and friend of Barack Obama, BlackBerry (BB).
The Canadian-born and bred tech has segued nicely into product development and market strategy around Cyber Security and IoT, to drive its long-term growth prospects.
Wall Street expects BlackBerry to drop about 5 US cents per share on quarterly revenue of $160m. This follows a similar story to the same timer last year when it lost 5 cents a pop on revenue of $174m.
The previous quarter, BB’s total revenues fell 12% YoY to $185m.
Meanwhile: Nothing is easy for NetEase
The shock eleventh-hour cancellation in China of Blizzard and NetEase’s long-awaited Diablo Immortal release has sent NetEase shares off a cliff in Hong Kong. The move to delay the the original June 23 release of the widely-panned Diablo Immortal comes just a few days after Blizzard’s Weibo (NASDAQ:WB) account was apparently banned from making new posts, although claims this was because of comments critical of the country’s regime might be a bit off the mark, as far as we can tell.
Reuters reports the China-based NetEase was all set to launch the game on Thursday, saying it wanted to make improvements to the gameplay experience.
Diablo Immortal was a co-dev out of NetEase and Activision Blizzard, (that’s the company Microsoft plans to buy) and the original Diablo was one of Blizzard’s most popular franchises, while China is one of the world’s largest gaming markets. But there’s more to this than meets the eye. NetEase has been under the blowtorch and pliers of China’s broader crackdown on both gaming and the import of foreign games into China.
The delay will be a setback, but possibly not unexpected for NetEase which also saw a slowdown in first quarter revenue growth.
What the brokers are saying:
Truist downgrades Roblox Group to Hold from Buy, reiterates Amazon (AMZN) as Buy
Downgrade to Hold as Roblox screens least favorable (US sp) on:
1) Revision trend, particularly EBITDA, “as we expect the company to continue to invest aggressively.”
Truist also says it’s “turning incrementally positive on AMZN ,having been tactically cautious exiting 2021, as we believe Street expectations are being reset to more achievable levels, and with the valuation down 38% YTD.”
Evercore ISI maintains Uber and Lyft as Buy
“We are reiterating our long-term Outperform ratings on both UBER and LYFT as more evidence from our 5th Annual U.S. Ridesharing Survey paints a mostly optimistic view around the industry’s recovery.”