U.S. Opening Bell: Investor Mood Rebounds Ahead Of AAPL Results; Yen Tumbles

Key Events

Investor sentiment rebounded ahead of Apple (NASDAQ:AAPL)'s earnings release on Tuesday, after earnings-driven plunges across tech and internet stocks squeezed equity markets and pushed the NASDAQ Composite 1.4 percent lower.

Futures on the S&P 500, Dow and NASDAQ 100 climbed to positive territory at the European market open, while Europe' shares on the STOXX 600 wavered around neutral levels, despite upbeat financial results from BP (LON:BP) and Credit Suisse (SIX:CSGN).

Meanwhile, global bonds bounced back, yields on 10-year Japanese notes dropped and the yen tumbled against all major currencies after the Bank of Japan refrained from significantly changing its ultra-loose monetary policy, quelling speculations that it would start cutting back on its sizeable bond-buying program.

Asian equities were mixed, with Japan’s TOPIX and Hong Kong’s Hang Seng slipping lower and South Korea’s KOSPI and Australia’s S&P/ASX 200 edging higher.

Global Financial Affairs

The regional uncertainty followed a selloff in the US session, which saw the tech-heavy NASDAQ Composite suffer its most significant three-day loss since March amid ongoing slumps in Netflix (NASDAQ:NFLX), Twitter (NYSE:TWTR) and Facebook (NASDAQ:FB).

Technically, the tech-heavy index has room to fall to 7,300 and still remain within a rising channel.

The S&P 500 was also dragged 0.58 percent lower by Communication Services and Technology shares, which slipped 1.57 percent and 1.56 percent respectively. Only two sectors were spared from the selling, with Energy stocks outperforming (+0.82 percent) on oil gains.

The Dow Jones Industrial Average lost 0.57 percent, while the Russell 2000 slid 0.61 percent.

WTI closed above $70 a barrel for the first time in over a month, surging 2.1 percent intraday and then settling at $70.13 amid signs of tightening supplies. Technically, the price stopped at the resistance of the top of a bearish pennant. At 10.30am GMT today, it was seen 0.63 percent lower, at $69.69.

The Chinese yuan slumped to a 13-month low on Monday and continues to extend losses today. Technically, the price has struggled to close above the July 2- shooting star’s high, which was reinforced by a Dark Cloud Cover July 24, confirmed with a second shooting star July 27 and verified with a third shooting star July 30. Currently, the intraday price is above those closing levels, as it has been Monday and Friday, before the close.

The dollar jumped against the yen, back above its uptrend line since late March and above the support of a symmetrical triangle, as it potentially blew out a bearish pennant, with an upside intraday breakout. The price move was prompted by the fact that Japanese policymakers stepped up flexibility on yields yesterday, allowing them to rise to 0.2 percent, but cut their inflation forecast though 2020 and moved their 2 percent inflation target further away, thereby deepening the gap with global central banks's tapering of crisis-era policies.

The next significant monetary policy events this week include decisions from the Federal Reserve and Bank of England. Investors will look for further confirmation that US policymakers plan two more interest-rate hikes before the end of this year, while their British counterparts are widely expected to increase borrowing costs Thursday.

Elsewhere, commodities fell after China’s manufacturing purchasing managers index dropped to 51.2 in July from 51.5 in June, with the first round of US trade tariffs taking a toll and slower credit growth denting demand.

Up Ahead

• The US Treasury is set to release its funding program for the next three months on Wednesday.

  Earnings season continues:

• Tesla (NASDAQ:TSLA), due Wednesday, EPS $2.78 & revenue $4.03 forecast

• Royal Bank of Scotland earnings are due on Friday, with revenues of $3.3 billion and EPS of $0.07 forecast.

• Barclays (LON:BARC), due Thursday, EPS $0.28 & revenue $6.94B forecast

• Royal Bank of Scotland Group (LON:RBS) earnings are due on Friday, with revenues of $3.3 billion and EPS of $0.07 forecast.

• Berkshire Hathaway (NYSE:BRKa), due Friday, EPS 3,398.89 & revenue 61.64B forecast

• Toyota Motor Corporation ADR (NYSE:TM), due Friday, EPS $3.95 & revenue $65.15B forecast

• Central banks in the US, the UK, Brazil, and India all meet this week.

• US personal spending and income data, out on Tuesday, are expected to have remained steady in June.

• The UK release PMIs covering manufacturing, construction and services sectors.

• The US jobs report, due on Friday, is predicted to show a healthy labor market, with 193,000 new jobs and an unemployment rate slipping back to 3.9 percent.

Market Moves

Stocks

• The FTSE increased 0.6 percent.

• Futures on the S&P 500 gained 0.2 percent.

• The STOXX Europe 600 climbed 0.1 percent.

• The MSCI All-Country World Index fell 0.1 percent to the lowest level in more than a week.

• The MSCI Asia Pacific Index dipped 0.5 percent to the lowest in a week on the most significant decrease in almost three weeks.

Currency

• The British pound gained 0.1 percent to $1.3142.

• The Dollar Index decreased less than 0.05 percent, after swinging between 0.13 percent gains and 0.1 percent loss.

• The euro gained 0.1 percent to $1.172.

• The Japanese yen decreased 0.2 percent to 111.24 per dollar, the weakest in more than a week.

Bonds

• Britain’s 10-year yield declined two basis points to 1.343 percent, the biggest fall in more than a week

• The yield on 10-year Treasuries slid two basis points to 2.95 percent, the lowest level in a week on the most significant fall in more than a week.

• Germany's 10-year yield lost two basis points to 0.42 percent, the most substantial slide in almost six weeks.

Commodities

• West Texas Intermediate crude slipped 0.4 percent to $69.85 a barrel.

• Brent crude lost 0.3 percent to $74.73 a barrel.

• Gold dropped less than 0.05 percent to $1,221.20 an ounce, the weakest level in almost 13 months.