Market Snapshot
Asia: Japan +1.3% to 20377. Hong Kong -1% to 24975. China -1.3% to 3727. India -0.1% to 28172.
Europe: London -0.1%. Paris -0.6%. Frankfurt -0.4%.
Economic News
8:55 Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
3:00 PM Consumer Credit
Key earnings before the open
MSM
Key earnings after the close
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Markets
U.S. stocks rebounded off their lows in bumpy trading today, driven by uncertainty over the future of Greece and concerns over China’s sluggish economy. The S&P 500 briefly turned positive but pulled back to trade flat at 2,067 in a choppy trading session, where the index had tumbled by more than 20 points earlier. The early move lower had briefly put it below a key support level last breached in October.
The Dow Jones Industrial Average was down 50 points, or 0.3%, to 17,632 but had seen a more than 200-point drop earlier, while the Nasdaq Composite also pared more brutal declines to move 0.6% lower, or down 30 points, to 4,961. Jittery trading has been driving the market action throughout the day as European officials attempt to hash out a credible bailout plan for Greece , while the government intervention in China’s stock market also has unsettled traders.
Greece faces what many call its last chance to stay in the eurozone today when Prime Minister Alexis Tsipras puts proposals to an emergency eurozone summit a day after Greeks overwhelmingly voted to reject more austerity. Tsipras will have to persuade the bloc’s other 18 leaders for a major new loan to rescue his country, while failure to reach a deal would increase the likelihood of a Grexit. Other updates: The Athens stock exchange will remain closed until tomorrow, Greece has appointed a new finance minister – Euclid Tsakalotos, and the ECB has maintained its emergency loan cap for Greek banks.
Wiping out much of yesterday’s rebound, Chinese shares fell yet again today, casting doubt on the slew of recent support measures unleashed by Beijing. Traders are also getting increasingly nervous about the unusually large number of Chinese companies asking for their shares to be suspended. About a quarter of the roughly 2,800 companies listed in Shanghai and Shenzhen filed for a trading halt by the close on Monday, and another 200 announced a suspension today. Shanghai -1.3%; Shenzhen -5.8%; ChiNext -5.7%.
Crude oil prices steadied this morning after posting one of their biggest sell-offs this year in the previous session due to bearish factors including Greece, China’s uncertain economy and a new flood of Iranian oil. Monday’s fall took the U.S. crude market down by 7.7%, or $4.40, to close at $52.53, almost rivaling the price decline in the aftermath of OPEC’s decision to not intervene in oil markets last year.
Australia’s central bank left its official cash rate unchanged at 2% at its July monetary policy meeting as sliding commodity prices and uncertainty in China argued for continued stimulus. RBA Governor Glenn Stevens also underlined the need for a lower currency, stating further depreciation seemed “both likely and necessary.” The central bank has already eased twice this year as the unwinding of a mining boom carves a gaping hole out of business spending and national income.
Saudi Arabia has signed a commitment to invest up to $10B in Russia over the next five years, in a move signaling a thawing in relations between the two countries. The majority of the money will be spent on Russia’s agricultural projects, as well as medicine, logistics, and the country’s retail and real estate sectors. Facing a political standoff with the West, Moscow has been turning eastward, to reduce reliance on Europe and the U.S. In early May, the country signed economic deals with China worth up to $25B.
Stocks
Plagued by a supply shortage and tepid demand, Samsung Electronics (SSNLF) is anticipating a seventh straight quarter of profit declines, reinforcing worries that Galaxy S6 sales fell short of expectations. Operating profit for the second quarter likely fell 4% from a year earlier to 6.9T won ($6.1B), while revenue for the period likely dropped 8.3% to 48T won. The declines come amid robust growth in Samsung’s semiconductor operations, leaving most of the blame on the the company’s once-highflying mobile division.
Meanwhile, a South Korean court has denied an injunction request by hedge fund Elliott Associates to block builder Samsung C&T from selling treasury shares to KCC Corp., clearing another hurdle for the proposed $8B merger of Samsung C&T and Cheil Industries. The ruling is another slap in the face to Elliott, which just bought shares in both Samsung Fire & Marine (SZVZF) and Samsung SDI (SSDIY) to block the merger. The potential deal would see heirs of patriarch Lee Kun-hee consolidate affiliate stakes and keep control of the Samsung group.
Advanced Micro Devices (AMD) gets hammered after lowering its revenue estimate for the second quarter, saying the demand for personal computers was weaker-than-expected. AMD now expects Q2 revenue to be down 8% Q/Q, worse than prior guidance for a 3% sequential decline. The company also said a manufacturing transition would cause a $33M charge, further squeezing its profit margins.
Starting today, Starbucks will raise prices on some of its beverages to cover rising costs including wages and rent, despite decreases in the price of coffee futures. Starbucks (SBUX) said average drink costs will go up by $0.05 to $0.20. In contrast to the move, J.M. Smucker (SJM) recently lowered the price of its Folgers and Dunkin’ Donuts (DNKN) coffees by 6%, and analysts expect Maxwell House (KRFT) to follow suit.