US bank earnings point to no clear signs of recession: ASX to open flat

US equities were lower in Monday trading ending just off their worst levels after giving up morning strength and extending last week’s gains. The market appears to be in a holding pattern as it awaits further clarity on 2nd quarter earnings as investors sell market rallies.

The Dow Jones Industrial Average lost 215.65 points, or 0.69 per cent, to 31,072.61, accelerating losses in the final hour of trading and erasing a 356 point jump earlier in the day. The S&P 500 fell 0.84 per cent to 3,830.85. The Nasdaq Composite declined 0.81 per cent to 11,360.05.

The late-day pullback follows a Bloomberg report that said Apple plans to slow hiring and spending on growth next year to deal with a possible downturn. Shares of Apple declined nearly 2.1 per cent.

Apple earnings will be important to the overall market in terms of how they manage currency, what’s happening in the Chinese business and how they’re going to react as consumers move more toward services rather than goods spending.

A strong earnings report from Goldman Sachs initially buoyed stocks, following mixed results last week from banks JPMorgan Chase and Morgan Stanley. Whilst bank earnings are mixed in some cases, the decline in profit wasn’t as severe as analysts expected as consumers continue to spend and borrow.

Jane Fraser, Citigroup’s chief executive, said on a conference call. “Nothing in the data that I see signals that the U.S. is on the cusp of recession,” “While a recession could indeed take place, it is highly unlikely to be as severe as others we have seen.”

Executives at JPMorgan Chase also said there were no clear signs of a recession yet as retail banking customers are still spending money on discretionary purchases like travel and restaurants.

Energy stocks gained in the broader market index. Shares of Hess jumped 4.8 per cent. Devon Energy gained 3.6 per cent, and Marathon Oil climbed nearly 3.5 per cent.

Oil prices extended gains on Monday, boosted by mounting concerns over gas supply from Russia and a lower dollar, offsetting demand fears brought on by a possible recession and China lockdowns.

Brent crude futures for September settlement ended the day 5 per cent higher at $106.27

On the clean energy front overnight best performing thematics was hydrogen , EV charger stocks and lithium companies with no real catalysts for their strength.

The US dollar retreated from multi-year highs on Monday, supporting prices of commodities ranging from gold to oil. The value of the US dollar is the strongest it has been in a generation, devaluing currencies around the world and unsettling the outlook for the global economy as it upends everything from the cost of a vacation abroad to the profitability of multinational companies.

One Australian dollar at 7:10 AM has strengthened compared to the US dollar yesterday, buying 68.16 US cents (Mon: 67.94 US cents), 57.05 Pence Sterling, 94.11 Yen and 67.17 Euro cents.

Gold prices firmed on Monday, as a pullback in the US dollar helped bullion recover some of its recent losses. Spot gold rose 0.8 per cent to $1,720, after falling to its lowest in nearly a year last week. Silver was up $0.25 or 1.3 per cent to US$18.84 an ounce.

Iron ore futures are pointing to a 2.9 per cent gain. Despite a solid month of crude steel
output for China in June, iron ore prices continue to struggle.

Copper rallied as well, settling up 3.7 per cent.

Bitcoin futures up 2 per cent.

The SPI futures are pointing to a 0.3 per cent fall.
Figures around the globe

US markets closed lower. The Dow Jones fell 0.7 per cent to 31,073, the S&P 500 lost 0.8 per cent to 3,831 and the Nasdaq fell 0.8 per cent to 11,360.

Across the Atlantic, European markets closed higher. Paris added 0.9 per cent, Frankfurt gained 0.7 per cent and London’s FTSE rose 0.9 per cent.

Asian markets closed higher. Hong Kong’s Hang Seng jumped 2.7 per cent, China’s Shanghai Composite added 1.6 per cent while Tokyo’s Nikkei was closed,

Yesterday, the Australian sharemarket added 1.2 per cent to 6687.