Stock Futures Edge Higher To Start August On A Strong Note
U.S. stock futures edge higher as investors geared up for the first trading day in August. The major benchmarks managed to notch their sixth month of gains in July. Even though volatility has been on the rise amid concerns of inflation risks and the threat from the delta Covid variant. The Nasdaq Composite and Dow Jones Industrial Average added about 1.2% and 1.3%, respectively, in July, while the broad S&P 500 gained close to 2.3% last month.
Following the lead from Asia and Europe’s stock market today, investors could expect stocks to start the first trading day in August on a strong note. Investors are also breathing a sigh of relief after China’s securities regulator said it will seek closer cooperation with its U.S. counterparts. Not to mention, the progress on the U.S. infrastructure plan also raised sentiments among investors. The Dow, S&P 500, and Nasdaq 100 futures were all in the positive territory, moving 0.44% and 0.54% and 0.48% higher respectively at 6:43 a.m. ET.
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Square Posts Upbeat Profits While Announcing $29B Acquisition Of Afterpay
Square (NYSE: SQ) announced plans to buy Australian fintech company Afterpay (OTCMKTS: AFTPF) in a $29 billion deal on Sunday evening. This acquisition is an all-stock deal at a roughly 30% premium to Afterpay’s last closing price. The acquisition came as the ‘buy now, pay later’ trend started to take shape. “Square and Afterpay have a shared purpose,” said Square’s CEO Dorsey in a statement. “We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.”
The San Francisco-based company has pointed to consumers, especially younger consumers, refraining from tapping traditional credit. Square’s own installment loans have been a “powerful growth tool” for its core seller business. Through this acquisition, Square will integrate Afterpay into both its seller and Cash App ecosystem.
Also, Square announced its second-quarter results on Sunday evening, ahead of the previously planned release on Wednesday. From its earnings report, gross profit came in 91% higher year-over-year. That marked a record quarterly growth rate for the fintech company. Its money-making machine, Cash App, saw profit up 94%, while sellers jumped 85% from the same period in the previous year. Net revenue excluding bitcoin came in at $1.96 billion for the quarter, an 87% rise year-over-year. The Cash App now has 40 million monthly transacting active customers.
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Oil Prices Slide Over China’s Economy & Higher Crude Output
Oil prices fell by more than $1 on Monday on concerns over China’s slowdown in economic growth. With factory activity slipping sharply in the world’s second-largest oil consumer, the weakness in oil prices shouldn’t come as a surprise. “China’s been leading economic recovery in Asia and if the pullback deepens, concerns will grow that the global outlook will see a significant decline,” said Edward Moya, senior analyst at OANDA.
In addition, a survey from Reuters shows that oil output from the Organization of the Petroleum Exporting Countries (OPEC) producers rose in July to its highest since April 2020. This came as the group further eased production curbs under a pact with its allies and top explorer Saudi Arabia phased out a voluntary supply cut.
OPEC and its allies, more commonly known as OPEC+, have been increasing their output as demand recovers. Underscoring the uncertainty lingering about the full economic recovery, the group chose to gradually boost the oil output. The move demonstrated the world’s push-pull over its reliance on fossil fuels. While many developed nations have ambitious plans to transition to greener fuels, oil is still largely indispensable in the energy market.
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Pfizer & Moderna Raise Prices For COVID-19 Vaccines
Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) have raised the prices of their COVID-19 vaccines in their latest European Union supply contracts. Given the new price revision, the duo is set to generate tens of billions of dollars in revenue this year. Many countries have been scrambling for new supplies for potential booster shots. Therefore, both pharmaceutical stocks could benefit handsomely from its latest contract with the EU.
The terms of the deals for the supply of 2.1 billion shots were revised after phase 3 trial data showed the messenger RNA shots had higher efficacy rates than the vaccines developed by AstraZeneca (NASDAQ: AZN) and Johnson & Johnson (NYSE: JNJ). Additionally, the authorized vaccines from AstraZeneca and Johnson & Johnson have also been linked to rare blood clots.
Chinese EV Stocks Are Trending
Meanwhile, Chinese EV stocks namely Li Auto (NASDAQ: LI) and Xpeng Motors (NYSE: XPEV) have reported stellar deliveries in July. Li Auto reported Sunday its deliveries for July totaled 8,589 units of its Li ONEs, its sole EV model. The July performance represented an 11.4% month-over-month increase from the 7,713 vehicles delivered in June. On a year-over-year basis, the growth was at 251.3%.
On the other hand, Xpeng recorded its highest-ever monthly deliveries of 8,040Smart EVs, representing a 228% increase year-over-year, and a 22% increase over last month. This is Xpeng’s new monthly record for deliveries. Rather unusually, Nio came in last among the trio to report. The largest Chinese EV startup delivered fewer cars than Li Auto and Xpeng in July.
Nio delivered 7,931 vehicles in July 2021, representing a strong 124.5% year-over-year growth. Following this month’s deliveries, Nio had delivered a year-to-date total of 49,887, more cars than all of last year. If anything, the recent figures from Chinese EVs are a sign that EV demand in China remains hot.
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More Earnings Underway
Big Tech earnings have dominated the stock market since the start of last week. Admittedly, some major tech companies have warned about a possible slowdown in growth. Nevertheless, most of the earnings reported so far have topped estimates. Some of the notable software stocks reporting today include Take-Two Interactive Software (NASDAQ: TTWO) and ZoomInfo Technologies (NASDAQ: ZI).
ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) on Friday reported profits for the second straight quarter. That is in large part due to the improving demand for petroleum products. A jump in oil prices also helped boost operations. Among the notable energy stocks reporting their earnings today is Diamondback Energy (NASDAQ: FANG). A surge in COVID-19 infections may have many investors on the edge. After all, it renews concerns around a stalled economic recovery. However, with the increasing vaccination numbers, the odds of a successful economic recovery is potentially greater than before.
