Equities extend their recovery; Nickel prices explode higher

Summary:

• US stocks on track for 3rd consecutive daily gain

• Lyft jumps after earnings beat

• DE30: labour demand weakens in Germany

• NIckel prices explode higher

• Crypto newsletter: Is Bitcoin sending a buy signal

There’s been further gains for equities so far today and those looking for a sustained recovery from Monday’s large declines will be pleased that US benchmarks are on track for a 3rd up day in a row. The markets seem to have recovered their poise after 3 heavy down days in a row and the S&P500 is now back around the 2900 handle. Short term the outlook is more promising but longer term the trend could have turned lower and this could simply be a corrective bounce before a retest of the low around 2775 or even a new leg lower. Once more there’s little to go off from the economic calendar today with the Initial jobless claims which came in at 209k (vs 215k exp and 217k prior) the only release of note.

One stock to have on the radar is Lyft, after the firm reported earnings for the second quarter. The ride-hailing company continues to lose money, but at a far slower rate than expected, with an adjusted loss per share for the period of $0.68 vs a consensus of $1.74. Revenues also topped forecasts with $867M comfortably beating the $809M expected.  In a call with CNBC’s Deirdre Bosa, Lyft CFO Brian Roberts said he believed peak losses for the company were last year, based on how well this quarter went. He also said the company may break even sooner than it predicted, and will update the street later this year in terms of long-term guidance and break-even date. The stock jumped by as much as 13% in after hours trade however, some of the enthusiasm was curbed when it was announced that share lock-ups will expire in less than 2 weeks on August 19th rather than the previously scheduled date in September. The stock started well and began higher by around 8% but since then there’s been more of a pullback. 

Today, we would like to focus on possible adverse ramifications of the global trade war, which has already affected the European manufacturing sector, and now is going to hit the labour market as well. Admittedly, we have yet to see alarming signals from the headline jobs data from Germany thus far, there are some signs of the broadening weakness. One of them is a number of unfilled job vacancies which has begun moving down of late. It is a clear sign of the weakening demand for labour in the European largest economy. As a result, it takes upward pressure off wages, not a welcome outcome in the eyes of the European Central Bank struggling to revive price growth. Moreover, the detailed data from Germany shows that temporary jobs have been already hit much stronger than the entire market, they are usually first in a lineup to lay off once employers discern weakness in demand on the horizon. Moreover, we have seen an increase in a number of people working shorter in the past year as employers try to cut back on working time before mulling over layoffs.

Nickel prices are up more than 4% today which takes the rally close to 50% for the year (!) as investors are afraid that Indonesia will introduce a proposed ban on exports starting from 2022. Nickel is increasingly used in batteries in automotive industry so a ban would obviously constrain global supplies. Nickel price is moving closer to 2018 high of $16580 with the next resistance at $18600.

Finally our Crypto newsletter focuses on a technical buying signal in Bitcoin and can be viewed in full here.