US index futures have continued to climb from yesterday’s close, extending the post-consumer price inflation rally. In the initial minutes following today’s producer price report, futures are holding steady with Dow all three main index futures contracts up about 0.6% from yesterday’s close.
US producer prices also showed inflation pressures easing, headline PPI fell more than expected (9.8% vs street 10.4% and previous 11.3%), while core PPI, excluding food and energy, fell as expected (7.6% in-line with street vs previous 8.2%).
Currency action is mixed following the inflation news. The US Dollar is extending declines relative to the Euro, Yen and Australian Dollar this morning, but has stabilized relative to the Loonie, Pound and Gold. Cryptocurrencies are soaring again with Bitcoin up 4.5%. Commodities are up today with WTI crude oil gaining 1.3%, natural gas rallying 3.5% and copper climbing 1.0%.
Earnings reports continue to highlight uneven economic conditions. Walt Disney is up 8.7% in premarket trading after a big boost from its Parks business enabled it to beat the street on earnings ($1.09 vs street $0.96). Disney+ posted higher than expected subscribers (152M vs street 148M), but management cut its long-term subscriber forecast, announced it is launching a new subscriber tier with advertising in December and intends to raise its rates without ads by 38%. Interestingly, parks competitor Six Flags is down 12.8% premarket after announcing disappointing earnings ($0.53 vs street $1.01) due to a 22% decline in park attendance from last year.
Canadian earnings reports are also mixed. Canada Goose reported a smaller than feared loss per share (-$0.56 v street -$0.62), as sales exceeded expectations. Manulife Financial also beat the street ($0.78 vs street $0.76). On the other hand, Stelco highlighted the impact of stagflation on many companies. Although Q2 sales rose by 13% over year, adjusted earnings fell by 7.0% from a year ago. Management noted that its output price of steel has dropped by 40% since April while input costs continue to rise or remain high. With margins getting squeezed, management guided toward a potentially significant drop off in earnings for at least the next two quarters.
