WORLDWIDE: HEADLINES
Twitter beats revenue targets with ad improvements, shares jump 5%
Twitter Inc (TWTR.N) on Thursday reported higher revenue growth than Wall Street had expected, as the social media platform rolled out ad targeting improvements to help brands reach potential customers.
Shares of Twitter rose 5% to $73 in trading after the bell.
Since the start of the year, Twitter has raced to introduce products in new areas like audio-only chat rooms and newsletter publishing in an effort to turn around years of business stagnation and reach its goal of doubling annual revenue by 2023.
Advertising revenue totaled $1.05 billion, up 87% from the year-ago quarter, and beat Wall Street estimates of $909.9 million.
Twitter has worked to improve the effectiveness of its ads, introducing 2,500 new topic categories during the quarter to help users find content they’re interested in, all of which provides more ad targeting data back to Twitter, the company said on a conference call with analysts.
“We get great signal about what people are most interested in, where they are or the places they care about,” said Twitter Chief Financial Officer Ned Segal during the call.
Those improvements, along with higher demand from advertisers seeking to reach consumers as countries reopen from pandemic restrictions, helped propel ad revenue, Twitter said.
The strong results from both Twitter and its tech peer Snap Inc (SNAP.N), which reported quarterly revenue growth of 116% on Thursday, shows “that the overall digital ad market is on fire right now, with the reopening further strengthening advertisers’ budgets,” said Ygal Arounian, a research analyst at Wedbush Securities.
Twitter reported 206 million monetizable daily active users (mDAU), its term for users who are served advertising, for the second quarter ended June 30, matching analyst targets of 205.9 million users, according to IBES data from Refinitiv.
Its U.S. user base declined by 1 million over three months from the previous quarter due to a lighter news cycle in the United States, Twitter said, with total users worldwide in line with Wall Street targets.
Total revenue, which also includes revenue the company earns from data licensing, rose 74% year-over-year to $1.19 billion, beating analyst estimates of $1.07 billion.
Full coverage: REUTERS
US housing market floats back to earth
The US housing market appears to be straining under the weight of its own pandemic-driven success. Recent data shows the sector is returning from the stratosphere and coming back to pre-COVID levels, as evidenced by a slew of data released this week.
While for much of the pandemic a rush to suburbia made the home and real estate stars of the recovery, the resulting plunge in inventory and dearth of building supplies have launched home prices beyond the grasp of many potential buyers, particularly at the lower end of the market.
“The housing market isn’t caving just yet,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “Have we reached a peak? That’s a possibility, but worst case scenario, I see a leveling off.”
The best news of the week for investors was delivered on Thursday by the National Association of Realtors (NAR), which reported that sales of previously owned homes (USEHS=ECI) rose 1.4% to 5.86 million units in June at a seasonally adjusted annualized rate, although the rebound was weaker than expected.
The number undershot consensus by 40,000 units, and followed May’s downwardly-revised 1.2% decline.
Full Coverage: REUTERS
WORLDWIDE: FINANCE / MARKETS
Asian shares dragged by vaccination lag, Wall St fares better
Asian share markets were in a mixed mood on Friday after a volatile week in which sentiment over global growth waxed and waned with every new headline on the Delta variant.
A slew of surveys on July manufacturing are expected to show a slight softening of activity in Europe and the United States, though from very high levels, while Asia looks more vulnerable.
“In the face of headwinds from the Delta variant of the COVID-19 virus, the global economic expansion is moving forward—albeit more tentatively than a month ago,” said Sara Johnson, executive director of global economics at IHS Markit.
“Outlooks in advanced countries with high vaccination rates remain bright, but near-term prospects in emerging and developing countries with low vaccination rates are murkier.”
That diverging outlook was reflected in MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) which slipped 0.4%, leaving it down 1.1% on the week so far.
Japan’s Nikkei (.N225) was closed for a holiday, but off 1.7% for the week and a whisker away from a seven-month trough.
Chinese blue chips (.CSI300) lost 1%, though well within the tight trading range of the past three weeks.
Wall Street was in a better mood after a run of strong earnings, with Nasdaq futures up 0.3% and S&P 500 futures 0.2%. EUROSTOXX 50 futures also firmed 0.3%, while FTSE futures gained 0.4%.
Investors are now looking ahead to the Federal Reserve’s policy meeting next week where more discussion about tapering is expected, though Chair Jerome Powell has repeatedly said the labour market remains well short of target.
He also still argues that the recent spike in inflation will prove fleeting, which may be one reason bond markets have been rallying so hard. Yields on U.S. 10-year notes were last at 1.28%, having hit a five-month low of 1.128% early in the week.
German 10-year bonds performed even better, with yields dropping seven basis points so far this week to -0.42%, the lowest since mid-February.
The rally was helped by a dovish tilt from the European Central Bank overnight when it pledged not to raise rates until inflation was sustainably at its 2% target.
“Currently the ECB is forecasting inflation at 1.4% in 2023, and it anticipates a very gradual recovery towards target thereafter,” noted analysts at ANZ.
“The guidance implies the ECB will not get caught up in future global tightening cycles unless it is justified by euro area dynamics. The policy puts the ECB at the dovish end of the global central bank hawkometer.”
That outlook has contributed to a steady decline in the euro to $1.1773 , near the four-month trough of $1.1750 touched earlier in the week. This helped lift the dollar index to its highest since early March, and it was last at 92.818 .
The euro has also been struggling against the safe-haven Japanese yen and hit its lowest in four months this week before steadying at 129.68 yen . With all the action in the euro, the dollar has been relatively steadier on the yen at 110.24 .
Full coverage: REUTERS
Oil slips but heads for steady week on supply tightness
Oil prices trimmed overnight gains on Friday but were poised to end the week largely steady after rebounding from a sharp drop, underpinned by expectations supply will remain tight as demand recovers.
Brent crude futures fell 7 cents, or 0.1%, to $73.72 a barrel at 0147 GMT, after jumping 2.2% on Thursday. For the week, Brent was headed for a 0.1% gain.
U.S. West Texas Intermediate (WTI) crude futures fell 8 cents, or 0.1%, to $71.83 a barrel, following a 2.3% gain on Thursday. WTI was set to end the week flat.
Demand growth is expected to outpace new supply, following the agreement by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, to add back 400,000 barrels per day each month from August through December.
Oil prices, along with other riskier assets, tumbled earlier in the week on concerns about the broad economic impact of surging COVID-19 cases of the Delta variant in the United States, Britain, Japan and elsewhere.
Benchmark contracts fell as much as $6 on Monday but have recouped all of those losses as investors expect overall crude demand to stay strong driven by the continued fall in oil stocks and rising rates of vaccinations.
“With demand holding up, the market is starting to sense the 400kb/d increase in OPEC (OPEC+) will not be enough to keep the market balanced. Inventories continue to fall, both in the U.S. and across the OECD,” ANZ Research analysts said in a note.
Full coverage: REUTERS
Dollar eases amid recovery in risk appetite with Fed meeting in focus
The dollar was set to end the week close to where it started following a roller-coaster week in which currencies were tossed around by shifting risk appetite, with the market’s focus now shifting to next week’s U.S. Federal Reserve meeting.
The dollar index is on track to advance 0.1% for the week, having barely budged overnight to stand at 92.782 in Asia on Friday.
That was, however, off the 3-1/2-month high of 93.194 hit on Wednesday as strong Wall Street earnings helped investors regain some of the confidence lost to earlier worries the Delta variant of the coronavirus could derail the global recovery.
The safe-harbour yen weakened less than 0.1% during the week to trade at 110.135.
Meanwhile, the euro was 0.2% lower over the period at $1.1779 after the European Central Bank pledged to keep interest rates at record lows for even longer, as widely expected.
The uptrend in the dollar index is “showing tentative signs” of stalling around 93.0, “but its overall resilience regardless of the shifting risk mood and the ECB’s shift to a more structurally dovish policy stance suggest retracements will likely be limited to the 91.5-92.0 zone,” Westpac strategists wrote in a client note.
“The US is better positioned than others to withstand the spread of the delta variant thanks to its earlier strong vaccination drive.”
Full coverage: REUTERS
