Morning Bid Americas: Wall St shines, China misses again

Loews

31/07/2023 11:00

A look at the day ahead in U.S. and global markets from Mike
Dolan:
    
Wall Street is lapping up a soothing blend of disinflation, peak
interest rates and trend growth, with two of its mega caps
reporting results this week in a forecast-beating earnings
season that has helped stocks hit their highest in more than a
year.
    With Apple and Amazon due to update the Street on Thursday
and the latest data showing U.S. inflation falling to its lowest
in two years, Friday saw the best day in two months for the
Nasdaq  .IXIC  and FANG-plus index  .NYFANG  of mega-cap tech
stocks. The S&P500 closed at its best level in more than a year.
    What's not to like? 
    It's far less rosy around the world for a start - even if
that gap in performance is starting to see the dollar  .DXY 
re-assert itself on the foreign exchanges.
    China's spluttering economy threw up another miss on Monday
as official business surveys showed manufacturing contracting
for a fourth straight month in July while services and
construction are stalling.
    While that has spurred hopes of government stimulus to
support an ailing property sector and head off deepening
deflation worries, there has still been little more than
piecemeal measures and warm words from Beijing so far.
    Partly dragged down by the stalling Chinese industrial
sector and also luxury goods demand, the euro zone's
second-quarter economic rebound showed half the growth
registered in the United States and inflation remains more than
two percentage points higher - with core inflation topping
forecasts for July.
    The Bank of England, meantime, is set to hike interest rates
again this week - with money markets putting 66% chance of
another quarter-point rise to 5.25%.
    The Bank of Japan's monetary policy tweak on Friday did
little to change the bigger picture there, even though the
central bank warned about rising prices and wages on Monday.
While 10-year Japanese bond yields have climbed about 15 basis
points from just before the shift, the yen  JPY=  has resumed
weakening - helping buoy Tokyo stocks  .N225 .
    Back on Wall Street, another heavy earnings week beckons and
the July U.S. employment report on Friday looms large.
    Stock futures are marginally positive ahead of Monday's
open, Asia bourses mostly just caught up with Friday's U.S.
gains and European indexes were little changed.
    U.S. Treasury yields were steady, with the dollar firmer -
due mainly to dollar/yen's jump to three-week highs.
    Euro zone banks  .SX7E  were higher, brushing off Friday's
stress tests from the European Banking Authority that showed
three out of some 70 European Union banks failed to meet binding
capital requirements under extreme macroeconomic scenarios.    

Events to watch for on Monday:
* U.S. corporate earnings: Loews, Arista Networks, Eversource
Energy, Welltower, Western Digital, ON Semiconductor, SBA
Communications, Hologic, Monolithic Power, Republic Services,
Diamondback Energy, Avalonbay 
* U.S. July MNI Chicago business survey, Dallas Fed July
manufacturing survey
* U.S. Treasury auctions 3-, 6-month bills

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
PCE inflation slowest in over two years    https://tmsnrt.rs/47bfqrQ
China's factory activity extends declines    https://tmsnrt.rs/3OhxmZg
A Fed gauge of financial conditions    https://tmsnrt.rs/47665ll
Most 'AI' mentions in calls so far this quarter Most 'AI'
mentions in calls so far this quarter    https://tmsnrt.rs/3KjXhi1
2023 Regional hedge fund strategies     https://tmsnrt.rs/476D7BP
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (By Mike Dolan, editing by Alex Richardson
mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
 ((mike.dolan@thomsonreuters.com; +44 207 542 8488; Reuters
Messaging: mike.dolan.reuters.com@thomsonreuters.net))