We start this eventful week on a positive note with Asian stocks higher this Monday despite China reporting a slowdown in a manufacturing activity. The US Jobs report for July on Friday will be the highlight of this week. We also have a Reserve Bank of Australia policy decision on Tuesday and Bank of England meeting on Thursday scheduled. The crackdown by Chinese market regulators and corporate earnings continue to dominate the agenda with more than a quarter of S&P 500 companies set to report. The economic calendar also features US PMI data along with factory orders and initial jobless claims. European PMI will be published today. Delta variant continues to affect economic recovery in most regions of the world.
US stocks fell on Friday amid a slide in Amazon shares. S&P 500 fell by 0.5%, while Nasdaq slipped 0.7% and Dow Jones fell by 0.4%. Amazon sank by nearly 7.6% after it reported its first quarterly revenue miss in three years. Despite closing lower on Friday, the major averages managed to wrap up a solid month gaining 1% – 2%. Investors digested a key inflation indicator that showed better-that-feared price pressures on Friday. The core personal consumption expenditures price index rose 3.5% in June which was below expected 3.6%. US second-quarter GDP rose by 6.5%, considerably less than 8.4% expected. The July US jobs report on Friday will be the main economic release this week. Economists are expecting the economy to have added 900k jobs in July after beating forecast in June with 850k. The report will provide fresh clues on the strength of the economic recovery and inform the outlook for Fed policy makers. US Dollar Index edged down this morning to 92.078. US Treasury yields fell after softer inflation data on Friday. US 10-year Treasury yield is currently around 1.23% and the 30-year is around 1.90%.
European markets have opened higher this Monday helped by rising Asian markets and strong results from HSBC. DAX Futures traded 0.4% higher, CAC 40 future climbed 0.6%, while FTSE 100 futures rose 0.8%. HSBC, Europe’s largest bank by assets, has reported a $10.8 billion profit for the first half year, more than double the performance for the same period last year. In data releases German retail sales rose 4.2% in June, a slowdown from a revised rate of 4.6% the previous month. Today most attention will be on manufacturing PMI data from the region, that could also show a slowdown. Bank of England’s decision on Thursday is the key event in Europe this week with the BoE expected to shed light on how and when it could start tightening policy. BoE is expected to be among the first of the world’s main central banks to begin reduction in economic stimulus. Sterling is little changed this Monday at $1.39 and EURUSD is mostly flat at 1.1868.
Asian stocks started higher this Monday with Nikkei jumping 1.9% and Heng Seng rising 0.8%. Shanghai Composite Index added 1.5%, while Australia’s S&P/ASX 200 rose 1.3%. The Asian markets are higher despite China reporting a slowdown in manufacturing activity. The country’s official purchasing managers’ index fell to 50.4 in July from 50.9 in June. China is also dealing with an outbreak of the COVID-19 delta variant, which has already been running rampant in many other Asian countries. Last week China’s regulatory crackdown has frightened investors away from Chinese stocks. Following a sharp sell off authorities put a floor under stocks and the yuan. In Australia the RBA will hand down its policy decision on Tuesday when it is widely expected to reverse its previous decision on beginning asset tapering. One of the contributing factors are the lockdowns in parts of the country due to the increase of COVID-19 cases. AUD/USD is slightly lower this morning at 0.7344, USD/CNY is up at 6.4644.
Oil prices fell on Monday on worries of economic recovery after China’s PMI release and an expected rise in oil output from OPEC producers agreed last month. Brent Futures fell by 1% to $74.65, while WTI dropped 0.9% to $73.26 a barrel. Gold futures fell 0.3% to $1,812.30/oz, while Bitcoin retreated back below $40,000 after climbing over the weekend to its highest level since May.