MARKET WRAPS
Watch For:
GDP data for EU, Germany, France, Italy; EU Business & Consumer Surveys; France consumer spending; CPI data for Germany, Saxony, Hesse, Bavaria, Brandenburg, Baden-Wuerttemberg, North Rhine Westphalia; Trading updates from Standard Chartered, BP, Glencore, Diageo, Airbus, EDP, Clariant, L'Oreal, Prada, Yandex, Fresnillo, Croda International, Heidelberg Materials, Bollore, St. James's Place, Weir Group, ConvaTec Group, Sage Group, Intesa Sanpaolo, Leonardo, DSM Firmenich
Opening Call:
European stock futures were lower, tracking broad declines in Asian stock benchmarks. The dollar and Treasury yields steadied; oil futures declined and gold gained.
Equities:
Stock futures were lower in cautious trade as investors looked ahead to economic data and Microsoft's results which kick off big tech earnings.
Chip-sector investors will be looking at Microsoft's discourse on infrastructure expenses while software investors will pore over the earnings to gauge the health of customer spending.
U.S. stocks ended mixed on Monday. The big question for investors in the coming days is whether a succession of potentially market-moving events could extend a recent rotation of stock-market winners and losers that has punished large tech stocks and boosted shares of smaller companies.
"There's just a lot going on," said Keith Lerner, co-chief investment officer at Truist Advisory Services. "It's hard to make a big call ahead of all of this."
Forex:
The euro could end the week higher against the dollar if the Fed's meeting Wednesday prompts markets to raise rate cut expectations and U.S. nonfarm payrolls data Friday are weaker than forecast, ING said.
The Fed and/or U.S. data could shake the euro versus the dollar from its mid-summer low volatility, it said.
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Sterling could fall sharply if the Bank of England cuts interest rates on Thursday, ING said.
It is a close call but the BOE is likely to vote 6-3 for a 25 basis points rate cut, while the market is currently pricing in 13bps, it said.
If the BOE cuts rates, expectations might shift for two extra moves, or three in total, which could weaken sterling considerably, ING said.
Bonds:
Euro-denominated bank bond spreads could experience increased volatility due to geopolitical risks and "spillovers from sovereign debt weakness," ING analysts said.
"While widening and more volatility in financial [bonds] can create buying opportunities and relative value plays, corporate [bonds] will remain within a narrower trading range and shrug off more negative news, " they said.
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U.S. Treasurys are set to end July with their third straight monthly gain.
"With cuts already delivered by the [European Central Bank], Bank of Canada, and the Swiss National Bank, we're reminded that as the proverbial policy tide begins to turn, divergences between major central banks tend to be short-lived," said BMO Capital Markets strategists.
"This makes the case for a September Fed cut stronger than it does a move on Wednesday - if for no other reason than the [Federal Open Market] Committee will have the benefit of two additional [consumer-price index] prints before the mid-September decision," they said.
Energy:
Oil edged lower amid worries over softening demand in China. The country's oil imports dropped in 1H and apparent demand declined 8% on year in June, ANZ noted.
Analysts said that this week's U.S. petroleum supply data due Wednesday, and the outcome of a meeting Thursday of major oil producers known as OPEC+, may provide fodder for oil's next big move.
Metals:
Gold edged higher in Asia. If the Fed is dovish this week, bets could increase to three rate cuts before the year-end, which should boost gold's prospects, said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Also, downside risks from the U.S. jobs report and a potential surprise rate increase by the BOJ may contribute to a bearish USD move, which could indirectly support a bullish gold outlook, the analyst added.
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Copper prices were lower, dragged by weak demand outlook. Investors are waiting for more policies to boost China's housing sector and domestic consumption which would bode well for the metal's demand, ANZ Research analysts said.
Prices could get a respite from supply pressures, as a union at the Escondida copper mine in Chile has asked members to reject a contract offer from the operators and prepare for a strike, they said.
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Iron-ore prices remain under pressure as investors watch for stimulus announcements from the Politburo meeting in China, ANZ Research analysts said.
The price of the steelmaking material could remain volatile in the near term due to weak demand and concerns over a falling pace of production, Huatai Futures said.
TODAY'S TOP HEADLINES
Investors on Alert for Fed Signals of September Rate Cut
The big question going into the Federal Reserve's meeting Wednesday comes down to how strongly officials signal their desire to cut rates.
The central bank is widely expected to hold its benchmark short-term interest rate steady-in a range between 5.25% and 5.5%, a two-decade high-while setting the table to begin a series of reductions at the next meeting in mid-September.
Investors Embrace Bond Funds Before Rates Start to Fall
The stock market may be roaring, but 2024 has been Wall Street's year of the bond fund.
Bonds are paying the highest yields in a generation and interest rates are poised to come down. Meanwhile, a record number of retirees are looking to cut risk in their portfolios. That combination has investors pouring money into both indexed and actively managed funds. Wall Street is seeing dollar signs.
U.S. stocks could face elevated downside risk in coming months, BofA strategists say
The rally in the U.S. stock market might be due for a downshift in coming months as historical and seasonal trends bring elevated near-term risk to the S&P 500, according to BofA Global Research.
Since 1936, the large-cap S&P 500 index SPX has experienced declines of 5% or greater three times per year on average, and it has suffered 10% corrections at least once per year, a team of BofA strategists led by Savita Subramanian, equity and quant strategist, said in a Monday note.
Here's why Microsoft's earnings come with so much pressure
Microsoft Corp. has a lot of weight to carry as it prepares for its earnings report on Tuesday.
Investors have been jittery as is about the technology sector recently and likely will be overly attentive to cautious signals heading into an action-packed week of Big Tech reports, including those from Microsoft MSFT, Meta Platforms Inc. META, Amazon.com Inc. AMZN and Apple Inc. AAPL
U.K. Government Cancels Retail Sale of Its 20% NatWest Stake
The U.K. government dropped plans set out by the previous administration for a retail sale of its remaining stake in NatWest Group, the bank it rescued at the height of the 2008-09 financial crisis.
U.K. Treasury Chief Rachel Reeves told the House of Commons Tuesday that the new Labour government decided to cancel the retail sale of its nearly 20% stake in NatWest. Instead, it will sell it privately in 2025, she said.
France Sees Hand of Far Left in Rail-Line Sabotage
PARIS-France's top cop said Monday he suspects far-left saboteurs were behind the burning of rail lines last week that paralyzed the country's high-speed train network as the Summer Olympics began.
"We have identified a number of profiles of people who could have committed these very deliberate and targeted sabotages," French Interior Minister Gérald Darmanin told French radio. The saboteurs cut and burned signaling cables at three sites around the country's rail network in a coordinated and targeted attack that caused chaos on high-speed lines just hours before the opening ceremony of the Games.
Iran Is Working to Undercut Trump in Presidential Election, U.S. Spy Agencies Say
WASHINGTON-Iran is seeking to harm Donald Trump's presidential campaign in covert online influence operations, fearing a return to power by the Republican nominee would inflame relations with Washington, U.S. intelligence officials said Monday.
U.S. spy agencies have "observed Tehran working to influence the presidential election, probably because Iranian leaders want to avoid" increased tensions with the U.S., an official with the Office of the Director of National Intelligence said during a press briefing.
BHP, Lundin to Jointly Acquire Canada's Filo for $2.96 Billion
BHP Group and Lundin Mining have agreed to jointly acquire Canadian exploration company Filo for roughly 4.10 billion Canadian dollars, equivalent to about US$2.96 billion, reflecting a scramble for copper resources to feed the global energy transition.
BHP, the world's No. 1 miner by market value, and others have been jostling for the world's best-known deposits of copper, arguably the most critical metal for the shift to clean energy because of its essential role in electric vehicles, renewable energy and grid infrastructure.
The U.S. Wanted to Knock Down Huawei. It's Only Getting Stronger.
Five years ago, Washington sanctioned Huawei, cutting off the Chinese company's access to advanced U.S. technologies because it feared the telecommunications giant would spy on Americans and their allies. Many in the industry thought it would ring the death knell for one of China's most vital tech players.
Huawei struggled at first-but now it's come roaring back.
Write to singaporeeditors@dowjones.com
Expected Major Events for Tuesday
04:30/NED: Jul Producer confidence survey
04:30/NED: Jun PPI
05:00/FIN: Jun Retail sales
05:30/FRA: Jun Household consumption expenditure in manufactured goods
05:30/FRA: 2Q GDP - first estimate
06:00/EU: 2Q New Commercial Vehicle Registrations in Europe statistics (EU27 + EFTA3)
06:30/HUN: 2Q Preliminary GDP
06:45/FRA: Jun Housing starts
07:00/SWE: Jul Consumer Tendency Survey
(MORE TO FOLLOW) Dow Jones Newswires
07-30-24 0015ET
