This content was published on July 11, 2022 – 09:46
(Bloomberg) — US equity futures dropped along with European stocks Monday as traders await the key second-quarter earnings season for indications on how companies are weathering the inflation storm. The dollar jumped and bonds gained.
Contracts on the S&P 500 and Nasdaq 100 were lower, suggesting last week’s rally in US stocks my stall. Twitter shares slumped in premarket trading after Elon Musk terminated his $44 billion takeover approach for the social media company. The Stoxx Europe 600 index shed about 0.5%, with carmakers and miners among the worst-performing sectors as concerns about China’s Covid resurgence also weighed on risk appetite.
A dollar gauge was back around the highest level since 2020, and the euro resumed its drop toward parity with the greenback. Yields on US Treasuries and European bonds fell. Oil declined and iron ore extended losses on concern about the demand outlook in China.
Price pressures, a wave of monetary tightening and a slowing global economy continue to shadow markets. A US inflation reading later this week is expected to get closer to 9%, a fresh four-decade high, buttressing the Federal Reserve’s case for a jumbo July interest-rate hike. Company earnings will shed light on recession fears that contributed to an $18 trillion first-half wipe-out in global equities.
“The real earnings hit will come in the second half as we’re hearing from companies, especially retailers, saying they’re already seeing weakness from consumers,” Ellen Lee, portfolio manager at Causeway Capital Management LLC, said on Bloomberg Television.
Chinese stocks had their worst day in about a month as a Covid resurgence combined with fresh fines for the tech giants sent investors running for the door. An Asian equity gauge shed 1%. Japan was a bright spot, buoyed by the prospect of administrative stability after the ruling coalition expanded its majority in an upper house election.
Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant Sunday and warned of “very high” risks, stoking fears of more lockdowns given China remains wedded to stamping out the pathogen.
Elsewhere, the pound fell as the race to replace Boris Johnson as UK premier heats up. Over in Europe, the main conduit for Russian gas goes down for 10-day maintenance on Monday. Germany and its allies are bracing for President Vladimir Putin to use the opportunity to cut off flows for good in retaliation for the West’s support of Ukraine following Russia’s invasion.
Bitcoin caught a downdraft from the cautious start to the week in global markets, falling as much as 2.6% but holding above $20,000.
What to watch this week:
- Earnings due from JPMorgan, Morgan Stanley, Citigroup, Wells Fargo
- New York Fed President John Williams speaks in Libor talk, Monday
- BOE Governor Andrew Bailey speaks, Monday and Tuesday
- South Korea, New Zealand rate decisions, Wednesday
- Federal Reserve Beige Book, Wednesday
- China trade, Wednesday
- US PPI, jobless claims, Thursday
- China GDP, key economic data, Friday
- G-20 finance ministers, central bankers meet in Bali, from Friday
- Atlanta Fed President Raphael Bostic speaks, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.6% as of 5:45 a.m. New York time
- Futures on the Nasdaq 100 fell 0.8%
- Futures on the Dow Jones Industrial Average fell 0.5%
- The Stoxx Europe 600 fell 0.5%
- The MSCI World index fell 0.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.6%
- The euro fell 0.8% to $1.0108
- The British pound fell 0.7% to $1.1945
- The Japanese yen fell 0.7% to 137.03 per dollar
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.06%
- Germany’s 10-year yield declined five basis points to 1.29%
- Britain’s 10-year yield declined four basis points to 2.20%
Commodities
- West Texas Intermediate crude fell 2.3% to $102.34 a barrel
- Gold futures fell 0.4% to $1,734.80 an ounce
©2022 Bloomberg L.P.
Source: swissinfo.ch
