Global equities continue to straddle the 0 mark mainly from below, this morning’s Nikkei closing a 1/3% down, Chinese benchmarks down, aside from the Shenzhen’s ¼% increase and Australia’s S%P nearly 1/5 a percent rise. The chief culprit is US President Donald Trump who yesterday tweeted that trade talks with China were snagged. The IMF’s Acting Man. Dir David Lipton yesterday said that China’s growth is expected to be heavily impacted by the continued trade war with the US. Meanwhile, with the Japan/S.Korea feud threatening processor and smartphone supplies, U.S. Asst. Sec. of State David Stilwell has stepped into the arena to “encourage dialogue”.
Today, G7 finance ministers meet in France to discuss US tariff threats on the European Union and minimum corporate tax rates. With Ursula von der Leyen confirmed last night as head of the European Commission, Economic sentiment in Europe and Germany continues to be bleak this July, dropping more than 3 points to -24.5 in the latter. The ECB’s Benoit Coeure this morning said this morning that he expects European growth to slow this quarter. The zone’s trade surplus, however, increased dramatically to €20.2 bn in May, with Italy’s doubling to €5.35 bn. Italy this morning also pleased analysts with a .25% increase in industrial orders in May, after a 2.2% reduction MoM in March, a 1.6% increase MoM in industrial sales. Labour data from the UK surprised to the upside, earnings up 3.6% as unemployment remains at a low 3.8%. The pound yesterday dashed hopes of a recovery, plunging below support at 1.25 as chances of a no-deal Brexit mount. This morning, the UK is reporting a 0.1% drop MOM in producer prices but flat results for CPIs and retail prices.
The USD index yesterday erased last week’s losses, returning to above the $97 mark, as retail sales climbed another 0.4% in June and import prices declined by 2%, on expectations of -2.1%. The NAHB’s housing market index increased by a point to 65. However, Industrial production and capacity utilization both disappointed with 0% growth and 77.9%, respectively. Putting a lid on the momentum, Fed Head Powell yesterday said that economic and trade uncertainties were “strengthening the case” for a rate cut.
This morning finds Bitcoin plunging below the 10K as it grapples with 9. Breaking through could send the crypto towards $8k next, this after yesterday’s congressional hearing on Facebook’s Libra, in which a total lack of confidence in the company was expressed across the political spectrum. Not helping matter, the Washington Post reported yesterday that Facebook been lobbying Libra to several government, treasury SEC officials. During the hearing, Facebook ignored requests to explain what measures would be taken to prevent data breaches within the Libra cosmos. Today’s G7 meet is also expected to weigh in on the matter. WTI futures lost $2.50 on the barrel yesterday after the API’s reported 1.4mB drawdown.
Reuters this morning reports a 7.9% drop in car sales throughout the European Union. In the US, most earnings reports were better than expected, JPMorgan reporting a 3.6% increase in revenues YoY and a 23% increase in earnings per share. Johnson & Johnson reported a 43% increase in earnings YoY, despite a 1.3% decline in revenues. Today’s reporters, Bank of America, Netflix and Microsoft, are expected to show a healthy round of growth in revenues and earnings.
|09:00 AM GMT – EU||Consumer Price Index (Jun)|
|11:00 AM GMT – US||MBA Mortgage Applications (Jul 12). Housing Starts Change (Jun) &|
|Building Permits (Jun) at 12:30. The Fed’s Beige Book at 18:00|
|12:30 PM GMT – Canada||Consumer Price Index (Jun)|
|14:30 PM GMT – OIL||EIA Crude Oil Stocks Change (Jul 12)|
|23:50 PM GMT – Japan||Imports, Exports & Merchandise Trade Balance (Jun)|
|01:30 AM GMT (+1) – Australia||Employment, Participation Rate (Jun)|
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