European and US futures are trading lower as traders are picking up the momentum from Asia, where trading has seen soft. This is despite the fact that PBOC surprised the markets with its move today by announcing an interest rate cut. The bank has taken this action to revive and stimulate growth as the country’s housing sector has seen a serious downtrend, and other covid-related lockdowns aren’t helping. Despite this dovish monetary policy move, the actions in the stock market over in Asia have been lacklustre, and they aren’t helping the European futures as well.
We are not seeing much risk-on rally today because the Chinese Retail Sales data failed to impress investors and traders as the data came well below the market expectations and printed the reading of 2.7%. against the forecast of 6.3%. The industrial production number, YoY, also fell short of expectations, with the reading of 3.8% against the reading of 4.5%.
Over in Europe, French and Italian markets are closed today for a bank holiday while German traders are focused on the economic numbers, the German WPI m/m. The data came a bit soft, and it failed to influence the markets positively.
As for the US markets, traders are more interested to know what the Empire State Manufacturing Index is going to look like as the number will be released will be 12:30 and is highly likely to set the trading tone for the rest of the day. The forecast is for 5.1 against the previous reading of 11.1. The reading was significantly lower than the previous reading. In addition, traders will also be paying attention to the NAHB Housing market index, where the number is expected to print the same reading as the previous time, which is 55.
Moving ahead, there are three important events that traders will keep close to their hearts. Firstly it is the UK’s CPI number which will be coming out on Wednesday and is expected to print a reading near 10% confirming the cost of the living crisis. Secondly, we have the US Retail Sales number, which traders expect to show a further slowdown than the expectation; the forecast is for 0.2%, while the previous reading was 1.0%. And final and more important is the FOMC Meeting Minutes, which will gather a lot of attention among traders and investors who would like to know what the Fed thinks about their monetary policy reading after an encouraging reading from the inflation and labour market.
Stock of The day
Aramco, the Saudi oil company, is likely to gain most of the attention among traders today as the company reported stellar earnings results with a 90% surge in profit in the second quarter. The main reason behind their profit surge is mainly higher oil prices. The company also confirmed that it has more than a reasonable spare capacity to pump more oil.
Gold prices continue to trade above the critical price level of 1,800, which keeps the hopes alive for further higher moves. When it comes to gold prices, traders are focused on three important things: firstly, it is the US economic readings, secondly speeches, and views from other Fed members and what they think of the Fed’s monetary policy, and finally, the strength or weakness in the dollar index. So far, it is a weakness in the dollar index, which is promoting the gold prices
Oil prices are taking a further breather and traders are pushing the prices even lower as Aramco said it has spare capacity to increase oil. However, in reality, there are fewer chances of that happening because it is in Aramco’s interest rate to keep the prices elevated.