MARKET WRAPS
Watch For:
Canada Wholesale Trade for May
Today's Top Headlines/Must Reads:
- Markets Appear Convinced the Fed Can Pull Off a Soft Landing
- Economists Are Cutting Back Their Recession Expectations
- Venture Firms Scale Back Megafunds in Strategy Shift
- China PBOC Adds Liquidity at Unchanged Policy Rates
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Opening Call:
Stock futures were mildly mixed on Monday after some disappointing news on China's economy damped risk appetite across global markets.
Data showed the world's second biggest economy grew by only 0.8% in the second quarter against the previous three months, slowing sharply from a 2.2% rise in the first quarter, and below what most economists expected.
Read China's Economy Barely Grows as Recovery Fades
Markets have so far been largely immune to China's weakness, as stock investors focused on signs of economic strength at home. Earnings last week showed the American consumer remained strong, and investors will be looking for similar signs this week as more companies report results.
Global stock indexes fell on the news from China. The Shanghai Composite declined 0.9%, while Europe's Stoxx 600 lost 0.3%. Trading in Japan was closed for a holiday, while Hong Kong's session was canceled as the city braced for a typhoon.
Pre-Market Movers
AT&T slipped further premarket, adding to losses that follow a series of articles in WSJ that highlighted the dangers of lead-wrapped transmission cables.
Microsoft and Sony agreed to keep Activision Blizzard's Call of Duty videogame on Sony's PlayStation system after Microsoft completes its acquisition of Activision. Microsoft rose 0.7%, U.S.-listed Sony rose 0.1%, and Activision rose 4.7%. Read more .
Richemont, LVMH, Christian Dior were hit hard by weaker-than-expected economic numbers out of China and a negative outlook from Cartier-owner Richemont.
Tesla rose 1.7% after its first Cybertruck rolled off the assembly line over the weekend.
United Airlines rose 1.1% after the airline and its pilots' union reached a contract agreement that includes increases in pilot pay of up to 40% over four years.
Friday's Post-Close Movers
BridgeBio Pharma said it would share next week topline results from the latest phase of its transthyretin amyloid cardiomyopathy heart disease study. Shares rose 12%.
BYND Cannasoft said it intends to launch an underwritten public offering. Shares of the Israeli-based company dropped 28%.
Universal Security Instruments reported higher quarterly and yearly sales. Shares rose 9.1%.
Forex:
Signs of disinflation and skepticism about whether the Fed can raise interest rates beyond July should keep the dollar weak in the near term but it could pick up later in the year, Rabobank Research said.
The dollar could benefit if U.S. recession fears increase into year-end, while the euro could struggle beyond the summer due to signs that the ECB's rate-rising cycle "is moving towards its peak," it said.
Rabobank expects EUR/USD to fall to 1.08 in three months and to 1.06 in six months, versus 1.1232 currently.
Meanwhile, ING said the dollar could win back some of its recent losses as investors take a more cautious approach ahead of next week's Fed decision, where it is widely expected to raise rates.
"Core inflation is declining, but the jobs market remains very tight and other economic indicators remain resilient."
The DXY dollar index "could find some support after climbing back above 100.00," ING added.
Energy:
Oil prices fell 1% in Europe after the Chinese GDP data.
As the world's second largest economy and a major consumer of commodities China's GDP numbers are "likely to continue to cause concern for markets," ING said.
Also weighing on prices were reports that some shuttered oil wells in Libya reopened.
Metals:
Base metals fell in early London trading as Chinese economic data raised questions about its demand for metals.
The figures highlighted that "the post-Covid momentum is faltering rapidly in the world's second-biggest economy," Deutsche Bank said. However, it could boost expectations of additional stimulus measures to support China's economy, the bank added.
TODAY'S TOP HEADLINES
Investors Are Bailing on Cathie Wood's Popular ARK Fund
Cathie Wood's flagship exchange-traded fund has rallied more than 50% this year. Investors are using that as an opportunity to get out.
They have pulled a net $717 million from the ARK Innovation ETF over the past 12 months, according to FactSet. That exodus marks a notable shift for a fund that had consistently drawn investor cash since its 2014 inception. Once the largest actively managed ETF with nearly $30 billion in assets under management, the fund has shrunk to roughly $9 billion, mostly due to investment losses.
Pay Raises Are Finally Beating Inflation After Two Years of Falling Behind
Americans' growing paychecks surpassed inflation for the first time in two years, providing some financial relief to workers, while complicating the Federal Reserve's efforts to tame price increases.
Inflation-adjusted average hourly wages rose 1.2% in June from a year earlier, according to the Labor Department. That marked the second straight month of seasonally adjusted gains after two years when workers' historically elevated raises were erased by price increases.
A Buoyant Global Economy Is Starting to Sag
The global economy's brief run of good luck may be ending.
Manufacturing activity is weakening across the world. Europe slid into a mild recession earlier this year. China's much-anticipated rebound from Covid-19 lockdowns is sputtering. Many emerging markets continue to struggle with heavy debt burdens and high interest rates.
What Markets Are Saying About the Fight Against Inflation
New signs of cooling inflation sparked market gains last week. But is the pain from inflation-and the Federal Reserve's interest-rate-raising campaign to fight it-really over?
Here is what market gauges are showing:
A Buoyant Global Economy Is Starting to Sag
The global economy's brief run of good luck may be ending.
Manufacturing activity is weakening across the world. Europe slid into a mild recession earlier this year. China's much-anticipated rebound from Covid-19 lockdowns is sputtering. Many emerging markets continue to struggle with heavy debt burdens and high interest rates.
Taiwan's Vice President Plans Stop in the U.S. at a Delicate Moment
TAIPEI-Taiwan's vice president plans to visit the U.S. in August, less than five months after a similar trip by the island democracy's president sparked an angry response from Beijing and accelerated a deterioration in Sino-American ties.
Lai Ching-te will stop in the U.S. on his way to and from attending the inauguration of Paraguay's president next month, a top Taiwan Foreign Ministry official said at a news briefing on Monday. The official didn't offer further information on Lai's itinerary while he is in the U.S.
Bridge Between Crimea and Russia Disabled in Presumed Ukrainian Attack
A presumed Ukrainian strike disabled the only road bridge connecting Russia with the occupied Crimean Peninsula, hitting once again a major symbol of President Vladimir Putin's rule and constricting Russian supplies to its troops in southern Ukraine.
Russia's National Antiterrorism Committee blamed Ukraine for the attack, saying that Kyiv used two naval drones against the bridge. Ukrainian media, citing government sources, also said that naval drones were involved.
Ukraine's NATO Push Hit a Bump. Joining the EU Will Also Be Tough.
Ukraine's bid for quick NATO membership faced a setback last week. Its path to membership of the European Union looks equally bumpy, despite encouragement from Brussels.
The EU last summer granted Ukraine official candidate status, opening the way for eventual membership of the bloc, one of President Volodymyr Zelensky's biggest goals for his country. Many EU officials and leaders describe the prospect of Ukraine joining the bloc as a necessity, vital to anchoring Kyiv in Western institutions, whatever its future relationship with NATO.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
PrairieSky Royalty 2Q
Economic Indicators (ET):
0830 New motor vehicle sales
0830 International Securities Transactions
0830 Wholesale trade
Expected Major Events for Monday
08:00/ITA: Jun CPI
12:30/US: Jul Empire State Manufacturing Survey
12:30/CAN: May New motor vehicle sales
12:30/CAN: May International transactions in securities
12:30/CAN: May Wholesale trade
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Monday
CrossFirst Bankshares Inc (CFB) is expected to report for 2Q.
Equity Lifestyle Properties Inc (ELS) is expected to report for 2Q.
FB Financial Corp (FBK) is expected to report $0.66 for 2Q.
Guaranty Bancshares Inc (GNTY) is expected to report $0.56 for 2Q.
Home Bancorp (HBCP) is expected to report $1.16 for 2Q.
National Bankshares (NKSH) is expected to report $0.74 for 2Q.
Neptune Wellness Solutions Inc (NEPT,NEPT-T) is expected to report for 4Q.
Nicolet Bankshares Inc (NIC) is expected to report $1.46 for 2Q.
Orrstown Financial Services Inc (ORRF) is expected to report $0.79 for 2Q.
PrairieSky Royalty Ltd (PSK.T) is expected to report $0.27 for 2Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Albany International Raised to Outperform From Neutral by Baird
Alcoa Cut to Neutral From Overweight by JP Morgan
American Equity Cut to Hold From Buy by Truist Securities
AT&T Cut to Neutral From Overweight by JP Morgan
Boyd Gaming Raised to Equal-Weight From Underweight by Morgan Stanley
Corning Cut to Neutral From Buy by UBS
EPR Properties Cut to Outperform From Strong Buy by Raymond James
First Wave BioPharma Cut to Neutral From Buy by HC Wainwright & Co.
(MORE TO FOLLOW) Dow Jones Newswires
07-17-23 0617ET
