MARKET WRAPS
Watch For:
Retail Sales for July; Canada CPI for July; Earnings from Home Depot
Today's Top Headlines/Must Reads:
- China Slashes Rates, Suspends Youth Jobless Data
- Russia Imposes Emergency Interest-Rate Rise to Halt Ruble Selloff
- Wall Street Is Ready to Scoop Up Commercial Real Estate on the Cheap
Follow WSJ market coverage here
Opening Call:
Stock futures were sharply lower on Tuesday after interest rate cuts by the PBOC failed to salve investors' concerns about weakening activity in the world's second biggest economy.
China's central bank unexpectedly cut several key interest rates. Data separately showed weak industrial output and retail sales, and Chinese officials said they would stop reporting youth-unemployment data after months of spiraling increases.
Read China's Central Bank Cuts Two Key Policy Rates
"The monetary policy effects are most likely to be neutral or could even be perceived as unfavorable in the sense that policymakers are starting to hit the panic button, especially in the face of a local confidence crisis," SPI Asset Management said.
Adding to the pressure on equities was the sight of further rises in benchmark government bond yields. Despite the soft China data, the 10-year Treasury yield rose above 4.2% to sit within just a few basis points of 15-year highs.
"Treasury yields remain quite important as a possible catalyst for stock indices in both directions," Fundstrat said.
Fundstrat reckons yields will fall over the coming months but may first move still higher "and if this happens quickly, I suspect that stock indices could be spooked by this rapid ascent in yields."
Pre-Market Movers
Arena Group jumped premarket after businessman Manoj Bhargava agreed to buy a majority stake.
Berkshire Hathaway took a new equity position in D.R. Horton and smaller positions in home builders Lennar and NVR. Berkshire reduced its stake in General Motors by 45% to 22 million shares now worth about $750 million. D.R. Horton was rising 3.1%. GM was down 0.6%. Read More .
Discover Financial Services shares fell 5.7% after it said Roger Hochschild had resigned as chief executive.
Getty Images was declining 19% in premarket trading after the company swung to a loss in the second quarter and cut its revenue outlook for 2023.
Hawaiian Electric Industries extended declines, falling 0.9% after tumbling in the previous session on accusations that downed power lines may have caused the wildfires that destroyed the town of Lahaina, Hawaii, and killed at least 99.
U.S. Steel fell 1.8% after finishing 37% higher on Monday after rejecting a $7.3 billion unsolicited offer from Cleveland-Cliffs.
Monday's Post-Close Movers
Chicken Soup for the Soul Entertainment's loss more than doubled in the second quarter, despite higher revenue. Shares fell 16%.
Grindr swung to a second-quarter profit and reported higher revenue as it focused on improving monetization of its platform. The company also raised its full-year guidance. Shares rose 23%.
Forex:
Strong retail sales data could lift the dollar, dragging EUR/USD down further, Danske Bank Research said.
EUR/USD, which fell below 1.09 on Monday to hit its lowest in more than five weeks, has generally been on a downward trajectory the past month, it said.
"The recent two rather benign CPI prints have not been a trigger for a persistent cyclical dollar decline."
Meanwhile, growth prospects in the eurozone and China look to be deteriorating and this pattern is expected to continue weighing on EUR/USD, Danske added.
Read Dollar Strength Hit Global Household Wealth in 2022, UBS-CS Report Says
Sterling erased gains after briefly hitting a two-week high against the euro following data showing U.K. average earnings excluding bonuses rose 7.8% in the three months to June, their highest since at least 2001.
This points to another U.K. interest-rate rise in September, though the unemployment rate rose more than expected to 4.2%, raising concerns about the impact of higher rates on the economy.
Investors are also cautious ahead of Wednesday's data, which are expected to show U.K. inflation slowing.
Any gains in sterling "could be contained" ahead of this data, MUFG said.
Read UK Record Wage Growth Leaves BOE With Another Tough Decision
Bonds:
Bond market weakness stands out in the absence of apparent bearish drivers and Tuesday's two-way data impetus hardly offers lasting relief, Commerzbank Research said.
"Markets are second-guessing swift Fed-cuts, with U.S. Treasuries selling off across tenors and the curve bear-flattening."
With the Assumption holiday in large parts of Europe, Commerzbank expects liquidity to be thin, enabling small data surprises to trigger decent volatility.
Energy:
Oil prices were steady as the PBOC rate cut only moderately boosted investor sentiment around the nation's economy.
A batch of Chinese economic data for July pointed to continued weakness. The nation's industrial production came in weaker than expected while retail sales slipped.
The "surprise rate cut will hardly reverse appetite for Chinese investments as meaningful fiscal stimulus becomes necessary," Swissquote Bank said.
Metals:
Base metal prices were rising while gold inched down after China's interest rate cuts, with investors still worried about the broader economy, according to Peak Trading Research, noting a strong dollar and weak Chinese demand.
"Investors are worried about rising interest rates and China's deepening property market downturn," Peak added.
The rate cuts have weakened the yuan, while Janet Yellen's comments on how Chinese weakness could drag the US economy too has furthered investor worries, Peak added.
Read Platinum Likely to Face Headwinds on Strong Dollar, Growth Worries
TODAY'S TOP HEADLINES
Crypto Custodian Prime Trust Files for Bankruptcy Protection
Prime Trust, a firm that bridged the crypto industry's banking access and stored its assets, filed for bankruptcy protection late Monday, after facing a shortfall in customer funds.
The company estimates that it has between 25,000 and 50,000 creditors. It listed assets of between $50 million and $100 million, and liabilities of between $100 million and $500 million, according to a court filing.
Esmark Bids for U.S. Steel, Setting Up Potential Battle for Steelmaker
Esmark said it made an all-cash offer to acquire United States Steel, ratcheting up competition to acquire the century-old steelmaker.
Esmark is a Pennsylvania-based industrial conglomerate with deep ties to the steel industry. The privately owned company is headed by James Bouchard, a former vice president for U.S. Steel's European business, and operates steel processing and distribution businesses.
Netflix Steps Up Videogame Challenge to Microsoft. The Cloud Is Its Battlefield.
Videogames might not immediately spring to mind when you think of Netflix but the streaming company is aiming to change that.
Netflix is testing a videogame streaming service as it looks to mount a bigger challenge to Microsoft and other giants in the space.
Japan's Economy Grows at 6% Pace in Second Quarter
TOKYO-Japan's economy expanded at a much faster pace than expected in the April-June quarter thanks to robust exports, outpacing growth in the U.S. and China.
Japan's real gross domestic product increased 1.5% in the three months to June from the previous quarter, compared with 0.9% growth in the January-March period.
Americans are feeling more optimistic about the economy, Fed says. Here's why.
American consumers are feeling less gloomy about the U.S. economy.
People's expectations of rising inflation fell in the near-, medium- and long-term, according to the Federal Reserve Bank of New York's July Survey of Consumer Expectations released Monday.
Georgia Grand Jury in Trump Case Returns Sealed Indictment
ATLANTA-A grand jury here returned at least one sealed indictment after a local prosecutor finished presenting evidence from her investigation into alleged election interference by former President Donald Trump and his allies.
It wasn't immediately clear which defendants were named or charges brought.
Why Trump's Phone Calls Could Be Focus of Potential Indictment in Georgia
Donald Trump, who has been hit with three indictments this year, could face a fourth as a grand jury in Georgia is considering whether he should be criminally charged for his attempts to overturn his 2020 election loss in the state.
If he is charged, the prosecution could rely at least in part on two phone calls Trump made, including one on Jan. 2, 2021, to Georgia Secretary of State Brad Raffensperger, a Republican who at the time was overseeing a forensic audit of mail-in ballots in a suburban Atlanta county. The U.S. Justice Department referred to the Raffensperger call in an indictment against Trump earlier this month, alleging he tried to push state officials around the country to contest election results.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Osisko Mining 2Q
Economic Calendar (ET):
0830 Jun Monthly Survey of Manufacturing
0830 Jun New motor vehicle sales
0830 Jul CPI
Stocks to Watch:
Africa Oil 2Q EPS 23c; Net $106.9M; Announces Appointment of Roger Tucker to Succeed Keith Hill as Pres and CEO, Tucker Has Taken Over Leadership Responsibilities Ahead of Previously Announced Date of Sept 5
Anaergia 2Q Loss C$119.8M; Rev C$42.5M; Anaergia Now Believes It Will Not Achieve Estimates Included in Previous Guidance, Expects Rev and Adjusted EBITDA Lower Than Previously Guided, Management Has Withdrawn Previous Fiscal 2023 Guidance; Says Management Won't Be Able to Provide Updates Regarding Guidance, Including Projected Rev and Adjusted EBITDA, Until Completion of Company's Strategic Review and a Reassessment of Assumptions
Buhler Industries 2Q EPS C$0.64; Rev C$67.6M
Condor Energies 2Q Loss/Shr C$0.04; Rev C$11,000
(MORE TO FOLLOW) Dow Jones Newswires
08-15-23 0616ET
