The Monday Market Minute

  • Global stocks mixed ahead of a hectic week on Wall Street that includes more than 150 corporate earnings reports, a key reading of the domestic jobs market and a crucial Fed rate decision.
  • Asia shares drift lower after a weaker-than-expected reading for China' industrial profits and reduced expectations for trade talks between Washington and Beijing.
  • European shares gain as merger activity and a weaker euro support markets, helping Britain's FTSE 100 surge more than 1.2%.
  • London Stock Exchange Group shares hit a record high after confirming talks to buy data analytics firm Refinitiv for around $27 billion.
  • U.S. equity futures suggest modest opening bell gains on Wall Street ahead of Wednesday's Fed rate decision and Friday's July non-farm payroll reading.

Market Snapshot

U.S. equity futures drifted lower Monday as investors prepped for a busy week of activity of on Wall Street that includes more than 150 quarterly earnings reports, a July jobs report and a much-anticipated Federal Reserve rate decision that could define market prospects for the second half of the year. 

The Fed starts its two-day meeting Tuesday in Washington again a paradoxical background of plus 2% GDP growth, the strongest job market in 50 years, near record highs for all three U.S. equity benchmarks and the near certainty of an interest rate cut from Fed watchers and bond markets.

The case for a rate reduction, the first since the depths of the global financial crisis more than a decade ago, lie in both the on-again, off-again fate of U.S.-China trade talks and their impact on both global economic growth and domestic corporate profits, both of which are slowing to the point where Fed official feel an "insurance cut" is warranted in the central bank's key policy rate, which currently sits in a range of 2.25% to 2.5%.

Both elements of the Fed's rate cut justification will dominate market headlines this week, with U.S. official sitting down for the first face-to-face talks with their opposite numbers in China this week since President Donald Trump's G20 meeting with Xi Jingping.

However, senior White House officials, including the President himself, have downplayed expectations for the meetings, given the major roadblocks on technology, agricultural purchases and intellectual property property protections that continue to vex the world's two largest economies. 

"I think probably China will say "Let's wait," Trump told reporters last week when asked for his prediction of the current round of negotiations. "Let's wait and see if one of these people who gives the United States away, let's see if one of them could get elected."

Earnings, as well, will remain front-and-center in the market's conscience this week, with more than 150 companies reporting quarterly profits, including Apple (AAPL) - Get Report , Exxon Mobil Corp. (XOM) - Get Report , General Electric (GE) - Get Report , General Motors (GM) - Get Report and Ford Motor Co.  (F) - Get Report .

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With just under half of the S&P 500 reporting so far this season, collective earnings are expected to fall by around 2.6% from last year, marking the first back-to-back quarterly decline since 2016. 

With all that at play, U.S. equity futures were still little-changed in overnight trading, moving largely in-line with global stocks, as contacts tied to the Dow Jones Industrial Average suggest a modes 15 point opening bell gain and those linked to the S&P 500 indicate a 2 point bump to the downside.

Pharmaceutical shares are likely to be in focus today after Mylan NV (MYL) - Get Report and Pfizer Inc. (PFE) - Get Report agreed to combine their off-patent drug businesses in an all-stock deal that will create a new company based in the United States.

Mylan shares were marked 23% higher in pre-market trading Monday to indicate an opening bell price of $22.7 each, a move that would still leave the stock nursing an 18% year-to-date decline. Pfizer shares, meanwhile, were seen 0.8% lower at $42.75 each with a market value of around $240 billion.

Overnight in Asia, a weaker-than-expected reading for industrial profits in China, which fell by 3.1% in June to take the first half decline to 2.4%, as well as a stronger U.S. dollar kept markets in check, with the MSCI Asia ex-Japan benchmark falling 0.47% and Japan's Nikkei 225 closing 0.19% lower on the session at 21,616.80 points.

European markets were modestly stronger, however, helped by a weaker euro, which traded at a two-month low of 1.1122 against the greenback.

The Stoxx 600 was marked 0.2% higher by mid-morning in Frankfurt, but the standout gainer was London's FTSE 100, which surged 1.6% as the pound fell to a 27-month low of 1.2302 and markets gained on news of a potential $27 billion takeover of data analytics firm Refinitiv by the London Stock Exchange Group  (LNSTY) .

Away from equities, Friday's stronger-than-expected second quarter GDP print of 2.1% trimmed expectations of a 50 basis point rate cut from the Fed this week and lifted the U.S. dollar index to a two-month high of 98.06 in overnight trading, while benchmark 10-year Treasury bond yields held at 2.063%.

Global oil prices edged lower in the early European session, held down by a stronger dollar, ongoing concerns for demand from the world's biggest energy consumers and reports of "constructive" talks between and Iran and its European partners over the fate of its 2015 nuclear treaty that has sparked recent tensions in the Gulf region.

Brent crude contracts for September delivery, the global benchmark, were seen 14 cents lower from their Friday close and changing hands at $63.32 per barrel while WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked 6 cents higher at $56.26 per barrel.