The Monday Market Minute
- Global stocks flat as investors await the start of U.S. earnings season and react to modestly stronger-than-expected economic data from China.
- China Q2 GDP slows to 6.2%, the weakest in 27 years, but June readings for retail sales, industrial output and fixed asset investment all surprise to the upside.
- Citigroup kicked of U.S. earnings today, with FactSet data suggesting the first back-to-back quarterly profit decline for the S&P 500 since 2016.
- European stocks edge higher, led by basic resource and auto stocks, as investors react to healthy June industrial data from China.
- Global oil prices little-changed as investors compute the impact of China growth on crude demand and watch the return of Gulf of Mexico production following the passage of Hurricane Barry this weekend.
- U.S. equity futures suggest a flat open on Wall Street Monday ahead of NY Empire State manufacturing data at 8:30 am Eastern time.
U.S. equity futures are pointing to a modestly firmer open on Wall Street Monday as investors both prep for a key set of data releases that will gauge the strength of the consumer economy and brace for the start of the second quarter earnings season.
With stocks at record highs and the Federal Reserve guiding markets to further monetary support in the coming months, the larger investors concerns between now and the end of the summer are likely to focus on both the strength of U.S. corporate earnings, their outlook for the second half of the year and the impact of President Donald Trump's myriad trade disputes on consumer spending and confidence in the world's largest economy.
Citigroup (C - Get Report) kicked off the first of those concerns this morning with stronger-than-expected second quarter earnings of $1.95 per share, compared to a Street forecast of $1.80, on revenues of $18.76 billion. Shares in the bank were marked 1.3% higher in pre-market trading while rivals JPMorgan (JPM - Get Report) , Goldman Sachs (GS - Get Report) , Wells Fargo (WFC - Get Report) , Morgan Stanley (MS - Get Report) and Bank of America (BAC - Get Report) are expected to follow with quarterly earnings reports over the next two days.
Netflix (NFLX - Get Report) will also post quarterly earnings and subscriber numbers after the bell Wednesday, firing the starter pistol for FAANG profits and near-term forecasts, as analysts predict the collective bottom line of S&P 500 companies will fall 3% from the same period last year, according to FactSet projections, a figure that would mark the first back-to-back quarterly decline in at least three years.
U.S. retail sales for the month of June, as well as housing starts data on Wednesday and the University of Michigan's consumer confidence reading on Friday will round out a trio of data points this week that all focus on the strength of the most import component to U.S. economic growth.
With all that ahead, U.S. equity futures were understandably muted in overnight trading, even as markets in Asia edged higher following some stronger-than-expected economic data from China, with contracts tied to the Dow Jones Industrial Average anticipating a 45 point bump and those linked to the S&P 500 indicating that the broadest benchmark of U.S stocks will add 4 points when the market opens at 9:30 am Eastern time.
Facebook (FB - Get Report) shares were an early market mover of note, falling 0.4% amid reports that Democratic lawmakers are planning legislation that would prevent tech companies from issuing digital currencies.
Bitcoin prices were also affected by the reports, with the cryptocurrency slumping more than 7% to to trade at $10,257.03 each on the Coindesk platform in early New York dealing after hitting a July 2 low of $9,855 early in the overnight session.
Boeing Co. (BA - Get Report) was also active, falling 1.2% while its European rival Airbus SE (EADSY) soared to an all-time high, as investors reacted to news that American Airlines (AAL) has extended cancellations of the grounded 737 MAX for a fourth time, taking the troubled aircraft out of commission until at least November.
Overnight in Asia, a trio of economic readings from China for the month of June surprised to the upside and suggested recent efforts to stimulate growth with tax cuts in order to offset the impact of its trade dispute with the United States are having some effect.
However, the country's official estimate for second quarter GDP growth slipped to 6.2% from a 6.4% tally over the first three months of the year, a figure that matched analysts' forecasts but nonetheless marks the weakest quarterly advance in more than 27 years.
China's 2nd Quarter growth is the slowest it has been in more than 27 years. The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving. This is why China wants to make a deal....— Donald J. Trump (@realDonaldTrump) July 15, 2019
....with the U.S., and wishes it had not broken the original deal in the first place. In the meantime, we are receiving Billions of Dollars in Tariffs from China, with possibly much more to come. These Tariffs are paid for by China devaluing & pumping, not by the U.S. taxpayer!— Donald J. Trump (@realDonaldTrump) July 15, 2019
Asia shares did manage to grin higher on the data, with gains linked to the hope of deeper fiscal or monetary support from Beijing, with the region-wide MSCI Asia ex-Japan index rising 0.16% in to the final hours of trading. Japan's Nikkei 225 was closed for a public holiday.
European stocks were modestly stronger at the start of trading, lead by trade-sensitive stocks in the auto and basic resource sectors following the surprisingly strong June data from China, with the Stoxx 600 rising 0.03% and Germany's DAX performance index bumping 0.15% higher in Frankfurt.
Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked a few ticks higher at 96.83 as investors bet on yen and yuan weakness to offset China's trade-linked slowdown, while benchmark 10-year Treasury note yields held at 2.138% in thin trading owing to the market holiday in Tokyo.
Global oil prices were little-changed in the overnight session, as well, with investors computing the impact of weaker China growth on crude demand and eyeing the return of production in the U.S. Gulf of Mexico following the passage of Hurricane Barry, which has slowed to a tropical storm over the weekend.
Brent crude contracts for September delivery, the global benchmark, were seen 34 cents higher from their Wednesday close and changing hands at $67.06 per barrel in early European trading while WTI contracts for August, which are more tightly linked to U.S. gas prices, were marked 23 cents higher at $60.44 per barrel.