MARKET WRAPS
Watch For:
U.S. ISM Report on Business Manufacturing for July; Canada
markets closed for civic holiday.
Opening Call:
Stock futures rose, signaling gains for major indexes at the
start of August as investors cheer strong earnings growth.
Investors are upbeat that the economic expansion will boost
corporate profits and enable stocks to keep rising, albeit at a
slower pace. Some are cautious that the highly contagious Delta
strain of coronavirus, a prolonged spell of inflation and China's
efforts to rein in tech firms could lead to bouts of
volatility.
"There are a few good reasons why the economy will continue to
grow at above normal rates," said Edward Smith, co-chief investment
officer at U.K. investment firm Rathbone Investment Management.
Consumers are spending freely, companies plan to invest in their
businesses and firms are restocking inventories, he said.
"That should enable earnings momentum to stay strong, carrying
through to the end of the year," Mr. Smith said.
Among individual stocks, Square dropped 4.9% ahead of the
opening bell. The payments company agreed to buy Australia's
Afterpay-which allows users to pay for goods in interest-free
installments-in an all-stock deal valued at around $29 billion.
Investors said sentiment in broader markets was given a boost by
comments from the Chinese securities regulator. The China
Securities Regulatory Commission said it would cooperate with
Washington on U.S. listings, after the Securities and Exchange
Commission said it would increase scrutiny of Chinese companies
that aim to sell shares in the U.S.
"Chinese and U.S. regulators shall continue to enhance
communication with the principle of mutual respect and cooperation,
and properly address the issues related to the supervision of
China-based companies listed in the U.S.," a spokesperson for the
CSRC told reporters, according to a transcript posted on the
regulator's website Sunday.
The comments appear to have buoyed Asian markets after a
turbulent few weeks.
The Stoxx Europe 600 rose, led by shares of retailers and makers
of cars and car parts.
Among individual stocks, HSBC rose 0.8% in London after the
British lender unveiled a forecast-beating quarterly profit of $3.4
billion and said it would resume paying dividends.
U.K. engineering firm Meggitt, which specializes in the
aerospace, defense and energy industries, shot up 58% after
agreeing to a GBP6.3 billion takeover, equivalent to around $8.8
billion, by Parker Hannifin.
Forex:
The dollar is unlikely to weaken further in coming days due to
expected strong U.S. economic data and global recovery concerns
supporting safe haven assets, ING said.
"This week's data should, on balance, keep investors upbeat on
the U.S. recovery and ultimately help cement the view that the
Federal Reserve will soon announce more details on its tapering
program (we think this could happen at the Jackson Hole conference)
and keep fuelling speculations around a 2022 rate hike," ING
analysts said.
Combined with worries about the fast-spreading Delta coronavirus
variant derailing the global recovery and the U.S.-China regulatory
spat, the dollar won't extend its depreciating trend this week,
they said.
The July U.S. nonfarm payrolls report on Friday could provide
"new directional momentum" for the euro-dollar exchange rate as the
Federal Reserve wants substantial further progress in the labor
market before reducing stimulus, Commerzbank said.
The surprisingly positive U.S. economic growth over the past few
quarters hasn't been reflected in employment in a satisfactory
manner yet, Commerzbank currency analyst Esther Reichelt said.
"From the Fed's point of view this seems to be the restraining
factor for U.S. monetary policy so that new information on the
situation on the labor market is most likely to trigger significant
moves in the USD exchange rates for now."
The Swiss franc will likely stay strong against the euro in the
near-term as coronavirus concerns support safe-haven assets and the
European Central Bank maintains its loose monetary policy measures,
Commerzbank said.
While the Swiss National Bank will keep its easy policy measures
in place and use currency interventions to curb excessive franc
gains, the ECB is unlikely to lift the euro by scaling back
stimulus for the time being, Commerzbank currency analyst Esther
Reichelt said.
"Hence, upward pressure on the franc is only likely to ease when
the pandemic-related risks are slowly priced out in the coming
months, thereby reducing demand for the franc as a safe-haven
currency."
Bonds:
In the bond market, the yield on 10-year Treasury notes ticked
up to 1.243% from 1.239% Friday.
Forward rates on the EUR money market signal that market
participants have again begun pricing in a certain tendency on the
part of the ECB to cut interest rates once more, LBBW said but
believes that the market is overinterpreting the ECB's dovish
signals.
"At this point, we believe the market is overinterpreting the
dovish signals given by the ECB in its forward guidance," LBBW's
senior fixed-income analyst Elmar Voelker said.
Absent any severe economic setbacks in the coming months, "our
view is that it seems unlikely there will be any renewed loosening
of monetary policy from the current perspective," he said.
Commodities:
Oil prices were lower after both benchmarks closed out July
roughly flat for the month. But the market has come under pressure
early Monday with "concerns over the spread of the Delta variant in
China," ING's Warren Patterson said.
While the number of cases in China remains low, partial
lockdowns and travel restrictions have been imposed in the affected
cities, and other countries in Asia like Thailand and the
Philippines have made similar moves.
In a signal that Delta concerns aren't as intense as they were a
few weeks ago, Brent traders increased bets on rising prices in the
most recent reporting week.
LME three-month copper futures rose 0.7% to $9,786 a metric ton,
recouping some of last week's losses that came with a stronger
dollar.
Supply fears are helping drive copper higher, said ING's Warren
Patterson, after the union representing workers at Chile's La
Escondida copper mine said its members voted to reject the mine
owner's most recent contract offer and go on strike. Codelco's
Andina mine, also in Chile, could also strike.
Meanwhile, Shanghai warehouse stocks of copper are falling, and
New York traders last week pushed their bets on rising prices to a
ten-week high.
London gold prices slipped following the dollar's recent
strength.
TODAY'S TOP HEADLINES
HSBC's Profit Rises as Pandemic Provisions Recede
HSBC Holdings PLC's net profit rose in the second quarter as the
London-based lender reduced provisions for bad loans caused by the
economic fallout from the coronavirus pandemic.
The banking giant, which is sharpening its focus on lucrative
Asian markets, unveiled a forecast-beating quarterly profit of $3.4
billion and said it would resume paying dividends-a key focus for
many investors in the sector.
Read More ->
Square Agrees to Acquire Afterpay for $29 Billion in All-Stock
Deal
SYDNEY-Square Inc. has agreed to acquire Afterpay Ltd. in an
all-stock deal worth around $29 billion, illustrating how financial
technology companies are seeking scale to challenge banks for a
bigger slice of the payments industry.
Square said a key attraction of the deal was a growing wariness
toward traditional credit among younger consumers, a group
particularly hard hit by the Covid-19 pandemic, as lockdowns
crushed many hospitality and casual jobs.
Read More ->
Succession Drama Grips Scholastic: CEO's Sudden Death, an Office
Romance and a Surprise Will
The longtime head of Scholastic Corp., M. Richard Robinson Jr.,
died suddenly in June on a walk in Martha's Vineyard. He left
behind a surprising succession plan.
He didn't give control of the $1.2 billion publisher to either
of his two sons, or his siblings, or his ex-wife, with whom he had
rekindled a friendship during the pandemic. Instead, control went
to Iole Lucchese, Scholastic's chief strategy officer. She also
inherited all his personal possessions.
Read More ->
Meggitt Agrees to $8.76 Bln Parker-Hannifin Takeover, Shares
Rise
Shares in Meggitt PLC rose on Monday after the company said that
it has agreed to a 6.3 billion pounds ($8.76 billion) takeover by
Parker Hannifin Corp., a deal that is expected to double the size
of Parker's Aerospace Systems segment.
Shares in Meggitt at 0820 GMT were up 273.70 pence, or 58%, at
742 pence.
Read More ->
Chile Workers at World's Biggest Copper Mine Vote to Strike
The union representing workers at Chile's La Escondida copper
mine said its members voted to reject the most recent contract
offer from the mine's owner and go on strike, potentially risking
disruptions to the supply of a key metal as the world's economy
continues to recover from the impact of the coronavirus
pandemic.
BHP Group Ltd.-controlled Minera Escondida, located in Chile's
northern Atacama Desert, is the world's largest copper mine,
producing almost 5% of the world's supply of the metal, which is
used to make electrical wiring and motors and in construction,
among many other applications.
Read More ->
Samsung Takes Intel's Chip-Seller Crown, but Bigger Showdown
Looms
Intel Corp. aspires to chip-technology supremacy within four
years. But for now, it has fallen from the industry's top spot by
one key measure.
In the second quarter, Samsung Electronics Co. overtook Intel as
the world's top chip maker by revenue. Given divergent outlooks for
their core businesses, the positioning is likely to stay that way
in the near future, industry analysts say.
Read More ->
Oil Search Intends to Recommend New Santos Takeover Proposal
Oil Search Ltd. said it intends to recommend a new takeover
proposal from Santos Ltd. to create an energy company with a market
value of more than 22 billion Australian dollars (US$16
billion).
Santos is offering 0.6275 of its own shares in exchange for each
Oil Search share. A deal would lead to Santos shareholders owning
61.5% of the combined company, with Oil Search investors holding
the remaining stock.
Read More ->
China Caixin Manufacturing PMI Drops to 16-Month Low
A private gauge of China's manufacturing activity in July fell
to a post-Covid-19 low as heavy floods, a resurgence in Covid cases
and power shortages in some cities weighed on output and new
orders.
The Caixin China purchasing managers index dropped to 50.3 in
July from 51.3 in June, Caixin Media Co. and researcher Markit said
Monday. July's reading was the lowest in the past 16 months, but
still held above the 50 mark that separates expansion from
contraction.
Read More ->
Senators Push to Wrap Up Bipartisan Infrastructure Bill This
Week
WASHINGTON-Senators wrapped up the construction of a roughly $1
trillion infrastructure bill, racing to pass it through the chamber
by the end of the week and send it to the House, where its fate is
intertwined with a $3.5 trillion package of Democratic
priorities.
Senate Majority Leader Chuck Schumer (D., N.Y.) kept the Senate
open through the weekend in a bid to begin considerations of the
bipartisan infrastructure package, $550 billion of which is in
addition to expected future federal investments in roads, bridges,
broadband, and other infrastructure projects. But lawmakers took
much of the weekend to complete the text of the bill, finishing the
final text Sunday night. Completion of the text will allow
lawmakers to begin the amendment process and move to final passage
in the coming days.
Read More ->
European Bonds Rally on Bets on Weak Growth, Inflation
Government bonds in the eurozone have rallied in recent weeks as
investors bet on a growing divergence in economic fortunes between
slowgrowing Europe and the rest of the world-especially the
U.S.
The yield on the benchmark 10-year German bund, slipped to minus
0.454% Monday, near its lowest level in over five months. In May,
it had climbed as high as minus 0.108%, according to Tradeweb. Bond
yields fall as prices rise.
Read More ->
Economy Week Ahead: Factories, Trade, Employment
The U.S. employment report for July is the focus of this week's
economic indicators.
Read More ->
Germany Retail Sales Rise
Retail sales in Germany increased in June beating forecasts
thanks to the easing of coronavirus-related lockdown
restrictions.
Retail sales increased 4.2% on month in June in calendar and
seasonally-adjusted terms, data from the country's statistics
agency Destatis showed Monday. This increase beats the forecast of
1.8% from economists polled by The Wall Street Journal.
Read More ->
Heavyweight Companies Enjoy Outsize Rewards as Economy
Rebounds
Big companies raced ahead during the Covid-19 pandemic,
leveraging the changes driven by the deepest business disruption in
decades to grab a larger slice of the economic pie.
Now, as the rich world bounces back from the shock, the
heavyweights are extending that lead, spending more on investments
and acquisitions, snapping up talent, employing big data and
leveraging new technologies.
Read More ->
Inflation Is Hot Now, but Investors Are Betting That Won't
Last
Investors are betting the inflationary streak that has sent
prices of everything from used cars to lumber soaring will fade in
the coming years, a reassuring sign for markets struggling to find
direction.
Few issues have vexed money managers more this year than
inflation. As the global economy has regained its footing, prices
for goods and services have risen-in many cases far faster than
economists had anticipated. Labor shortages and supply-chain
disruptions snarling the global shipping industry have added to
inflationary pressures.
Read More ->
Reduction in Fed's Asset Purchases Might Not Spark 'Taper
Tantrum'
WASHINGTON-Investors barely reacted last week when Federal
Reserve officials signaled they could announce plans to start
reducing their bond buying later this year. That was a relief for
policy makers eager to avoid a repeat of the market turmoil that
erupted in 2013 when the Fed made a similar announcement.
The Fed's next test will come when it outlines a concrete plan
for when and how it will scale back, or taper, the asset
purchases.
Read More ->
Anthony Fauci Warns on Covid-19 That 'Things Are Going to Get
Worse'
The Biden administration's chief medical adviser said he didn't
believe the U.S. would return to lockdowns but warned that "things
are going to get worse" as a more contagious variant of the
coronavirus has led to a surge of new cases.
"We are looking, not I believe, to lockdown but we are looking
to some pain and suffering in the future because we are seeing the
cases go up," Dr. Anthony Fauci, director of the National Institute
of Allergy and Infectious Diseases, said Sunday on ABC's "This
Week." He added, "The solution to this is, get vaccinated."
Read More ->
Simone Biles Will Make Dramatic Return to Tokyo Olympics on
Balance Beam
TOKYO-Simone Biles will compete in the balance beam final on
Tuesday, her sports federation said here, making a high-stakes
return a week after she pulled herself out of competition because
she didn't feel mentally able to perform safely.
The 24-year-old gymnast, widely regarded as the greatest of all
time, has not competed since she withdrew from the team final after
a shaky vault in the team final last Tuesday. She has withdrawn
from four other finals in the days since then. The balance beam
final represents her last chance to come back to competition in the
Tokyo Olympics, and to take an individual medal of any color.
Read More ->
U.S. Blames Iran for Drone Attack on Israeli-Linked Tanker
The U.S. joined the U.K. and Israel Sunday in blaming Iran for a
fatal drone strike last week on an Israeli-linked tanker near the
coast of Oman in the Arabian Sea, and the U.S. said it would work
with allies to develop a response to the incident.
The statement from Secretary of State Antony Blinken marked
unusually blunt language from the Biden administration,
particularly as it is also seeking to revive a nuclear deal with
Iran.
Read More ->
Myanmar Rulers Extend State of Emergency
Myanmar's junta leader has pledged to hold democratic elections
within two years, extending a state of emergency imposed by the
military when it overthrew the country's elected government in
February.
Speaking in a televised address on Sunday, Gen. Min Aung Hlaing
said his State Administration Council is "working as quickly as
possible" to prepare for fresh elections after voiding the results
of a 2020 vote that dealt a landslide victory to the party of
civilian leader Aung San Suu Kyi.
Read More ->
Write to sarka.halas@wsj.com
TODAY IN CANADA
Earnings:
Viemed HC. Inc (VMD.T) 2Q
Economic Indicators (ET):
Nothing major scheduled
Stocks to Watch:
No items published
Other News:
No items published
Market Talk:
No items published
Expected Major Events for Monday
00:30/JPN: Jul Japan Manufacturing PMI
05:00/JPN: Jul Consumer Confidence Survey
05:00/JPN: Jul Auto sales
06:00/GER: Jun Retail Trade
06:00/RUS: Jul Russian Manufacturing PMI
07:45/ITA: Jul Italy Manufacturing PMI
07:50/FRA: Jul France Manufacturing PMI
07:55/GER: Jul Germany Manufacturing PMI
08:30/UK: Jul CIPS / Markit Manufacturing PMI
13:45/US: Jul US Manufacturing PMI
14:00/US: Jul ISM Report On Business Manufacturing PMI
14:00/US: Jun Construction Spending - Construction Put in
Place
15:00/US: Jul Global Manufacturing PMI
23:30/JPN: Jul CPI (Tokyo), CPI ex-Food (Tokyo)
23:50/JPN: Jul Monetary Base
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Monday
Aerojet Rocketdyne Holdings (AJRD) is expected to report $0.48
for 2Q.
Alexander's Inc (ALX) is expected to report for 2Q.
Amrep Corp (AXR) is expected to report for 4Q.
ArcBest Corp (ARCB) is expected to report $1.61 for 2Q.
BlackRock TCP Capital Corp (TCPC) is expected to report $0.33
for 2Q.
Brixmor Property Group Inc (BRX) is expected to report $0.14 for
2Q.
CNA Financial Corp (CNA) is expected to report $1.12 for 2Q.
Coastal Financial Corp (CCB) is expected to report $0.44 for
2Q.
Columbia Sportswear Company (COLM) is expected to report $-0.06
for 2Q.
DSP Group Inc (DSPG) is expected to report $-0.03 for 2Q.
Eagle Financial Services (EFSI) is expected to report for
2Q.
Electrovaya (EFL.T) is expected to report for 3Q.
FNCB Bancorp Inc (FNCB) is expected to report for 2Q.
FRP Holdings Inc (FRPH) is expected to report for 2Q.
First Bancshares Inc (FBMS) is expected to report $0.76 for
2Q.
Gladstone Investment Corp (GAIN) is expected to report $0.29 for
1Q.
Global Payments Inc (GPN) is expected to report $0.87 for
2Q.
Green Plains Inc (GPRE) is expected to report $-0.21 for 2Q.
Hayward Holdings Inc (HAYW) is expected to report for 2Q.
Intevac Inc (IVAC) is expected to report $-0.26 for 2Q.
Jeld-Wen Holding Inc (JELD) is expected to report $0.56 for
2Q.
KnowBe4 Inc (KNBE) is expected to report for 2Q.
Loews Corp (L) is expected to report $0.72 for 2Q.
Minerva Neurosciences Inc (NERV) is expected to report $-0.18
for 2Q.
ON Semiconductor Corp (ON) is expected to report $0.34 for
2Q.
ONE Gas Inc (OGS) is expected to report $0.53 for 2Q.
Protara Therapeutics Inc (TARA) is expected to report for
2Q.
Sanmina Corp (SANM) is expected to report $0.38 for 3Q.
Sino-Global Shipping Amer (SINO) is expected to report for
3Q.
Square Inc (SQ) is expected to report $-0.05 for 2Q.
Stellus Capital Invest (SCM) is expected to report $0.28 for
2Q.
Sterling Bancorp Inc (SBT) is expected to report $0.06 for
2Q.
TG Therapeutics (TGTX) is expected to report $-0.55 for 2Q.
Timken Co (TKR) is expected to report $1.43 for 2Q.
Transocean Ltd (RIG,RIGN.EB) is expected to report $-0.15 for
2Q.
U.S. Gold Corp (USAU) is expected to report for 4Q.
Ultra Clean Holdings Inc (UCTT) is expected to report $0.60 for
2Q.
Ultragenyx Pharmaceutical Inc (RARE) is expected to report
$-1.31 for 2Q.
Universal Health Realty (UHT) is expected to report for 2Q.
Vornado Realty Trust (VNO) is expected to report $0.26 for
2Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
There are no actions to report from the last 24 hours.
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
August 02, 2021 06:09 ET (10:09 GMT)
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