MARKET WRAPS

Stocks:

European stocks rose to start the month, as comments from the Chinese securities regulator signalling cooperation with U.S. counterparts boosted sentiment.

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.

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.

U.S. Markets:

U.S. 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.

In a speech delivered Friday night, Fed Gov. Lael Brainard suggested that the central bank won't announce a tapering of its bond purchase program at the Jackson Hole gathering at the end of the month. "I expect to be more confident in assessing the rate of progress once we have data in hand for September, when consumption, school, and work patterns should be settling into a post pandemic normal," she said.

The September jobs data won't come until Oct. 8, according to the Labor Department's calendar of releases, and the next Federal Open Market Committee meeting after that will end Nov. 3.

The next jobs report, covering July, is scheduled for release on Friday. The Institute for Supply Management manufacturing report is due at 10 a.m. Eastern.

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:

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.

EMEA HEADLINES

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.

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.

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.

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.

AXA 1H Net Profit, Revenue Rose on Better Property and Casualty Claims

AXA SA said Monday that net profit and revenue increased in the first half thanks to growth in all business lines, particularly improved property and casualty claims and a strong underwriting result at AXA XL, the company's property and casualty and specialty risk division.

The French insurance company said net profit rose to 4 billion euros ($4.75 billion) from EUR1.43 billion in the first half of 2020.

Heineken NV Swings to 1H Net Profit; Backs 2021 View

Heineken NV on Monday reported a swing to net profit for the first half and backed its full-year expectations.

The Dutch brewer said it expects earnings for the year to remain below 2019. The rise in commodity costs are expected to start affecting the business in the second half of the year and have a material affect in 2022, it said.

Fired Executive Says Deutsche Bank's DWS Overstated Sustainable-Investing Efforts

Deutsche Bank AG's asset management arm, DWS Group, tells investors that environmental, social and governance concerns are at the heart of everything it does and that its ESG standards are above the industry average.

But behind closed doors, it has struggled to define and implement an ESG strategy, at times painting a rosier-than-reality picture to investors, according to its former sustainability chief and internal emails and presentations seen by The Wall Street Journal.

Covid-19 Vaccine Health Pass Fuels French Protests

French protesters took to the streets for the third consecutive Saturday to protest new restrictions on people unvaccinated against Covid-19, a growing movement that threatens to complicate the country's coronavirus response.

More than 204,000 protesters-many decrying what they called a "health dictatorship" and carrying banners and French flags reading "Freedom!"- marched in cities across France, including Marseille and Lyon, according to estimates from France's interior ministry.

Textbook Publisher Pearson Bets Big on Online Learning

Andy Bird joined education-resource company Pearson PLC as chief executive officer at a time when education was undergoing an upheaval-the middle of the Covid-19 pandemic.

With students around the world suddenly learning from home, the company's online business saw big growth: Enrollment at Pearson's online K-12 schooling offering, Connections Academy, grew by 40%, says Mr. Bird, the former chairman of Walt Disney International.

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.

Belarusian Olympic Sprinter Seeks Polish Visa After Refusing to Return Home

TOKYO-A Belarusian Olympic athlete here is seeking a Polish visa after she resisted her team's attempts to send her home against her will in the middle of a public dispute, according to a support group for athletes and a Belarusian opposition group.

The International Olympic Committee said Monday that sprinter Krystsina Tsimanouskaya was safe and in the hands of authorities in Tokyo. The Belarusian Sport Solidarity Foundation, an organization which supports opposition athletes and has been assisting Ms. Tsimanouskaya in Tokyo, as well as the National Anti-Crisis Management, a leading opposition group, later said she is seeking a visa at the Polish embassy in Tokyo.

GLOBAL NEWS

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.

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.

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.

Economy Week Ahead: Factories, Trade, Employment

The U.S. employment report for July is the focus of this week's economic indicators.

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.

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.

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.

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."

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.

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.

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.

Write to sarka.halas@wsj.com

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(END) Dow Jones Newswires

August 02, 2021 06:20 ET (10:20 GMT)

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