Monetary developments in the euro area; U.S. Advance Report on
Durable Goods; U.S. Federal Open Market Committee meeting; updates
from Deutsche Boerse, Dassault Systemes, Kering, Telecom Italia,
Ferrovial, ACS, FirstGroup, Croda International, Reckitt Benckiser,
Koninklijke KPN, Randstad.
Europe to open flat after choppy session on Wall Street. Dollar
edges lower, Bitcoin jumps. Oil and gold rise.
European stocks could struggle at the open as investors awaiting
results from a number of U.S. technology giants later this week and
for guidance from the Federal Reserve on Wednesday.
"This week is really where we enter crunchtime for earnings,"
said Hugh Gimber, a strategist at J.P. Morgan Asset Management.
"With tech names reporting, the bar is high."
Rising concerns over the Delta variant of Covid-19 and worries
over economic growth are likely to challenge the pace at which the
U.S. stock market will rise in the coming weeks, some investors
said. Money managers also are awaiting guidance from the Federal
Reserve this week, including policy makers' outlook on inflation
and any clues on when the central bank may start scaling back its
bond purchase program.
"Economic activity in the U.S. does seem to have peaked," said
Altaf Kassam, head of investment strategy for State Street Global
Advisors in Europe. "We're still in very benign territory where the
economy is still powering ahead, but not at the full elastic bounce
The market actually may be reflecting more of that than it
seems, said JC Parets, the founder of technical-analysis service
AllStarCharts. The records for the big indexes are coming from a
small group of stocks, which happen to be the largest. Underneath
that, he said, the picture is much choppier.
In corporate news, Rio Tinto is expected to report underlying
earnings of US$12.01 billion for the six months through June,
according to 14 analysts' forecasts compiled by Vuma.
That would be up from US$4.75 billion in the same period in
2020. A Vuma compilation of 12 forecasts points to an interim
dividend of roughly US$4.93 a share, versus US$1.55 a share a year
Forecasts on the miner's payout are wide, however, after a
strong first half for iron-ore prices. Analysts are tipping an
ordinary dividend anywhere between US$3.57 a share and US$9.16 a
share. Rio Tinto is scheduled to report after the Australian market
The greenback edged lower against major currencies, with the WSJ
Dollar Index falling 0.3%, ahead of big-tech earnings and the Fed's
communication later this week. A bullish earnings season and rising
economic indicators are offset by concerns about the Delta variant
and possible lockdowns around the world. The dollar slid 0.5%
against the British pound and the Swiss franc, and 0.3% versus the
The Federal Reserve's bringing forward of interest rate
expectations in June likely encouraged more speculators to bet on
the dollar strengthening than weakening in the week to July 20, ING
The latest CFTC data showed the dollar's positioning moved into
net-long territory for the first time since March 2020 in the week
to Tuesday. Long positions expect an asset price to rise and short
positions expect it to fall.
"This is clearly a signal of how the combination of the Fed's
hawkish expectations after the recent shift in tone and the general
unwinding of reflation trades has prompted a recovery in USD
sentiment," ING forex strategist Francesco Pesole said
On Monday, Bitcoin jumped about 25% from its 5 p.m. ET level
Friday. Investors pointed to short positions being liquidated and
speculation that Amazon may be venturing into digital currencies.
The price of bitcoin rose as high as $40,539, its highest level
since mid-June, according to CoinDesk.
Worries about post-Brexit trade tensions could have prompted
speculators to bet against sterling in the week to July 20, ING
Sterling short positions outweighed long positions for the first
time this year in the week to last Tuesday, according to the latest
CFTC data. Shorts expect an asset price to fall and longs expect it
The shift in positioning isn't fully aligned with the spot
market, where most G-10 currencies have performed worse than
sterling in the past month, ING forex strategist Francesco Pesole
"At the same time, speculators may start to be pricing in some
risk premium related to the post-Brexit EU-U.K. negotiations on the
Northern Ireland protocol, which appear to be at a stalemate."
In bond markets, the yield on the 10-year Treasury note ticked
lower to 1.276% from 1.286% Friday.
The yield on 10-year Treasury inflation-protected securities, or
TIPS, fell to a record low Monday. Viewed as a proxy for the real
yield, a measure of what investors earn from bondholdings after
compensating for inflation, the TIPS yield reached minus 1.120% in
intraday trading, according to Tradeweb.
Oil edged higher in the morning Asian session, but gains could
be limited by ongoing concerns over the Covid-19 Delta variant.
This variant continues to spread globally and travel
restrictions aren't easing, Oanda said.
The world is determining how it will live with Covid-19, and it
still currently appears that worries over crude demand in the short
term may prevent the tight market from sending oil prices much
higher, Oanda added.
Gold consolidated as traders eye this week's Federal Open Market
Committee meeting. Market players are waiting to see whether the
Fed will signal the start of tapering, for example, by scaling back
bond purchases, which would likely be bad news for gold,
The price of gold is unable to detach itself from the
psychologically important $1,800/oz level ahead of the meeting, it
Copper rose in early Asian trade due to a likely growing
bottleneck in primary metal production in China, according to
Goldman Sachs. The Covid-19 Delta variant could exacerbate the
market tightness, it said.
The investment bank expects a 430,000 ton refined metal deficit
in 2H, and thinks this could continue next year. Maintaining its
"bullish conviction," Goldman Sachs has price targets for copper in
three, six and 12 months of $10,500, $11,000 and $11,500 a ton,
The three-month LME copper contract rose 0.9% to $9,890/ton.
Iron ore rose in early Asian trade as the selling that had
weighed down the steel-making ingredient in recent sessions has
subsided. Investors are finding confidence in the growing steel
output of many countries even as Chinese authorities try to rein in
steel production, ANZ said.
After a strong start to the year, China's steel output is
showing signs of weakness, the bank said.
The most-traded September iron ore contract on the Dalian
Commodity Exchange rose 1.2% to CNY1,155.0 a ton.
TODAY'S TOP HEADLINES
China Industrial Profit Data for June Signal Relatively Strong,
if Uneven, Recovery
China's industrial profit rose 20.0% from a year earlier in
June, slowing from May's 36.4% expansion as favorable low-base
The profitability of China's industrial companies looks
relatively strong as more than 70% of those surveyed reported
higher profits than what they earned before the coronavirus
pandemic, said the National Bureau of Statistics.
Bitcoin Jumps to a Six-Week High
The price of bitcoin jumped to a six-week high Monday, with some
investors attributing the rally to short positions being liquidated
and speculation that Amazon.com Inc. may be venturing into digital
Bitcoin soared as high as $40,501.70, according to Dow Jones
Market Data, reaching its highest level since mid-June. It rose 9%
from its 5 p.m. EDT level Sunday. Rival currency Ether jumped
Infrastructure-Bill Negotiators Try to Overcome Late Hurdles
WASHINGTON-A push to complete a roughly $1 trillion
infrastructure agreement hit a series of hurdles Monday, as aides
squabbled over funding for water infrastructure and how to apply a
requirement that federal contractors pay their employees a locally
prevailing wage, among other issues.
Lawmakers had previously set Monday as a target for closing out
their talks and beginning floor consideration of the emerging
agreement, though that timeline seemed to slip as the two sides
sniped at each other.
Chinese Officials Blame U.S. for Stalemate in High-Level
TAIPEI-Senior U.S. and Chinese officials sparred over Covid-19,
human rights and cybersecurity during a tense exchange Monday in
the highest-level meetings between the two countries on Chinese
soil since Joe Biden became president.
Chinese Vice Foreign Minister Xie Feng, meeting with U.S. Deputy
Secretary of State Wendy Sherman in the port city of Tianjin on
Monday, said American perceptions of China as an "imagined enemy"
were responsible for a stalemate in relations between the two
Foreign Purchases of U.S. Homes Fall to New Low
Foreign purchases of U.S. homes declined for a fourth straight
year as the Covid-19 pandemic sharply limited international
Foreigners bought $54.4 billion in U.S. residential real estate
in the year ended in March, down 27% from the prior year, according
to a report released Monday by the National Association of
Realtors. That is the lowest level on record since NAR began
collecting the data in 2011.
China's Tech Regulator Orders Companies to Fix Anticompetitive,
China's main technology-sector regulator ordered the country's
internet giants to fix certain anticompetitive practices and data
security threats, building on a regulatory campaign to reform how
China's largest tech companies operate.
China's Ministry of Industry and Information Technology, which
oversees China's telecommunication and industry policies, said
Monday that its new six-month rectification program was aimed at
correcting a range of industry issues, including disrupting market
order, infringing on users' rights, mishandling user data and
violating other regulations.
Investors Aren't Playing Defense, but the Military Splurge Isn't
Weapons makers are struggling in the current equity market, but
their defensive perimeter may be more secure than it seems.
On Monday, Lockheed Martin reported a $1.8 billion
second-quarter profit, narrowly missing Wall Street's expectations
because of a $225 million loss on a classified program. The
company's shares slipped, despite Chief Executive James Taiclet
raising the earnings-per-share forecast for 2021.
Credit Card Spending Bill Will Come Due
Credit-card companies no longer have a spending problem. They've
still got a borrowing problem.
In recent months, many U.S. consumers were spending at levels
similar to, or better than, what they were doing in the same period
in the year before the pandemic began. At Capital One Financial,
purchase volume on its domestic cards was up 25% in the second
quarter of 2021 from what it was the same period in 2019.
Aon, Willis Towers Scrap $30 Billion Merger Amid Antitrust
Aon PLC and Willis Towers Watson PLC abandoned a more than $30
billion tie-up to create the world's largest insurance broker,
deciding it wasn't worth pursuing in the face of Justice Department
opposition to the merger.
The DOJ filed a lawsuit against the deal last month, the first
big test of the Biden administration's more muscular antitrust
policy. The suit, filed in a federal court in Washington, said that
the proposed merger would lead to higher prices and reduced
innovation for U.S. businesses, employers and unions that rely on
LVMH Books Higher 1H Revenue, Profit as Fashion Sales Surge
LVMH Moet Hennessy Louis Vuitton SE's earnings rose sharply in
the first half as sales jumped by more than half on the year,
driven by the core soft-luxury division.
The French luxury-goods giant said Monday that it made an
operating profit of 7.63 billion euros ($8.98 billion) in the six
months to end-June, nearly fives times as much as the previous-year
period, and some 44% higher than in the same period of 2019. Sales
increased to EUR28.67 billion from EUR18.39 billion previously.
Covid-19 Vaccine Pioneer BioNTech Plans to Make New Malaria and
Tuberculosis Shots in Africa
BioNTech SE said it would invest some of the profits from the
Covid-19 vaccine it markets with Pfizer Inc. into developing shots
for malaria and tuberculosis in Africa, part of the German
company's plan to establish a large production hub for innovative
medicines on the continent.
The biotech firm plans to build a factory in Africa and develop
a manufacturing network with local partners to transfer its
technology based on messenger RNA, a genetic molecule, to a
continent that has suffered from a lack of access to vaccines and
other lifesaving treatment, BioNTech Chief Executive Ugur Sahin
U.S. Combat Role in Iraq to End This Year, Biden Says
WASHINGTON-President Biden said the U.S. combat mission in Iraq
would conclude by the end of 2021, but the U.S. military would
continue to work with Iraqi forces in their fight against the
Islamic State militant group.
"We are not going to be, by the end of the year, in a combat
mission," Mr. Biden said Monday at the start of a White House
meeting with Iraqi Prime Minister Mustafa al-Kadhimi. The president
said U.S. military forces would "be available to continue to train,
to assist, to help and to deal with ISIS."
Lebanon Nominates Former Prime Minister Najib Mikati to Form
BEIRUT-Lebanon's political factions nominated billionaire
businessman and former Prime Minister Najib Mikati to form the
country's next government, in an attempt to break a monthslong
deadlock after two previous attempts were abandoned.
President Michel Aoun on Monday tapped Mr. Mikati with forming a
new government after a majority of lawmakers backed him. His
designation comes after Saad Hariri, the last prime
minister-designate, gave up his nine-month effort to form a
government in mid-July.
Barclays Overtakes Credit Suisse in Investment Banking
Barclays PLC recently overtook Credit Suisse Group AG in
investment banking revenue, a sign that the U.K. bank's long,
frustrated push to be a major player is making progress thanks in
part to the troubles of its Swiss rival.
The London-based bank vaulted past its Zurich-based counterpart
to be the largest investment bank outside the U.S. in the second
quarter of this year with $1.26 billion of investment banking
revenue, representing a 4.1% market share, according to Dealogic.
JPMorgan Chase & Co. was the top investment bank during the
quarter with $3.15 billion of revenue, a 10.1% market share.
Intel Sets Plan to Again Become World's Premier Chip Company
The race is on at Intel Corp. as the semiconductor giant pledges
to return to the top of its game, committing to produce the world's
best chips within four years.
To get there, Chief Executive Pat Gelsinger laid out a plan
Monday for the company to introduce at least a new central
processing unit-the brains of the modern computer-every year
between 2021 and 2025. Each is expected to be based on transistor
technology more advanced than the last.
Ad-Tech Company AdTheorent Nears $1 Billion SPAC Deal to Go
Advertising-technology company AdTheorent Inc. is nearing a
combination with a special-purpose acquisition company to go public
in a deal that would value the firm at about $1 billion, people
familiar with the matter said.
AdTheorent uses machine learning and data science to optimize
advertising and marketing campaigns for its customers. It says it
can efficiently target consumers without using sensitive personal
Judge Extends Deadline for FTC to Refile Facebook Antitrust
WASHINGTON-The Federal Trade Commission has until Aug. 19 to
file an amended version of its antitrust lawsuit against Facebook
Inc. after a judge granted the agency an extension.
Judge James E. Boasberg of the U.S. District Court for the
District of Columbia had previously set a July 29 deadline after
saying the agency hadn't supported its claims that Facebook has
monopoly power in personal social-networking services. His
dismissal of the suit cited in part how the FTC calculated the
company's market share.
Tesla's Quarterly Profit Soars to Record $1.1 Billion
Tesla Inc.'s generated a record quarterly profit as the car
maker largely sidestepped the effects of a global chip shortage
that has constricted production for many global auto makers.
The Silicon Valley electric-car maker, as it posted
second-quarter earnings on Monday, said its ability to navigate
ongoing supply-chain challenges would help dictate its pace of
growth in the second half of the year as it races to satisfy
growing demand for battery-powered vehicles.
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Expected Major Events for Tuesday
05:00/FIN: Jun Labour force survey, incl unemployment
06:00/DEN: Jun Retail Sales Index
07:30/SWE: Jun Foreign trade
08:00/ITA: Jun Foreign Trade non-EU
08:00/EU: Jun Monetary developments in the euro area (M3)
08:30/UK: Jun Capital issuance
10:00/FRA: 2Q Claimant count and job advertisements collected by
10:00/UK: Jul CBI Distributive Trades Survey
12:00/HUN: Jul Hungarian interest rate decision
15:59/UKR: Jun Industrial Production
23:01/UK: Jul REC JobsOutlook survey
23:01/UK: Jul Shop Price Index
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(END) Dow Jones Newswires
July 27, 2021 00:19 ET (04:19 GMT)
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