Empire State Manufacturing Survey for August; Canada Wholesale Trade for June
Stock futures were declining early Monday after data showed China's economy stumbled in July as a two-month boost from easing lockdowns faded, prompting the country's central bank to unexpectedly cut two key interest rates in an effort to shore up faltering growth.
The rate cut is the second this year from Beijing as its stringent zero-Covid policy has forced businesses to shut, consumers to pull back on spending and growth to slow.
Esty Dwek, chief investment officer at Flowbank, told Bloomberg Television that investors were "focusing on the fact the U.S. seems to have finally started a period of disinflation."
Dwek added that "if China is slowing and isn't going to pick up very much then investors really need the U.S. to hold up."
The strength of the U.S. consumer will be closely watched this week by Wall Street as major retailers Walmart, Target and Home Depot report quarterly earnings, and retail sales data for July are released.
Read Barrons.com: Why the Stock Market Rally Could Be the Real Thing
The dollar should remain strong in the near-term as the Federal Reserve is likely to continue raising interest rates even after data showed inflation slowed more than expected in July, Danske Bank said.
"Monetary conditions are not restrictive enough to ensure a return of inflation to 2%. Hence, we do not think it is time to reverse course on our bullish USD view."
It may take a couple of weeks when key economic data are published, or a decent rebound in oil prices, before dollar sentiment finds a renewed tailwind, Danske Bank said. It expects EUR/USD to fall below parity in the second half of the year.
Eurozone economic releases this week, including German ZEW investor expectations on Tuesday and eurozone gross domestic product data on Wednesday, are likely to add to concerns about a weak economy and push the euro lower, ING said.
"Neither should provide much lasting support for EUR/USD, which can sink back into the 1.0150/0200 area."
Concerns are growing about the ongoing rise in gas prices in Europe, compounded by drought across much of Europe and low levels of the Rhine disrupting raw material transport networks and pushing up costs on other routes, ING said.
Sterling's reaction to key U.K. data this week--including unemployment and inflation figures--may be modest, as they're unlikely to change interest-rate expectations for the BOE, ING said.
"That should mean EUR/GBP is able to hold below Friday's highs near 0.8485/90. Cable [GBP/USD], however, looks vulnerable to dollar strength and could quite easily make a return visit to 1.2000."
Relative valuations are at levels where selling BB-rated credit and buying BBBs and lower quality high-yield credit "makes a lot of sense" on a beta-neutral basis, Jefferies said.
"This view is gaining traction in the market as well."
Jefferies has started to see more active selling of BB-rated bonds and buying of lower-quality high-yield at the market level and it remains around neutral duration.
Crude futures were almost 2% lower in Europe after a raft of Chinese data showed that economic activity in the world's largest importer of oil slowed last month.
Beyond China, traders are on the lookout for news on the Iran nuclear deal, which, if revived, could boost global oil production by about a million barrels a day inside a year.
The European Union has told Iran it wants a yes or no response to a draft proposal it circulated last week by today, The Wall Street Journal has reported.
In other news, water levels in Germany's Rhine river continue to fall, hampering industrial flows through the country as the continent battles an ongoing drought.
With barges unable to pass, the flow of industrial goods has suffered as logistics costs rise, particularly for coal-powered plants which have traditionally imported coal via the river.
Read: Rhine Water Levels Drop Further as European Drought Continues
Base metals and gold were down in early London trading as weaker-than-expected industrial data from China pressured the global economic outlook.
"Macro looks poor especially with this morning's China data overlapping with news of continued strikes in the U.K. as rising cost-of-living continues to be a sore point," Marex said, adding that the rising dollar was adding further pressure.
TODAY'S TOP HEADLINES
Robinhood Learns to Nab Interest Income
Robinhood Markets Inc. hasn't stolen back its momentum, but it might be getting there.
Some notable things happened in Robinhood's results in the second quarter, announced in early August. No, it wasn't a jump in trading. But average revenue per user ticked higher for the first time since the start of the meme-stock frenzy in the first quarter of 2021, from $53 the prior quarter to $56. Notably, that was helped by a big increase in non-transaction revenue: Net interest income grew by more than a third from the first to second quarter, to $74 million, even as transaction-based revenues dipped from $218 million to $202 million.
Affirm CEO Says Next Recession Will Silence Fintech Lender's Doubters
Max Levchin says the market is wrong about Affirm Holdings Inc., the buy now, pay later company he co-founded a decade ago. It might just take a recession to prove it.
Affirm's stock is down 77% since hitting its peak in November, compared with a 9% decline in the S&P 500 during the same period. Investors are worried about future costs of borrowing, growing competition and whether Affirm's borrowers will fall behind on payments during a downturn. The company's total valuation stands at about $11 billion, down from a peak of $47 billion.
Victoria's Secret Is Trying a New Look. Can Customers Be Convinced?
Victoria's Secret spent the last year trying to shift from a brand associated with the male gaze to a company representing female empowerment. Many customers don't know it made any changes at all.
Most shoppers who participated in a study conducted by the lingerie seller in February weren't able to identify Victoria's Secret & Co. as the brand behind recent ads of models wearing its lingerie, according to internal research documents reviewed by The Wall Street Journal. The ads show women with different ethnicities, body types and ages mostly in natural-looking lingerie, including a pregnant Grace Elizabeth and multiracial model Paloma Elsesser.
A Dose of Vitamin Shoppe Could Be Good for Your Portfolio
This column is part of the sixth annual Heard on the Street stock-picking contest.
Franchise Group, owner of the Vitamin Shoppe chain, had its brief moment in the spotlight in June when it tried to buy Kohl's. The acquisition didn't materialize and the stock's value has since fallen, but the company deserves a closer look.
Movie Theaters Plot Revival as Americans Show Up for Blockbusters
America's movie theaters are enjoying a happy plot twist for a change.
The summer movie season is wrapping up with several blockbusters. Studio executives are signaling a commitment to the big screen. And the ravaged landscape of closed theater chains that many predicted two years ago hasn't come to fruition.
Saudi Aramco Posts 90% Jump in Profit, Generating Billions for Kingdom
DUBAI-Saudi Arabia's national oil company on Sunday posted a 90% jump in quarterly profit on the back of high oil prices, generating billions of dollars in cash that is infusing fresh momentum into the kingdom's ambitious economic makeover and strengthening its geopolitical power.
Aramco, officially named Saudi Arabian Oil Co., said its net income amounted to $48.4 billion in the three months ending in June, up from $25.5 billion in the same period a year earlier, because of higher crude-oil prices and stronger refining profit. It is the highest quarterly net income Aramco has posted since it started trading its shares on the Saudi stock exchange in 2019. The company is one of the most valuable globally, briefly taking the top spot in May.
China Growth Slows Across All Fronts in July, Prompting Unexpected Rate Cut
SINGAPORE-China's economy stumbled in July as a two-month boost from easing lockdowns faded, prompting the country's central bank to unexpectedly cut two key interest rates in an effort to shore up faltering growth.
A raft of data released Monday showed economic activity slowed across the board in July, including factory output, investment, consumer spending, youth hiring and real estate, highlighting the breadth of the economic challenge facing policy makers in a politically sensitive year for leader Xi Jinping, who is expected to break with recent precedent and seek a third term in power this fall.
Japanese Economy Recovers Prepandemic Size With 2.2% Growth
TOKYO-Japan's economy recovered its prepandemic size in the April-June quarter thanks to strong consumer spending and higher exports, but inflation may start to weigh on growth later this year.
The world's third-largest economy after the U.S. and China expanded 0.5% in the three months to June from the previous quarter and 2.2% on an annualized basis, which reflects what would happen if the pace continued for a full year.
Germany's Wholesale Prices Rose Strongly in July, But There Are Signs of Easing
Germany's wholesale prices rose strongly in July but at a slower pace than in the previous months.
German wholesale prices rose 19.5% on year in July, the German statistics office Destatis said Monday. Wholesale prices rose 21.2% on year in June and peaked at 23.8% in April.
Market Rebound Draws Wary Eye From Some Investors
Stocks reached another milestone in their comeback last week, with the Nasdaq Composite rising more than 20% from its mid-June low to end its longest bear market since 2008.
The rally has stirred a familiar debate: Will the rebound continue?
(MORE TO FOLLOW) Dow Jones Newswires
August 15, 2022 05:16 ET (09:16 GMT)Copyright (c) 2022 Dow Jones & Company, Inc.