This morning, September S&P 500 futures (ESU23) gained +0.11%, while September Nasdaq 100 E-Mini futures (NQU23) rose +0.09%, as investors geared up for more corporate earnings reports and awaited Friday’s nonfarm payrolls data.
In Friday’s trading session, Wall Street’s major averages closed with solid gains. Intel Corporation (NASDAQ:INTC) led the charge, surging over +6% on the Dow after reporting better-than-expected Q2 results and an optimistic Q3 guidance. T. Rowe Price Group Inc (NASDAQ:TROW) followed, climbing more than +8% on the back of stronger-than-expected Q2 results. Meanwhile, Procter & Gamble Company (NYSE:PG) rose over +2% as its Q4 organic sales surpassed Wall Street’s consensus estimates. However, Enphase Energy Inc (NASDAQ:ENPH) experienced a downturn, plunging more than -7% after offering weaker-than-expected Q3 sales guidance.
On Friday, data from the U.S. Department of Commerce revealed that the U.S. core PCE price index, a key inflation indicator monitored by the Federal Reserve, stood at +0.2% m/m and +4.1% y/y in June, slightly lower than expectations. Additionally, the U.S. employment cost index in Q2 increased by +1.0% q/q, the slowest pace in 2 years. Furthermore, the University of Michigan’s consumer sentiment reading for July came in at 71.6, falling short of expectations.
“Market sentiment appears to be more positive about inflation control and avoiding an economic recession,” commented Win Murray, a research director at asset manager Diamond Hill.
Minneapolis Fed President Neel Kashkari noted that the U.S. inflation outlook is “quite positive,” but he acknowledged that the central bank’s aggressive monetary tightening could lead to some job losses and slower economic growth.
In other news, Citigroup raised its year-end target for the S&P 500 by 15% to 4,600 points, citing a higher probability of a soft landing for the U.S. economy.
The second-quarter earnings season continues, with investors eagerly anticipating reports from major global companies this week, including Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Merck & Co (NYSE:MRK), Pfizer (NYSE:PFE), AMD (NASDAQ:AMD), Caterpillar (NYSE:CAT), Starbucks (NYSE:SBUX), and Qualcomm (NASDAQ:QCOM).
The main highlight of the coming week will be the U.S. Nonfarm Payrolls report for July. Investors will also keep a close eye on various economic data, such as the U.S. S&P Global Manufacturing PMI, ISM Manufacturing PMI, ISM Manufacturing Prices, JOLTs Job Openings, ADP Nonfarm Employment Change, Crude Oil Inventories, Initial Jobless Claims, Nonfarm Productivity (preliminary), Unit Labor Costs (preliminary), S&P Global Composite PMI, S&P Global Services PMI, Factory Orders, ISM Non-Manufacturing PMI, Average Hourly Earnings, Private Nonfarm Payrolls, and Unemployment Rate.
Today, the U.S. Chicago PMI will be closely watched, with economists expecting a value of 43.0 for July, compared to the previous reading of 41.5.
In the bond markets, United States 10-Year rates are currently at 3.980%, up +0.33%.
The Euro Stoxx 50 futures rose +0.22% this morning as investors analyzed significant Eurozone growth, inflation data, and corporate earnings reports. While food and beverage stocks underperformed on Monday, mining and healthcare stocks experienced gains. Preliminary data released on Monday indicated that Eurozone headline inflation declined further in July, and most measures of underlying price growth also showed signs of easing. A separate data release revealed that the Eurozone economy returned to growth in the second quarter. Over the weekend, European Central Bank President Christine Lagarde stated that the ECB could raise interest rates again, even if it decides to pause at its next meeting. Meanwhile, the Bank of England will conduct its rate-setting meeting on Thursday, and market participants hold divided sentiment on whether policymakers will revert back to a 25-basis point rate hike following a 50-basis point hike in June. In corporate news, Heineken NV (HEIA.A.DX) witnessed a decline of over -5% after the Dutch brewer cut its 2023 profit growth forecast.
Germany’s Retail Sales, Italy’s GDP (preliminary), Italy’s CPI (preliminary), Eurozone’s CPI (preliminary), Eurozone’s Core CPI (preliminary), and Eurozone’s GDP (preliminary) data were released today.
The German June Retail Sales came in at -0.8% m/m and -1.6% y/y, falling short of expectations.
The Italian GDP for the second quarter was reported at -0.3% q/q and +0.6% y/y, weaker than anticipated.
The Italian July CPI stood at +0.1% m/m and +6.0% y/y, slightly below expectations.
Eurozone’s July CPI arrived at -0.1% m/m and +5.3% y/y, while Eurozone’s July Core CPI stood at -0.1% m/m and +5.5% y/y, both showing signs of easing inflationary pressures.
Eurozone’s GDP for the second quarter was reported at +0.3% q/q and +0.6% y/y, surpassing expectations.
Asian stock markets settled in the green today. China’s Shanghai Composite Index (SHCOMP) closed up +0.46%, while Japan’s Nikkei 225 Stock Index (NIK) closed up +1.26%.
China’s Shanghai Composite closed higher as optimism over additional stimulus measures outweighed concerns about the decline in business activity in July. Official surveys showed that China’s manufacturing activity declined for the fourth consecutive month in July, and the services and construction sectors were on the verge of contraction, posing a threat to growth prospects for the third quarter. In response, China’s State Council issued measures to revive and expand consumption in the automobile, real estate, and services sectors to boost economic development. Additionally, major Chinese cities like Beijing and Shenzhen committed to meeting the increasing housing demands of the public, supporting national initiatives to revitalize the property market. Meanwhile, Hong Kong-listed tech stocks surged on Monday after the council unveiled measures aimed at supporting the country’s largest tech companies.
“We believe the Chinese government will continue to gradually introduce more supportive policies for the ailing property sector as required,” commented Philip Meier, a multi-asset portfolio manager at Gramercy.
In Japan, the Nikkei 225 Stock Index closed sharply higher and hit a 4-week high following the Bank of Japan’s announcement of unscheduled bond-purchase operations to contain the selloff triggered by its decision to allow yields to rise above a 0.5% cap. Government data showed that Japanese factory output recorded its first improvement in two months in June, reflecting manufacturers’ growing confidence driven by robust demand. The yen weakened on Monday, boosting export-oriented stocks. In corporate news, Toyota Tsusho Corp climbed over +9% after reporting favorable quarterly results and raising its full-year consolidated earnings guidance. However, Sumitomo Pharma tumbled about -10% following disappointing trial results for its schizophrenia treatment. The Nikkei Volatility closed down -1.22% to 18.59.
The Japanese June Industrial Production came in at +2.0% m/m, slightly below expectations.
The Japanese July Household Confidence arrived at 37.1, exceeding expectations.
Featured Image: Freepik @ newfabrika
