- US equity futures fall, European equities retreat
- US CPI and Fed’s Powell feature prominently this week
- Chinese data could disappoint after policy easing
- ECB Lagarde says policy will change at next meeting
LONDON, July 12 (Reuters) – An upsurge in new infections caused by the Delta coronavirus variant capped gains in equities and commodity prices on Monday, with Wall Street expected to open lower and bond yields holding just below- above the troughs of several weeks.
Markets are also nervous at the start of an eventful week which will see the start of the second quarter earnings season in the United States, the release of inflation data in several countries and the testimony of the Chairman of the Federal Reserve, Jerome Powell, who will be scrutinized for any discussion of the reduction. . Read more
MSCI’s All Country Stock Index (.MIWD00000PUS) closed last week in the red but rose 0.2% on Monday, supported by strong gains in Asia where markets followed Friday’s record close on US stocks. Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.7% while Japan’s Nikkei (.N225) rebounded 2.2%.
Chinese blue chips (.CSI300) rose 1.1%.
But concerns about the outlook were highlighted by the warning from finance ministers of the world’s 20 largest economies that recent improvements in the global economy could be hampered by rapidly spreading COVID-19 variants such as Delta Read more.
A Reuters tally of new COVID-19 infections show them increasing in 69 countries, with a daily rate of 478,000.
The variant is responsible for a record rise in infections in Australia where another lockdown appears imminent. South Korea has placed its capital Seoul under the toughest anti-COVID restrictions yet, as cases continue to rise in Asia and Europe.
“There is a little global coordination problem with different countries vaccinating at different rates. The question is how well you are vaccinated and the vaccinations are quite low in much of Asia,” Colin said. Asher, senior economist at Mizuho in London.
Asher said, however, that for Western markets, with better vaccination rates, monetary policy would be the primary focus.
The US inflation data expected on Tuesday will be particularly watched after the recent bond rally which lowered 10-year US Treasury yields by 15 basis points at one point.
While markets have since stabilized, yields are not far from their 4.5-month low of 1.35%, under pressure at least in part from the revised bullish investor sentiment.
Futures for the US Nasdaq, Dow Jones and S&P 500 were slightly lower as a pan-European stock index slipped 0.2% (.STOXX)
Commodity prices were also subdued, with Brent crude futures falling half a percent. London-traded copper, nickel and aluminum also fell, although China’s decision on Friday to ease policy supported metal futures in Shanghai.
China’s decision to cut bank reserve requirements seemed to reflect policymakers’ view that the economy was losing momentum. The reduction will free the equivalent of $ 154 billion into the economy.
Investors are eager to assess whether the earnings season will support Wall Street’s rise, with the S&P 500 .SPX up around 16% for the year so far, supported by the expected rise in earnings.
Expectations for a 65% increase from the same quarter of 2020, according to Refinitiv. JPMorgan (JPM.N), Goldman Sachs (GS.N), Bank of America (BAC.N) and other major banks kick off Tuesday’s results.
In currency markets, the US dollar edged up against a basket of currencies at 92.17 as the yen, which strengthened last week to a three-week high against the greenback, eased 0.14%.
The euro strengthened to $ 1.188 from last week’s low of $ 1.1780. He did not respond to comments from European Central Bank President Christine Lagarde that the bank will change its policy directions at its next meeting and show it is serious about boosting inflation . Read more
Reporting by Sujata Rao; Additional reporting by Wayne Cole in Sydney, edited by Angus MacSwan
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