July Manufacturing PMI; July ISM Report On Business
Manufacturing PMI; June Construction Spending; July Global
U.S. stock futures edged down to start a new month of trading,
after major indexes finished July with their best month since
U.S. stocks mounted a furious recovery to start the second half
of this year, boosted by positive signals from earnings and
expectations that the Federal Reserve may not need to raise
interest rates as aggressively as once thought.
Federal-funds futures, used by traders to place bets on the
course of interest rates, on Monday morning showed a 21.5%
probability that the Fed will raise its key interest rate to a
range between 3.5% and 3.75% or higher by the end of the year, down
from 45.7% a week ago.
Last week, central-bank officials approved another unusually
large interest-rate increase, lifting their federal-funds rate to a
range between 2.25% and 2.5%.
The optimism marks a stark turnaround from the first six months
of 2022, when stocks recorded their worst first half of a year
since 1970. The July rally in stocks came alongside a sharp
recovery in Treasury bond prices, providing relief to investors who
often count on bonds in their portfolios to hedge against pullbacks
Even so, there are concerns that have kept traders cautious,
including decades-high inflation, the war in Ukraine and
expectations that the U.S. economy will slip into a recession.
The possibility that the Fed could still move aggressively at
its next meeting in September has also kept jitters lingering in
the market. On Sunday, Federal Reserve Bank of Minneapolis
President Neel Kashkari said on CBS's "Face the Nation" that
inflation remains "very concerning" and that central bankers would
do what's needed to bring price pressures down.
Investors' shifting expectations for central-bank policy for the
rest of the year have scrambled other areas of financial markets in
recent days, upending some trades that have flourished this year.
The U.S. dollar, for example, which has staged a prolonged rise in
2022, fell on Monday for a fourth consecutive session, with the WSJ
Dollar Index losing 0.2%.
Later Monday, investors will parse earnings from companies
including Loews, due before the market opens, as well as
Diamondback Energy, Pinterest and Activision Blizzard, all of which
will report after the closing bell.
Overseas, the pan-continental Stoxx Europe 600 rose.
London-traded shares of HSBC Holdings climbed after the global
banking giant said profit rose 62% in the second quarter from a
year earlier. In Asia, indexes traded mostly higher despite data
showing Chinese manufacturing activity unexpectedly contracted in
The DXY dollar index fell in early European trading. Weak real
economic data from China isn't a good sign for the dollar because
falling demand from the Asian giant means there will be a decline
in demand for energy globally, according to Commerzbank.
"Everything that currently endangers the prospect of high energy
prices and thus high U.S. terms of trade is bad for the U.S.
dollar," the bank said. "Thus, also the risk of a U.S.
USD/JPY may extend its recent pullback, based on technical
charts, UOB said. Late last week, USD/JPY fell sharply and broke
below both the trendline support and 55-day exponential moving
average in quick succession, the bank said. If USD/JPY closes below
the next major support level near the bottom of the daily Ichimoku
cloud at 131.45, this would suggest the July high of 139.39 may not
come back into the picture, at least for a few months, UOB
Oil prices fell Monday amid uncertainty over the outcome of the
OPEC+ meeting this week. The group will reportedly consider keeping
oil production unchanged for September despite calls from the U.S.
for more supply, but a modest increase in output is also expected
to be discussed, Phillip Securities Research team said.
The also technically marks the end of the production alliance
between Saudi Arabia-led OPEC and Russia, but analysts expect the
OPEC+ alliance to continue. The Saudi energy minister and Russian
deputy prime minister met Friday to discuss continued
"opportunities for cooperation," the Saudi Ministry of Energy
Metals markets in early European trading were mixed as worries
over the health of the global economy continue to mount. Demand for
metals remains uncertain with data showing Chinese manufacturing
output rose at a slower pace in July.
Supply issues are also still present with Europe's energy crisis
likely to curtail zinc and aluminum output. "Stockpiles [of
aluminum] plunged to a 31 year low of 295,325 tons last week, which
equates to approximately 1.5 days of consumption," ANZ Research
TODAY'S TOP HEADLINES
HSBC Pledges to Restore Pre-Covid Dividends as Profit Jumps
Global banking giant HSBC Holdings PLC's profit rose 62% in the
second quarter from a year earlier, and the bank said it plans to
resume paying quarterly dividends in 2023.
HSBC earned $5.5 billion in April through June, up from $3.4
billion in the same period in 2021. Analysts had expected a profit
of $2.7 billion, according to consensus forecasts compiled by the
Amgen Fights IRS Over $10.7 Billion Tax Bill
Biotech Amgen Inc. is in a pitched battle with the Internal
Revenue Service over the company's international tax strategy and
$10.7 billion in back taxes and penalties that the agency says it
The IRS says that Amgen underreported its taxable income by
nearly $24 billion from 2010 to 2015 by inappropriately attributing
what the agency says should have been U.S. profits to a Puerto Rico
subsidiary that oversees manufacturing of the company's drugs.
Made-in-Vietnam Electric Vehicles Are Heading to the U.S.
Vietnam's Vingroup JSC became a corporate juggernaut in its home
country, operating everything from luxury resorts to hospitals,
shopping malls and supermarkets.
Now, it wants to break into the U.S. car market with a
little-known electric-vehicle startup, called VinFast, that has a
novel way of pricing its models.
Heineken First-Half Net Profit Tops Market Views; Sees
Significant Cost Pressures Ahead
Heineken NV said Monday that net profit for the first half rose
on the back of action to mitigate inflationary pressures on its
cost base, and that it affirmed its forecast for 2022 and changed
its guidance for 2023.
The Dutch brewer said that it expects significant cost pressures
and ongoing investment to affect the second-half of 2022 and into
2023, noting that the commodities price softening is being offset
by higher natural price levels and availability.
A Banana Boat Sunscreen Spray Was Recalled Due to Presence of
Edgewell Personal Care Co. issued a voluntary recall of one of
its Banana Boat sunscreen spray products after an internal review
found trace levels of the carcinogen benzene in some samples.
Edgewell pulled several batches of its Banana Boat Hair &
Scalp Sunscreen Spray SPF 30 after tests found that the product
contained small amounts of the cancer-causing chemical, the
manufacturer said Friday in a statement to the U.S. Food and Drug
Investors Fear Stock-Market Rally Will Be Short-Lived
Bearish investors aren't buying into hopes that July's rapid
advance for stocks heralds the start of a new bull market.
If anything, they say the worst might be yet to come as
inflation remains high, the Federal Reserve plans more
interest-rate increases and stocks trade at valuations that still
don't look cheap.
Market Mayhem Triggers Deal-Making Drought
Merger activity has slowed dramatically after a record year in
2021, and some deal makers are bracing for an even quieter second
In the U.S., about $1 trillion of deals had been struck in 2022
through late July, according to Dealogic. That is the lowest in
five years-excluding 2020, when deal making ground to a halt at the
outset of the pandemic-and a nearly 40% drop from the same period
in 2021. Globally, some $2.4 trillion of deals were announced,
representing a roughly 30% decrease. The total number of
transactions also was down.
Ukraine Grain Shipment Departs for First Time Since Russian
Ukraine dispatched its first grain shipment since the start of
Russia's invasion on Monday, under a deal aimed at easing global
The ship departed the Odessa port carrying 26,000 metric tons of
corn headed for Tripoli, Lebanon, according to Ukrainian officials
and the Turkish government, which helped broker the deal. The
Sierra Leone-flagged bulk carrier, the Razoni, is expected to
arrive in Istanbul on Tuesday, and then continue on its course
China's Manufacturing Output Expanded at Slower Pace in July
China's factory activity expanded at a slower pace in July,
according to a private gauge, as Beijing's stringent Covid-19
restrictions eased and lockdowns were largely confined to less
economically important regions of the country, lowering the
The Caixin China purchasing managers index fell to 50.4 in July
from 51.7 in June, according to data released Monday by Caixin
Media Co. and S&P Global. The 50 mark separates expansion from
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The financial market is closed for the Civic Holiday.
Expected Major Events for Monday
00:30/JPN: Jul Japan Manufacturing PMI
05:00/JPN: Jul Auto sales
06:00/GER: Jun Retail Trade
06:00/RUS: Jul Russian Manufacturing PMI
07:45/ITA: Jul Italy Manufacturing PMI
07:50/FRA: Jul France Manufacturing PMI
07:55/GER: Jul Germany Manufacturing PMI
08:00/ITA: Jun Unemployment
08:30/UK: Jul S&P Global / CIPS UK Manufacturing PMI
13:45/US: Jul US Manufacturing PMI
14:00/US: Jul ISM Report On Business Manufacturing PMI
14:00/US: Jun Construction Spending - Construction Put in
15:00/US: Jul Global Manufacturing PMI
23:01/UK: Jun Zoopla House Price Index
23:50/JPN: Jul Monetary Base
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Monday
AFLAC Inc (AFL) is expected to report $1.25 for 2Q.
Aerojet Rocketdyne Holdings (AJRD) is expected to report $0.54
Affiliated Managers Group Inc (AMG) is expected to report $3.21
Alexander's Inc (ALX) is expected to report for 2Q.
Alliance Resource Partners LP (ARLP) is expected to report $0.94
Amkor Technology Inc (AMKR) is expected to report $0.47 for
Beasley Broadcast Group (BBGI) is expected to report for 2Q.
Builders FirstSource Inc (BLDR) is expected to report $3.02 for
CNA Financial Corp (CNA) is expected to report $0.98 for 2Q.
CNO Financial Group (CNO) is expected to report $0.48 for
Cerevel Therapeutics Holdings Inc (CERE) is expected to report
Credit Acceptance (CACC) is expected to report $12.89 for
EPR Properties (EPR) is expected to report $0.53 for 2Q.
Emergent Biosolutions (EBS) is expected to report $-0.04 for
Encompass Health Corp (EHC) is expected to report $0.84 for
Equity Commonwealth (EQC) is expected to report for 2Q.
FRP Holdings Inc (FRPH) is expected to report for 2Q.
German American Bancorp (GABC) is expected to report $0.70 for
Global Payments Inc (GPN) is expected to report $1.18 for
Jacobs Engineering Group Inc (J) is expected to report $1.69 for
Jeld-Wen Holding Inc (JELD) is expected to report $0.67 for
Kemper Corporation (KMPR) is expected to report $-0.98 for
Lindblad Expeditions Holdings Inc (LIND) is expected to report
$-0.39 for 2Q.
Loews Corp (L) is expected to report $0.72 for 2Q.
Matson Inc (MATX,X-MATX) is expected to report $8.24 for 2Q.
Meridian Corp (MRBK) is expected to report $0.93 for 2Q.
Minerva Neurosciences Inc (NERV) is expected to report for
Monolithic Power Systems (MPWR) is expected to report $2.12 for
ON Semiconductor Corp (ON) is expected to report $1.17 for
Partners Bancorp (PTRS) is expected to report for 2Q.
Pinterest Inc (PINS) is expected to report for 2Q.
Regal Rexnord Corp (RRX) is expected to report $1.82 for 2Q.
Security Federal Corp (SFDL) is expected to report for 2Q.
Solaris Oilfield Infrastructure Inc (SOI) is expected to report
$0.14 for 2Q.
Sterling Bancorp Inc (SBT) is expected to report $0.07 for
TG Therapeutics (TGTX) is expected to report $-0.51 for 2Q.
Titan International (TWI) is expected to report $0.77 for
Transcat (TRNS) is expected to report $0.23 for 1Q.
VBI Vaccines Inc (VBIV,VBV-T) is expected to report $-0.07 for
Zovio Inc (ZVO) is expected to report for 2Q.
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ANALYST RATINGS ACTIONS
Carlyle Group Raised to Outperform From In-Line by Evercore ISI
Hercules Capital Cut to Perform From Outperform by
Mid-America Apartment Raised to Market Outperform From Market
Perform by JMP Securities
Paramount Global Cut to Market Perform From Outperform by
Ping Identity Holding Cut to Neutral From Buy by B of A
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
August 01, 2022 06:25 ET (10:25 GMT)
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