Germany WPI; updates from Henkel, Pandora
Europe should open higher, with traders likely to take heart
from Wall Street's hefty gains on Friday, buoyed by signs of easing
inflation and improving consumer sentiment. In Asia, major stock
benchmarks were mixed; the dollar strengthened further; while
Treasury yields, oil and metals all edged lower.
European stocks should add to recent gains on Monday despite the
energy crisis and worries over the ongoing supply chain
"The resilience of U.S. markets may be helping here, as receding
inflation is tempering expectations that the Federal Reserve will
be as aggressive as originally supposed when it comes to raising
rates," wrote Michael Hewson, Chief Market Analyst at CMC Markets
Shares in Asia were mixed early Monday, but with losses limited,
after China's PBOC unexpectedly cut two key policy rates. The
positive move was counterbalanced by disappointing data that showed
China's economic growth slowed in July.
The dollar gathered strength in Asia but gains were capped by
IG highlighted the PBOC's rate cut, which could give more
support to China's cooling economy and a boost to risk sentiment;
while tensions between the U.S. and China were in focus, with
another visit to Taiwan by a delegation of U.S. lawmakers led by
Sen. Ed Markey.
The dollar made solid gains on Friday on hopes U.S. inflation
Bank of America said investors seemed to think so, perhaps
building on their increasingly bearish commodity outlook.
The bank cited its own survey of investors, with 57% of
respondents saying their biggest macro concern was that inflation
had probably peaked but a persistently tight Fed policy would still
be required for it to decline towards the central bank's
BoA added that dollar positioning had been adjusted lower from
last month's seven-year high, "in line with price action since
mid-July, but at odds with sentiment suggesting perhaps some
reluctance in the change."
The yuan weakened against the dollar in offshore and onshore
markets, following the PBOC's rate cut and softer-than-expected
China economic data.
The PBOC's cut of its one-year medium-term lending facility had
been unexpected, and China's July activity readings have also been
a downside surprise, Maybank analysts said.
Also, lower rates may only offer some relief amid headwinds from
China's zero-Covid policies and property-market malaise and a
potential global growth slowdown. Yuan sentiment might lean a tad
cautious in the interim, Maybank added.
Read: Bitcoin Tops $25,000 Level for First Time Since Early
Treasury yields edged lower in Asia with inflation still the
Improving inflation figures have boosted some hopes the Fed
would not need to raise interest rates as aggressively as feared,
potentially leaving room for policy makers to rein in still red-hot
inflation without sending the economy into recession. That
buttressed the view that policy makers might have an opening to
engineer a soft landing.
Odds of a 50-basis point Fed hike in September have reached
57.5%, versus 42.5% for a 75bp, according to the CME FedWatch
"We still expect a further small rise in the 10-year Treasury
yield by the end of the year...which could put renewed downward
pressure on the prices of commodities, and particularly gold, in
the coming months," said Capital Economics.
Oil futures were down almost 1% in Asia, extending Friday's
losses, after news reports indicated supply disruptions in the Gulf
of Mexico were likely to be short lived.
A Louisiana official said a damaged oil-pipeline component was
due to be replaced by the end of the day, Reuters reported. The
damaged flange had disrupted flows from offshore platforms in the
Phillip Securities said fears of a recession may also cloud the
demand outlook for crude for now.
FxPro said the oil price rally last week fitted into a
"corrective rebound picture," warning that if bulls "do not find a
new fundamental reason to buy at current levels near $94 for WTI in
the next few days, we should expect a bear market recovery."
Gold futures were slightly lower, after clinching a fourth
straight week of gains on Friday.
Commerzbank said though prices have embarked on an upward
trajectory, it may still be too early to expect the precious metal
to make any real comeback.
"Furthermore, we are confident the dollar will appreciate again,
especially vis-à-vis the euro...which is likely to weigh on the
gold price in the medium term."
Copper prices were also lower, and a higher Fed funds rate and a
stronger dollar could mean that the metal faces headwinds in the
short term, CBA said.
"Combined with concerns over Europe's copper demand, it's hard
to see prices lifting from here, particularly at the pace over the
Iron-ore futures weakened around 1.7% on signs of rising
Inventories at Chinese ports rose by 1.3% last week, bringing
their increase since mid-July to nearly 7%, ANZ Research said.
Also, market sentiment hasn't been helped by Japan equipment
manufacturer Komatsu recently reporting that Chinese demand for its
excavators fell sharply in July. Heavy equipment machinery such as
excavators are often used in iron ore mines.
TODAY'S TOP HEADLINES
China's Central Bank Cuts Key Policy Rates
China's central bank on Monday cut key policy interest rates, a
move that could provide more support to the cooling economy.
The People's Bank of China said it lowered interest rates of
both one-year medium-term lending facility and seven-day reverse
repurchase agreements by 10 basis points, while injecting liquidity
via the two instruments.
Chinese Economy Slows Unexpectedly as Rebound Sputters
China's economic growth unexpectedly slowed in July after a blip
of accelerated recovery in June, official data showed on
Industrial production rose 3.8% from a year earlier, down
slightly from the 3.9% increase in June, according to data released
by the National Bureau of Statistics. That fell short of the 4.5%
growth expected by economists polled by The Wall Street
China New-Home Prices Post Biggest Fall in Over Six Years
BEIJING--New-home prices in China in July fell the most in over
six years as home buyers lost confidence in the property market
after a year-long slide in sales, stalled projects and mounting
debt defaults by real-estate developers.
Average new-home prices in 70 major cities in July fell 1.67%,
compared with the same period a year earlier, after falling 1.29%
in June, according to Wall Street Journal calculations based on
data released Monday by China's National Bureau of Statistics.
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
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.
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
Labor Shortage Is Vexing Challenge for U.S. Economy
As anyone who has lost luggage or waited half an hour for a
restaurant check can tell you, America needs way more workers in
some parts of the economy.
Economists think so too. Many of them see the imbalance in labor
supply and demand as at the heart of the U.S.'s current economic
challenges. They say that fixing it is critical to achieving a
so-called soft economic landing, in which the highest inflation in
four decades comes down without unemployment rising enough to
trigger a recession.
Ukraine's Food Exports Slowly Pick Up Under Grain-Corridor
ISTANBUL-An international agreement to restore Ukraine's Black
Sea grain exports is showing early progress, with 18 ships moving
to and from ports in Odessa nearly six months after Russia's
invasion bottled up a chunk of the world's agricultural
On Saturday, the grain initiative passed a key milestone when
the first inbound ship to arrive in Ukraine under the agreement
safely departed Odessa after loading 12,000 tons of corn bound for
Turkey. Before the ship's departure, all of the other outbound
ships leaving Odessa had been vessels that were stranded in Ukraine
when Russia attacked in February.
Saudi Aramco Posts 90% Jump in Profit, Generating Billions for
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
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.
Ukraine Accuses Russia of Using Nuclear Plant to Blackmail
KYIV, Ukraine-Ukraine's President Volodymyr Zelensky accused
Russia of using Europe's largest nuclear power plant to blackmail
Kyiv and its allies, urging tougher sanctions against Moscow after
recent shelling in the vicinity of the facility prompted warnings
of a nuclear accident.
Fighting around the Zaporizhzhia nuclear power plant has
intensified in recent days as Russia and Ukraine struggle to make
meaningful gains on the battlefield almost six months into a war
that has worn down both sides.
Winemakers in Southern Europe Grapple With Extreme Weather
Lucio Salamini has witnessed the weather patterns around his
family's vineyard in northern Italy change dramatically over the
past 30 years. But he says he has never seen anything like this
After scorching hot days, the heat doesn't let up at night,
causing stress on his vines. And almost every month this year has
seen less rainfall than average, with the nearby Po River-a key
freshwater source for surrounding farms and vineyards-seeing record
low water levels in recent weeks.
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Expected Major Events for Monday
05:00/FIN: Jun Retail sales
05:00/FIN: Jul CPI
06:00/GER: Jul WPI
06:00/NOR: Jul External trade in goods
06:30/SWI: Jul Import Price Index
06:30/SWI: Jul PPI
07:00/HUN: Jun Construction
07:00/SVK: Jul CPI
07:00/SVK: Jul Core & net inflation development
10:00/IRL: Jun Goods Exports and Imports
15:59/UKR: Jun Trade
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(END) Dow Jones Newswires
August 15, 2022 00:39 ET (04:39 GMT)
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