Opening Bell: U.S. Futures Wobble Ahead Of Earnings, Fedspeak; Pound Dips

Key Events

Shares in Europe and futures on the S&P 500, Dow and NASDAQ 100 meandered this morning, following a mixed Asian session as traders switched on the autopilot ahead of some key earnings releases as well as speeches from several Fed members that could add insight into the possibility of a rate cut being implemented as soon as the next monetary policy meeting at the end of the month.

The STOXX 600 traded within a narrow range since it fell below its ascending channel since the early June bottom. Gains in chemical stocks offset a selloff in real estate shares.

A vacuum of market news resulted in a mixed equity performance in the earlier Asian session, which closed little changed but mostly higher.

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Japan’s Nikkei (-0.69%) underperformed as it re-opened after a holiday. Technically, the price closed below both the uptrend line and the 200 DMA, while trading within a bullish falling flag. South Korea’s KOSPI (+0.45%) provided the best results in the region—even against a strengthening won—ahead of the Bank of Korea’s rate decision during the week. Technically, the USD/KRW found resistance below the downtrend line since the May 21 high.

Global Financial Affairs

Yesterday, U.S. equities gained ground to post yet new records on the back of a technology rally. The S&P 500 hit a fresh record close eking out a 0.02% gain, with defensive Utilities (+0.40%) outperforming. However, cyclical Technology (+0.28%) also led gains, offsetting a 0.9% drop in Energy stocks—which tracked the price of oil slipping below $60—and a 0.56% decline in Financials on the outlook for lower interest rates.

The Dow Jones Industrial Average posted a 0.1% advance to a fresh record close as well. The NASDAQ Composite closed 0.17% higher, giving up a new all-time high before the close. The NASDAQ 100 rallied 0.30% to both an all-time high and a record close.

The USD gained for a second straight day, bouncing off the 200 DMA, even as a rebound in yields faded after yesterday’s drop. The Dollar Index is retesting the top of its short-term channel top since the May 23 high and the uptrend line since the September bottom. Helping the greenback higher were Brexit woes affecting both the euro and the pound.

Sterling in particular fell to the lowest level since April 2017 as Brexit negotiations soured after U.K. leadership contenders Boris Johnson and Jeremy Hunt ramped up the odds of a no-deal departure from the 28-nation bloc.

WTI crude slid below the psychological $60 level, but remained above the 50 DMA and within an uptrend.

Up Ahead

• JPMorgan Chase & Co (NYSE:JPM), Bank of America (NYSE:BAC), Goldman Sachs Group (NYSE:GS) and Taiwan Semiconductor Manufacturing (NYSE:TSM) are among companies due to report results this week.
• U.S. June retail sales, due on Tuesday, are expected to rise from the prior month.
• Monetary policy decisions are due in Indonesia, South Korea and South Africa on Thursday.

Market Moves

Stocks

• The Shanghai Composite Index declined 0.2%.
• The MSCI Emerging Market Index advanced 0.2% to the highest in more than a week.

Currencies

• The Dollar Index gained 0.18% for the second day and a total advance of 0.3%.
• The euro slid less than 0.05% to $1.1253.
• The British pound dropped 0.2% to $1.2493, the weakest in a week.
• The onshore yuan climbed less than 0.05% to 6.875 per dollar.
• The Japanese yen fell 0.1% to 108.04 per dollar, the largest fall in more than a week.

Bonds

• The yield on 10-year Treasurys climbed less than one basis point to 2.09%.
• The yield on 2-year Treasurys advanced one basis point to 1.84%.
• Germany’s 10-year yield dropped less than one basis point to -0.26%.
• Japan’s 10-year yield fell less than one basis point to -0.117%.

Commodities

• West Texas Intermediate crude declined 0.3% to $59.43 a barrel, the lowest in a week.
• Iron ore gained 0.4% to $116.97 per metric ton, the highest in almost two weeks.
• Gold climbed less than 0.05% to $1,414.35 an ounce.
• Soybeans fell 0.5% to $9.16 a bushel.