Monday July 15th

15-07-2019

Stock futures rise as earnings season kicks off

U.S. stock index futures pointed to a slightly higher open on Monday as the corporate earnings season got under way. Around 8:10 .m. ET, Dow Jones Industrial Average futures indicated a gain of 45 points at the open. S&P 500 and Nasdaq 100  futures also pointed to modest gains. Citigroup reported second-quarter earnings and revenue that topped analyst expectations, sending its shares up around 1%. Gains from the initial public offering of Tradeweb, an electronic bond trading platform, drove the bank’s results past Wall Street estimates. Other big banks like J.P. Morgan Chase, Morgan Stanley, Bank of America and Goldman Sachs are expected to report quarterly earnings later this week. Despite Citigroup’s strong report, the outlook for this earnings season is bleak. Analysts expect S&P 500 earnings to have fallen by 3% in the second quarter, according to FactSet data. Monday’s moves come after the major indexes reached record highs last week as Federal Reserve Chair Jerome Powell indicated during congressional testimony that an interest-rate cut could be on the horizon from the central bank. The Dow closed above 27,000 for the first time on Thursday and Friday’s gain brought its increase on the week to 1.5%. Meanwhile, China’s economic growth slowed to 6.2% in the second-quarter from a year earlier, its weakest pace in at least 27 years, as the trade war with the U.S. took its toll. Still, China’s gross domestic product growth was in line with expectations, and data for industrial production, retail sales, and fixed-asset investment came in above analyst expectations. President Donald Trump commented on the Chinese economic data, tweeting that the slowdown in economic growth is “why China wants to make a deal.” Investors stateside will have an eye on developments in the U.S.-China trade war after Reuters reported on Sunday that the U.S. may approve licenses for companies to restart new sales to Chinese telecommunications giant Huawei within two weeks. The Wall Street Journal reported that Huawei is planning extensive layoffs in the U.S. amid the struggle with its blacklisting. Chinese stocks recovered from an earlier slip to finish the trading day higher on Monday, following the release of GDP data that showed the Chinese economy growing at its slowest pace in at least 27 years. The Shanghai composite added 0.4% to 2,942.19, while the Shenzhen component rose 1.04% to 9,309.42. The Shenzhen composite also gained 1% to 1,572.34. Hong Kong’s Hang Seng index added 0.22%, as of its final hour of trading. Elsewhere, South Korea’s Kospi ended the trading day in Seoul 0.2% lower at 2,082.48. Markets in Japan were closed on Monday for a holiday. Oil prices rose slightly on Monday as Chinese industrial output and retail data topped expectations but gains were capped by overall figures showing the country’s slowest quarterly economic growth in decades. The positive Chinese data may indicate early success in the government’s stimulus efforts and potentially more oil demand in the world’s second biggest economy. Brent crude futures rose 33 cents, or 0.5%, to $67.05 a barrel, while U.S. crude was up 20 cents, or 0.3%, at $60.41 a barrel. Gold steadied on Monday after data showed Chinese economic growth slowed to its weakest in about 27 years, while gains in equities curbed appetite for bullion as investors latched onto some positive readings from the world’s second-biggest economy. China’s second-quarter annual GDP growth fell to a 27-year low of 6.2% as expected, but its quarterly growth reading of 1.6% beat forecasts. June reports on industrial production, retail sales and urban investment were above expectations. Spot gold had inched 0.1% higher to $1,416.29 per ounce, reversing some losses ahead of the data. U.S. gold futures rose 0.4% to $1,418.10.