July 31, 2018, by Lorcan Roche Kelly
Economic data released overnight in Asia showed some weakening in China with both manufacturing and services PMIs coming in below forecast. In Europe, the pace of growth slowed for the euro-area with advance second-quarter GDP at 0.3 percent, below expectations for a 0.4 percent expansion, while headline inflation quickened to 2.1 percent, ahead of economist forecasts. Core inflation, which strips out food and fuel prices, rose to 1.1 percent. The data comes after a European Commission measure of sentiment in the euro-area economy showed confidence dropped to the lowest level in a year.
The weaker-than-expected economic figures are giving a lift to bond prices. That move has been helped by the Bank of Japan decision to keep policy unchanged, while adding forward guidance to its statement that it would maintain low interest rates for an “extended period of time.” The BOJ also cut its inflation forecast. The decision in Tokyo marks the start of three days of major central bank announcements, with the Federal Reserve up tomorrow and the Bank of England on Thursday.
Apple Inc. is expected to announce fiscal third-quarter revenue of $52.3 billion when the technology giant reports today. Investors will be watching for any updates on new iPhones, and how the current iPhone X is performing. They will also want executives’ views on the impact of the current trade dispute between China and the U.S. on the company’s bottom line. Earlier today in Europe, Credit Suisse AG shares rose after it reported a revenue beat, while BP Plc saw profit grow and debt fall.
Overnight, the MSCI Asia Pacific Index slipped 0.6 percent while Japan’s Topix index closed 0.8 percent lower following weak China data and the BOJ decision. In Europe, the Stoxx 600 Index was broadly unchanged at 5:45 a.m. Eastern Time as investors digested earnings and economic data. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.949 percent and gold was lower.
At 8:30 a.m., personal income and spending figures are released, with both expected to expand 0.4 percent. Core PCE and Canada GDP for May are also due at that time. 9:00 a.m. sees S&P CoreLogic house prices and U.S. July consumer confidence is due at 10:00 a.m. The Fed’s two-day policy meeting begins, with the bank today set to redeem $28.5 billion of debt as part of its on-going balance sheet reduction.