By Lorcan Roche Kelly
Face to face
U.S. Trade Representative Robert Lighthizer will lead a small team to Shanghai on Monday to restart high-level face-to-face meetings between the world’s two largest economies in a bid to forge a deal on outstanding trade issues, according to people familiar with the plans. While negotiators will be there until Wednesday, no imminent breakthrough is expected. There have been moves from both sides in recent days to reduce tensions, with the White House agreeing to timely decisions on licences to sell to Huawei Technologies Co., while the Chinese have started to make goodwill gestures.
Earnings, earnings, earnings
It’s a huge day for corporate results, with many blue chip and bellwether companies reporting. Caterpillar Inc., Boeing Co. and Ford Motor Co. will show the state of U.S. manufacturing. Investors are exhibiting signs of bullishness ahead of Facebook Inc.’s earnings, but the Department of Justice’s escalation of its probe into big tech may weigh on the sector. Tesla Inc. also announces results later, as do PayPal Holdings Inc., and AT&T Inc.
The continuing decline in German manufacturing is starting to look increasingly worrying, with Purchasing Managers Index data for the sector this morning coming in at the lowest level in seven years. That 43.1 reading for July and a worse-than-expected reading for France dragged down Markit’s composite PMI reading for the euro area to 51.5 — well below expectations. The data comes as the European Central Bank governing council meet to make their monetary policy decision, announced tomorrow. U.S. PMI data is due at 9:45 a.m. Eastern Time.
Overnight, the MSCI Asia Pacific Index climbed 0.2% while Japan’s Topix index closed 0.4% higher amid increased trade optimism. In Europe, the Stoxx 600 Index was 0.3% lower at 5:50 a.m. with London’s FTSE 100 Index dropping 1% on the day Boris Johnson is due to be installed as Prime Minister. S&P 500 futures pointed to some red at the open, the 10-year Treasury yield was at 2.057% and gold was higher.
Today is packed with earnings, and some eco data, including U.S. June new home sales at 10:00 a.m. However, probably the biggest event today will be the testimony of former special counsel Robert Mueller before two Democratic-led U.S. House panels. He is in front of the Judiciary Committee from 8:30 a.m. and then at the Intelligence Committee from 2:00 p.m. Mueller is not expected to deviate from the conclusion of his published report, though he may go some way toward explaining it clearly.