U.S. stock futures displayed a slight mix in trading on Monday following some disappointing news regarding China’s economy. This news dampened risk appetite in global markets.
Stock-Index Futures Performance
- S&P 500 futures (ES00) rose 1 point, or 0%, to 4538
- Dow Jones Industrial Average futures (YM00) fell 37 points, or 0.1%, to 34641
- Nasdaq 100 futures (NQ00) added 27 points, or 0.2%, to 15721
Previous Session Performance
During the previous session on Friday, the Dow Jones Industrial Average rose by 114 points, or 0.33%, ultimately closing at 34509. The S&P 500 declined by 5 points, or 0.1%, reaching 4505. Additionally, the Nasdaq Composite dropped by 25 points, or 0.18%, ending the session at 14114.
Cautious Start on Wall Street
At the start of the week, Wall Street is expected to have a hesitant start, with stocks remaining just below their 15-month highs. The cautious tone across global markets has emerged due to disappointing news from China.
Slower Growth in China
Recent data revealed that China’s economy, the second-largest in the world, grew by only 0.8% in the second quarter compared to the previous three months. This represents a significant slowdown from the 2.2% rise experienced in the first quarter. Year-on-year growth stood at 6.3%, falling short of forecasts of 7.3%.
Implications for Traders
Traders are now contemplating how to interpret this news and whether it should be viewed positively, possibly indicating increased stimulus measures from Beijing.
Senior analyst at Swissquote Bank, Ipek Ozkardeskaya, stated, “Weak growth means that the government and the People’s Bank of China (PBoC) will step up efforts to further ease financial conditions and pave the way for a quicker recovery.”
The Impact of Supportive Policies on the Chinese Property Downturn and Falling Exports
The implementation of supportive policies thus far has yielded limited results in reversing the Chinese property downturn, risk of disinflation, and falling exports. Consequently, market sentiment remains unenthusiastic about the current situation. This sentiment is evident in the decrease in industrial commodity prices such as oil and copper, as they are sensitive to perceptions of Chinese demand.
U.S. Second Quarter Earnings Season
Following Friday’s significant bank kick off, Monday’s session for the U.S. second quarter earnings season is expected to be relatively quiet. However, several companies, including First Bank and Home Bank, will be delivering their results, which could potentially impact market dynamics.
Key Market Catalysts in the Coming Days
Analysts indicate that the upcoming days will be filled with potential market catalysts. Notable updates are anticipated from major companies like Tesla, Morgan Stanley, Goldman Sachs, Netflix, and Bank of America. Additionally, U.S. retail sales data will offer further insight into consumer behavior, shedding light on the health of the economy.
Minimal Impact on Strong Market Performance
Although there was a slight decline in market performance at the end of last week, overall performance remains impressive this year. The S&P 500 has risen by 17%, while the Nasdaq Composite has experienced a significant increase of 35%.
Upcoming U.S. Economic Updates
In terms of U.S. economic updates, the Empire State manufacturing survey for July is scheduled for release at 8:30 a.m. Eastern time. This survey will provide valuable insights into the state of the manufacturing sector.