Disappointing Economic Data May Weigh On Wall Street

The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to give back ground after moving mostly higher last week.

Concerns about the outlook for the global economy may weigh on the markets following the release of disappointing Chinese data.

Chinese industrial production and retail sales growth slowed in July, suggesting a slowdown in the economic recovery amid new COVID-19 outbreaks and supply chain disruptions.

Industrial production growth slowed to 6.4 percent in July from 8.3 percent in June, data from the National Bureau of Statistics revealed. Output was expected to gain 7.8 percent.

Retail sales grew at a slower pace of 8.5 percent on a yearly basis following a 12.1 percent spike in June. This was also weaker than the economists’ forecast of 11.5 percent.

Negative sentiment may also be generated in reaction to a report from the New York Federal Reserve showing New York manufacturing activity saw significantly slower growth in the month of August.

The New York Fed said its general business conditions index plunged to 18.3 in August from 43.0 in July. While a positive reading still indicates growth, economists had expected the index to show a much more modest drop to 30.0.

Trading activity may be somewhat subdued, however, as traders look ahead to closely watched reports on U.S. retail sales and industrial production as well the minutes of the latest Federal Reserve meeting.

U.S. stocks ended roughly flat on Friday despite the Dow and the S&P 500 both climbing to fresh record highs early on in the session.

Data showing a significant drop in U.S. consumer sentiment, and concerns about the impact of surging cases of the Delta variant of the coronavirus on growth outweighed buoyant earnings updates from some top notch companies.

The Dow, which rose to 35,610.57 in early trades, ended the session at 35,515.38, gaining 15.53 points or 0.04 percent. The S&P 500 ended up by 7.17 points or 0.16 percent at 4,468.00, while the Nasdaq settled with a gain of 6.64 points or 0.04 percent at 14,822.90.

The Dow gained about 0.9 percent in the week and the S&P 500 added 0.7 percent, while the Nasdaq edged down 0.1 percent.

The University of Michigan’s preliminary report said U.S. consumer sentiment slumped to 70.2 in August 2021, from 81.2 in the previous month and well below market expectations of 81.2. It was the lowest reading since December 2011,

Data from the Labor Department showed U.S. import prices rose by 0.3 percent in July after surging up by a revised 1.1 percent in June. Economists had expected import prices to climb by 0.6 percent in July compared to the 1 percent jump originally reported for the previous month.

Meanwhile, the Labor Department said export prices shot up by 1.3 percent in July following a 1.2 percent leap in the previous month. Export prices were expected to increase by 0.8 percent.

Walt Disney shares closed higher despite paring substantial portion of early gains. The stock rose on better-than-expected quarterly earnings and a strong growth of its customer base.

Salesforce.com moved higher on strong results. Microsoft, Netflix, Comcast and WPP closed higher.

DoorDash shares tumbled Friday morning after reporting wider second-quarter loss, but rebounded as the session progressed to close with a gain of about 3.5 percent.

Boeing, American Express, JP Morgan Chase and Goldman Sachs shed 1 to 1.4 percent.

Commodity, Currency Markets

Crude oil futures are plummeting $1.99 to $66.45 barrel after falling $0.65 to $68.44 a barrel last Friday. Meanwhile, after surging $26.40 to $1,778.20 an ounce in the previous session, gold futures are rising $2.40 to $1,780.60 an ounce.

On the currency front, the U.S. dollar is trading at 109.26 yen versus the 109.59 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1775 compared to last Friday’s $1.1797.

Asia

Fears of weakening economic recovery in China exacerbated the negative sentiment attributed to the worsening coronavirus situation in the region and dragged down most Asian stocks. Key regional benchmarks closed in the red after several economic indicators for July from China missed forecasts.

China’s Shanghai Composite however managed to close at 3517.34, up 0.03 percent above Friday’s close after PBoC’s status quo on medium term lending rates and liquidity infusion partially revived sentiment lost in the aftermath of the data releases.

Japan’s Nikkei 225 closed at 27523.19, down 453.96 points or 1.62 percent as delta despair eclipsed better-than-expected GDP numbers. Citizen Holdings advanced by 9.82 percent followed by Fujifilm Holdings Corp. which rallied 6.78 percent. Nippon Express Co. declined by more than 13 percent. Takara Holdings dropped 5.23 percent in the day’s trade.

The Hang Seng Index of the Hong Kong Stock Exchange shed 233 points or 0.88 percent to close at 26,158.62. The day’s high was at 26,439 and low at 26,043.37. The Korean market was closed on Monday being public holiday.

The S&P/ASX200 closed lower Monday, dropping 46.40 points or 0.61% to 7,582.50 amidst extension of certain coronavirus restrictions and reinstatement of night curfew.

The A2 Milk Company rallied more than 12 percent over reports of possible takeover. Beach Energy declined by more than 9 percent after the oil producer reported a dip in its revenue as well as profit for the financial year 2021. Bendigo and Adelaide Bank also crashed more than 9 percent post earnings report.

The NZX 50 of the New Zealand Stock Exchange shed 43.91 points or 0.34 percent to close at 12720.15 amidst an anxious wait to the monetary policy decision later in the week, given the expectation that RBNZ would be raising interest rates.

The a2 Milk Company Limited rallied 11.37 percent on reports that the company is a takeover target. Diagnostics and Research company Pacific Edge declined more than 3 percent. Australia New Zealand Banking Group declined 2.78 percent.

Europe

European stocks are exhibiting weakness Monday afternoon amid rising worries about the spread of the delta variant of the coronavirus in several countries.

Data showing substantial declines in China’s industrial production and retail sales in the month of July, and geopolitical concerns following the collapse of the Afghanistan government also appear to be weighing on sentiment.

The pan European Stoxx 600 is declining by about 0.5%. The U.K.’s FTSE 100 is sliding 1.07%, Germany’s DAX is down 0.42% and France’s CAC 40 is tumbling 0.8%.

In the German market, Lufthansa is down nearly 4%, Adidas is lower by about 2% and Volkswagen is trailing its previous close by about 1.5% BMW, Daimler, Siemens and Deutsche Post are also notably lower.

In France, Kering is down more than 3%, Technip and Renault are lower by 2.5% and 2.2%, respectively. L’Oreal, ArcelorMittal, Safran, LVMH, Hermes International and Air France-KLM are down 1 to 2%.

Shares of insurance company Axa are down by about 0.4%. The company has announced the sale of its operations in Singapore to HSBC for $575 million.

Faurecia is surging up nearly 6% after the company won the bid to acquire a majority stake in German automotive lighting group Hella, trumping rival bidders and creating the world’s seventh-largest player. Faurecia is set to buy a 60% stake in Hella from the founding Hueck family through a mixture of cash and stock, the company said in a statement on Saturday. The Hueck family will take up to 9 percent of the combined company.

In the British market, Bruberry Group, Glencore, Anglo American Plc, Rio Tinto, Weir Group, JD Sports Fashion, Antofagasta, Royal Dutch Shell, BHP Group, BP, Prudential and Everaz are down 2 to 3.4%.

Coca Cola HBC has advanced by 1.3%. LSE, Ocado Group and Severn Trent are up with modest gains.

U.S. Economic Reports

New York manufacturing activity saw significantly slower growth in the month of August, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index plunged to 18.3 in August from 43.0 in July. While a positive reading still indicates growth, economists had expected the index to show a much more modest drop to 30.0.

Looking ahead, the New York Fed said firms remained optimistic that conditions would improve over the next six months, with substantial increases in employment and prices expected.