China GDP fallout; Bank earnings; Prime Day

Posted at 3:20 AM, Jul 15, 2019
and last updated 2019-07-15 07:49:21-04

1. China’s economy: China’s economic growth slumped to its lowest level in nearly three decades as the world’s second largest economy feels the effects of a prolonged trade war with the United States.

The country’s GDP grew at 6.2% in the quarter that ended in June, the slowest quarterly growth rate since 1992 and down from 6.4% in the previous quarter, according to government figures released Monday.

Monthly data for June was better than expected but likely doesn’t mark the beginning of a turnaround, according to Capital Economics.

“A stronger end to the quarter didn’t prevent growth from slowing in [the second quarter] and we see more weakness on the horizon,” senior China economist Julian Evans-Pritchard said in a research note.

2. Bank earnings: US bank earnings kick off Monday with Citigroup, which is set to report second quarter results before the bell.

Investors will listen closely for what bank CEOs have to say about the effects of lower interest rates, which put pressure on earnings.

Stocks have broadly rallied on the expectation that the Federal Reserve will soon begin cutting rates, making it cheaper for companies to borrow money. Analysts warn that bank stocks could be the exception.

“It is hard to find meaningful positive offsets in an environment of declining rates and muted economic activity,” analysts at Keefe, Bruyette & Woods said in a recent note.

Also on the radar is what executives have to say about credit quality, and their outlook on the health of the economy.

3. Prime Day: Amazon Prime Day is here.

This year, the global discount event will run for two days. Prime Day will feature more than 1 million deals, including what Amazon boasts will be the “the biggest deals ever” on Amazon Music, Prime Video and Alexa-enabled devices.

Amazon, which raked in $232 billion in sales last year, does not break out revenue on Prime Day. But global sales this year are expected to hit $5.8 billion, according to Coresight Research. Last year, Amazon generated $3.9 billion, according to the research firm.

4. More market gains: US stock futures point to fresh gains on the heels of record highs last week.

The Dow is set to rise 15 points Monday, or almost 0.1%. The Nasdaq and S&P 500 are tracking similar increases.

European markets opened mixed. Britain’s FTSE 100 and France’s CAC 40 were flat in early trading. Germany’s DAX gained 0.4%.

Shares of Anheuser Busch InBev fell nearly 2% in Belgium after the company shelved plans for an IPO of its Asia business, canceling what would have been the biggest public offering of the year.

In Asia, Hong Kong’s Hang Seng popped 0.3%. Japan’s Nikkei rose 0.2% and the Shanghai Composite gained 0.4%

The Dow closed up 0.9% on Friday at a record 27,332 points. The Nasdaq was up 0.6%, and the S&P 500 was rose 0.5%, finishing above 3,000 for the first time ever.

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5. Coming this week:
Monday — China Q2 GDP; Prime Day begins; Citi earnings
Tuesday — US retail sales; Germany’s ZEW economic sentiment index; JPMorgan Chase, Wells Fargo, Goldman Sachs, Charles Schwab, Johnson & Johnson, United Airlines earnings
Wednesday — US housing starts and building permits; Eurozone inflation; Bank of America, eBay, IBM, Netflix earnings; US oil inventories
Thursday — Japan inflation; Morgan Stanley, Philip Morris, Honeywell, Microsoft earnings
Friday — American Express and BlackRock earnings; University of Michigan consumer sentiment