When bad news sounds good

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 19, 2022. REUTERS/Brendan McDermid

A preview of the day ahead at Anshuman Daga Markets

After a strong run of mostly upbeat earnings reports on both sides of the Atlantic last week, stock bulls will now want macro data to disappoint.

While the Fed has already raised interest rates by 225 basis points this year as it battles the worst inflation in four decades, disappointing economic news could force it to slow, bringing relief to jittery markets.

The Fed, White House and economists are all saying the economy is not in a recession based on broader measures of activity, but Treasury yields are pricing in bad news.

US 10-year Treasury yields fell 33 basis points in July, marking the biggest monthly decline since March 2020.

As August kicks off with manufacturing surveys from around the world, there is hope for bond and stock bulls.

Asian stocks started on a weak note on Monday, with Chinese factory activity unexpectedly contracting in July as virus outbreaks cloud demand prospects. Read more

Japan’s manufacturing activity also grew at the slowest pace in 10 months in July. Read more

The lackluster growth outlook hit oil prices after ending last month with their second straight monthly losses for the first time since 2020.

U.S. stock futures traded lower in Asia after the S&P 500 (.SPX) and Nasdaq (.IXIC) posted their biggest monthly percentage gains since 2020.

On the corporate front, banking titan HSBC has sought to woo investors with a higher profitability target and bullish dividend outlook, while fending off a proposal by its biggest shareholder to split up the biggest bank from Europe. Read more

Meanwhile, US House Speaker Nancy Pelosi began her tour of four Asian countries but did not mention Taiwan amid intense speculation that she might visit the self-governing island claimed by China. Read more

Key developments that should further guide markets on Monday:

Economic Data – July Final Global PMI – Worldwide, Germany June Retail Sales, July US ISM (Manufacturing)

Main benefits: HSBC, AXA and Heineken

Chinese factory activity unexpectedly contracts in July as COVID flares up – read more

Evergrande offers sweetener for debt overhaul as China’s property crisis deepens – read more

Reporting by Anshuman Daga Editing by Vidya Ranganathan

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