A look at the day ahead in the European and global markets by Tom Westbrook
Gains and hopes for a turnaround in Chinese markets are the prelude to this week’s big central bank decisions.
Microsoft (MSFT.O), Google parent Alphabet (GOOGL.O), Visa (VN), recruiter Robert Half (RHI.N), General Electric (GE.N), 3M (MMM.N), Dow (DOW.N), chipmaker Texas Instruments (TXN.O) and grain trader Archer-Daniel Midlands (ADM.N) are among the heavyweights and highlights in the United States.
Unilever (ULVR.L), LVMH and EssilorLuxottica (ESLX.PA) report in London and Paris.
Corporate performance and prospects risk disappointing markets, which are increasingly pricing in a ‘soft landing’ in growth and inflation.
In the Asia session, investors cheered – albeit not too loudly – their pledges of support in the announcement of an earlier than expected Politburo meeting in China.
Hong Kong real estate stocks rose sharply, but for much of the past week or two they had slid deeper into discount markets, allowing gains to come from a low base. The Hang Seng (.HSI) is up about 3% and the Shanghai Composite (.SSEC) is up about 2%, but neither is exceeding recent ranges.
The yuan surged but received help from China’s state banks, which sources said were making onshore and offshore purchases earlier in the Asian day.
Most notably, analysts at Morgan Stanley highlighted the absence of a well-known statement that “property is for dwelling, not speculation,” and the addition of a promise to “tweak” the policy.
“Investors should remember that the early phase of COVID-19 easing was termed ‘tweak’ policy, which later led to a complete policy change,” they wrote. Dealers are buying it today but may not be tomorrow, while big names like Country Garden and Dalian Wanda face a cash crisis.
The Euro-Zone Bank Lending Survey is also out on Tuesday and may provide an outlook on the state of borrowing ahead of the Fed and European Central Bank meetings, both of which are expected to raise interest rates.
The yen held steady in Asia as investors weigh whether the Bank of Japan will adjust monetary policy on Friday.
Portal graphics
Key developments that could impact markets on Tuesday:
Economic Events: German LFO Surveys, Eurozone Bank Lending Survey
Revenue: Unilever, EssilorLuxottica, LVMH, Danaher, Microsoft, Alphabet, Texas Instruments, Verizon, Visa, General Electric, General Motors, 3M, ADM, Spotify, Snap, Dow
Reporting by Tom Westbrook. Edited by Sam Holmes
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