Opening Bell: Earnings Misses Hit Futures; Japanese Yields Spike; Yuan Tumbles


European stocks and futures on the , and opened the week on the back foot, as investors focused on earnings misses and moved to risk-off trade ahead of key interest rates decisions.

The slid lower with miners as well as food and beverage makers tracking a downturn in all the major Asian equity markets. Heineken (AS:), the world’s second-biggest beer brewer, a 1.89 euros EPS, below the 1.91 forecast. The company also cut its full-year margin guidance to reflect the impact of currency headwinds on revenues and operating profit.

USD/JPY Daily Chart

USD/JPY Daily Chart

A jump by Japanese yields to their highest level in nearly a year and a half kicked off a week loaded with crucial monetary policy discussions by the , the and the .

Speculation that the Bank of Japan may cut back its massive asset-buying program and allow the yield to rise above its 0.100 percent target prompted the yield surge on Monday. Should those expectations materialize, an investor rotation into higher yields would entail a boost for the as well. Technically, the dollar-yen pair has developed a bearish pennant pattern right on top of the uptrend line. A downside breakout, as the greenback weakens versus its Japanese counterpart, would signal that yen buyers have absorbed all available supply at these levels and are prepared to bid prices higher in search of willing sellers.

Meanwhile, the Chinese extended last week’s decline and is set to close at the lowest level since June 2017. The yuan’s downward spiral, which has recently sparked US President Donald Trump’s criticism of Chinese authorities for alleged currency manipulation, significantly increases risk for equity markets as it pushes investors to shift to risk off trade and safe-haven assets. Such a move would jibe with our analysis that stocks and the are ripe for a correction.

WTI Daily Chart

In other news, creeped 0.95 percent higher, erasing most of Friday’s losses. Technically, the price has been consolidating since July 13 in a pennant-shaped, considered a continuation pattern. A downside breakout would signal that traders are prepared to resume the prior selloff since $75. The uptrend line since November 2017, currently at $66, will be the next test.

Up Ahead

  • Canada’s for June is released Tuesday.

  • Canadian for June is released Tuesday.

  • Canadian for June is released Tuesday.

  • Earnings season continues with:

  • Tech heavyweight Apple (NASDAQ:) reports : analysts expect EPS of $2.16 and revenues of $52.3 billion
  • Berkshire Hathaway (NYSE:), , EPS 3,398.89 & revenue $61.64 billion forecast
  • Barclays (LON:), , EPS $0.28 & revenue $6.94 billion forecast
  • Tesla (NASDAQ:), , EPS $2.78 & revenue $4.03 billion forecast
  • Toyota (NYSE:), , EPS $3.95 & revenue $65.15 billion forecast
  • The US Treasury is set to release its funding program for the next three months on Wednesday.

  • Central banks in the US, Japan, the UK, and all meet this week. The BOJ may tweak its yield-curve control policy and cut its CPI forecasts, while the Bank of England is even amid Brexit gloom. The Fed is expected to hold rates, as is Brazil’s central bank. The RBI will probably raise its benchmark.

  • US and for June, out on Tuesday, are expected to post a steady reading.

  • The on Friday is predicted to show a healthy labor market, with 193,000 new jobs and the slipping back to 3.9 percent.

  • China’s probably edged lower in July, hindered by a deleveraging agenda and trade war jitters.

Market Moves

Stocks

  • Canada’s fell 0.45 percent on Friday.

  • The Europe 600 lost 0.4 percent, the biggest decrease in almost three weeks.

  • Futures on the S&P 500 fell 0.2 percent to the lowest level in more than a week.

  • The slipped 0.2 percent.

  • The slid 0.4 percent, the first retreat in a week and the largest fall in more than a week.

Currencies

  • The Canadian was up 0.10 per cent against the U.S. greenback early Monday, trading at 0.7664.

  • The Dollar Index climbed 0.1 percent.

  • The declined less than 0.05 percent to $1.1656.

  • The rose less than 0.05 percent to $1.311.

  • The Japanese yen decreased 0.1 percent to 111.13 per dollar.

  • The yuan gained 0.22 percent, set to the lowest close since June 2017.

Bonds

  • Canada’s was up early Monday at 2.318, a 0.96-percent increase.

  • The yield on Treasuries gained one basis point to 2.96 percent.

  • Germany’s yield dropped one basis point to 0.40 percent.

  • Britain’s yield fell less than one basis point to 1.282 percent, the most significant fall in more than a week.

Commodities

  • The gained less than 0.05 percent.

  • West Texas Intermediate crude climbed 0.5 percent to $69.02 a barrel.

  • LME slipped 1.9 percent to $6,176.00 per metric ton, the lowest level in a week on the most substantial decrease in almost three weeks.

  • fell 0.3 percent to $1,220.31 an ounce, the weakest level in almost 13 months.

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