A look at the day ahead from Sujata Rao.
Monetary accommodation, economic growth and company earnings may
all be peaking, Delta cases remains a menace but markets? They
are just fine.
Whether or not Jerome Powell's Jackson Hole speech this
Friday brings the long-awaited taper signal, Wall Street is back
doing what it does best -- notching record highs. Futures
indicate another firm start for U.S. and European shares, after
a 1.5% jump on MSCI's main Asian equity index.
So after last week's wobbles, what's going right? First, the
economy. U.S. August composite PMIs slipped to the lowest since
December but at 55.4, the private sector is clearly robust. Euro
zone PMIs too slipped but from July's two-decade highs while
Tuesday data revised up German Q2 GDP to 1.6%, versus a previous
1.5% estimate.
As for the pandemic, there are hopes vaccine-sceptic
Americans will finally take the Pfizer/BioNtech vaccine after
the drug regulator FDA granted it full approval. That's helping
oil prices extend gains following Monday's 5% leap.
Another peak that matters is the "real" U.S. Treasury yield.
Last week's 9 basis-point rise rocked stock markets but 10-year
inflation-adjusted yields are back below -1%.
And there's steady corporate newsflow -- Banco Santander is
to buy out its U.S. consumer unit in a $12.7 billion deal while
chemicals firm IFF has agreed to a $1.3 billion sale of its
microbial control unit to Germany's Lanxess.
Finally, the U.S. House of Representatives will return at
1600 GMT to continue debating a $3.5 trillion budget plan after
a vote on it was postponed.
Key developments that should provide more direction to markets
on Tuesday:
-Germany Q2 GDP revised up to 1.6%
-UK engineering group Wood reported a 14.1% fall in H1 profit;
Switzerland's BV plans a Q4 IPO for Skan in which it has a
majority stake
-UK supermarket Morrisons shareholder Legal & General
sees new bids from a private equity chain were closer to true
value. Rival Sainsbury's shares rocketed 15% on Monday on
reports it too was facing an approach.
-U.S. building permits, new home sales July
-Richmond Fed services index
- U.S. auction $80 billion in 2-year bonds, Germany to auction
7-year debt
- Hungary central bank expected to hike rates
- ECB board member Isabel Schnabel speaks in panel discussion
- U.S. Earnings: Medtronics, Best Buy, Urban Outfitters,
Nordstrom
- European earnings: Zurich Flughafen
(Reporting by Sujata Rao; editing by Dhara Ranasinghe)