Morning Markets: IMF sees US and UK weakening

Watchlist

• Singapore: CPI (published)
• France: Flash PMI (0700 GMT)
• Germany: Flash PMI (0730 GMT)
• Eurozone: Flash PMI (0800 GMT)
• US: Flash manufacturing PMI (1345 GMT)
• US: Existing home sales (1400 GMT)

The IMF has issued upbeat forecasts for the world economy, stating that the "pickup in global growth anticipated in the April World Economic Outlook remains on track, with global output projected to grow by 3.5% in 2017 and 3.6% in 2018." Growth for Europe, China, Japan has been revised up, while it has been revised down for the UK and US. 

Some Asian markets look fragile for now, due to soft prices for commodities. The resources pain in pretty clear on Australia's ASX, with top Australian miners losing ground. But the mood is brighter in China, with gains for both the Shanghai Composite and Hong Kong's Hang Seng. Meanwhile political machinations underway in the US mean that the Trump trade is likely to stay on the back burner for now.

Economists expect today’s European PMI survey data to continue to indicate moderate growth for the euro area at the start of the third quarter. The composite PMI is on track to tick fractionally lower: 56.2 in the flash data for July, according to TradingEconomics.com’s consensus forecast. If the projection is right, the index will post its seventh straight reading of 56 or higher – an upbeat trend that points to an economic recovery that’s likely to carry over through the second half of the year. 

In the US, preliminary estimates of economic activity for July are on tap today, with the flash data for the manufacturing and services sectors. Based on consensus forecasts from TradingEconomics.com, the services sector is expected to maintain a moderately strong rate of growth. Manufacturing is also expanding, but the initial PMI estimate for July is projected to show that the pace of expansion remains relatively sluggish.

Also in the US, economists are projecting that sales of existing houses will slip to 5.57 million units in June, down slightly from 5.62 million previously (seasonally adjusted annual rate), based on TradingEconomics.com’s consensus forecast. If the estimate is right, sales will remain at a middling level against recent history.

Market signals

Asian session

• Oil remained below $46/barrel before an Opec meeting on Monday
  
• The US is fraught with political machinations that are damping sentiment
  
• Jared Kushner appears before the Senate intelligence committee on Monday
• Donald Trump Jr will face a Senate committee investigating Russian electoral meddling
• Japanese data for June due out this week may show sluggish CPI
• The Nikkei 225 tumbled; it was down 0.56% to 19,986.24 at 0524 GMT
• China posts industrial profits this week, with early indicators pointing upwards
• Shanghai Composite was up by 0.50% to 3,254.14 at 0544 GMT
• Hong Kong's Hang Seng was up 0.49% to 26,836.20 at 0546 GMT
• Large inventories of imported iron ore in China are weighing on ore prices
  
• A selloff for banks and top miners dragged Australia's S&P/ASX200 into the red
  
• S&P/ASX200 was down by a hefty 0.65% to  5,685.60 at 0543 GMT
  
• China looks set to launch a crude oil futures market in the second half of this year
• IMF forecasts point to a firmer world growth, thanks to China, Japan and Europe
  
• IMF expects world GDP growth to hit 3.5% this year, and 3.6% in 2018
  

Forex ahead

• AUD held onto recent gains ahead of RBA speech on Wednesday
  
• AUD was worth 0.7923 at 0542 GMT
  
• JPY rose for a fifth day on trader caution about the week ahead
• USD has hit a five week low against the yen; it was worth just ¥111.0545 at 0542 GMT
  

In opinion

1...2...3
While Europe is on track for growth, but US services and manufacturing PMI, as well as existing home sales, aren't breaking any records, says James Picerno.

Macro time
In his weekly Macro Monday roundup, Kay Van-Petersen is sitting uneasily -- he knows the JPY and the Nikkei are going to move, and he thinks the time to short the Nikkei is nearly nigh.

Q2 bonanza
The second-quarter earnings season looks strong, with European companies posting the fastest growth in EBITDA since the fourth quarter of 2010, writes Peter Garnry.

Ignoring Mario
The euro rallied last week when traders chose to ignore ECB president Mario Draghi's warnings and focus instead on his rosy economic outlook, says Michael O'Neill.

Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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