Here are five things you must know for Monday, August 15:
1. — Stock Futures Lower As China Rate Cut Rattles
U.S. equity futures edged lower Monday, while the dollar built gains against its global peers and oil prices slumped, as a surprise rate cut in China rattled growth sentiment abroad and put investors in a cautious mood at home ahead of a big week of consumer-focused data.
Stocks are riding a solid, although by no means spectacular, run of weekly gains following Friday’s rally on Wall Street as investors pare bets on near-term rate hikes from the Federal Reserve amid slowing inflation prospects.
China’s decision to cut a series of rates aimed at stoking credit growth, however, suggests overseas economies are having a more difficult time managing both their soaring energy costs as well as their post-pandemic recoveries.
China published data on Sunday showing slower-than-expected retail sales growth, a disappointing pace of industrial production and softer-than-forecast government investment.
The data clipped global oil prices as investors looked ahead to weakening demand from the world’s biggest crude importer, with WTI futures for September delivery falling $1.89 in overnight trading to $90.20 per barrel.
That could help not only domestic inflation prospects, but add further downward pressure to U.S. gas prices, which the American Automobile Association pegged at $3.956 per gallon last night, the lowest since early March.
In other markets, benchmark 10-year notes were pegged at 2.853% in overnight trading, while 2-year paper was changing hands at 3.270%. The dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.31% higher at 105.959.
Overnight in Asia, Japan’s Nikkei 225 closed 1.14% higher, building on Friday’s solid gains, as the yen drifted lower against the dollar, while China’s rate cuts helped tech stocks, keeping losses for the region-wide MSCI ex-Japan benchmark at -0.25%.
On Wall Street, futures tied to the S&P 500 are indicating a 16 point opening bell decline while those liked to the Dow Jones Industrial Average are priced for a 105 point move to the downside. Futures linked to the tech-focused Nasdaq are indicating a 55 point dip.
2. — Week Ahead: Retail Earnings, Sales Data, Fed Minutes In Focus
The strength of the U.S consumer is likely to be in focus this week as investors pick through data on July retail sales, housing starts and second quarter earnings from Walmart (WMT) , Target Corp (TGT) and Home Depot (HD) .
With consumer sentiment improving, inflation slowing and the Atlanta Fed’s GDPNow forecasting tool indicating a solid 2.5% third quarter growth rate, improving retail metrics, whether it be from overall sales or bullish near-term outlooks from that nation’s biggest stores, could provide a firm base for investor confidence heading into the autumn months.
July retail sales data is due Wednesday at 8:30 am, just after July quarter updates from Walmart and Home Depot on Tuesday and Target and Lowe’s (LOW) the following data. Later that afternoon, investors will also get minutes from the Fed’s July policy meeting, which may hint towards a late 2022 pause in rate hikes if inflation continues to trend in its current direction.
Housing starts and building permits data is due Tuesday at 8:30 am Eastern time, wiht existing home sales figures set for the same time on Thursday.
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3. — Kohl’s Shares Slip As Activists At Starboard Dump Stake
Kohl’s Corp. (KSS) shares slipped lower in pre-market trading after activists investors at Starboard Value have slashed their stake in the struggling retailer following attempts to buy it earlier this year.
Securities and Exchange Commission filings from late Friday suggest Starboard has cut around 80% of its 2.59% stake in Kohl’s, which it began accumulating in January, over the three months ending in June. The fund now owns around 535,000 shares, according to its 13-F report.
Last month, Kohl’s ended talks with the Franchise Group FRG over a possible $8 billion takeover, following similar interest from private equity firms and retail asset investors, including Sycamore Partners, Simon Property Group SPG and Brookfield Asset Management..
Kohl’s will publish tis second quarter earnings on Thursday.
Kohl’s shares were marked 0.63% lower in pre-market trading to indicate a Monday opening bell price of $32.97 each.
4. — Wells Fargo Shares Lower On Report of Mortgage Business Re-Think
Wells Fargo (WFC) shares edged lower in pre-market trading following a report from Bloomberg news that suggested the bank is preparing to significantly reduce its once-leading mortgage business.
Bloomberg said the shift, which is expected to include big changes in the way it deals with outside mortgage originators, is likely to lead to Wells Fargo focusing its home lending business to existing customers.
The bank said in a statement that it’s “evaluating the size of our mortgage business to adapt to a dramatically smaller originations market” while “continuing to look across the company to prioritize and best position us to serve our customers broadly.”
Wells Fargo shares were marked 0.54% lower in pre-market trading to indicate an opening bell price of $45.69 each.
5. — Google Reportedly Planning New YouTube Streaming Service
Alphabet (GOOGL) shares slipped lower in pre-market trading, with tech stocks pressured by higher Treasury bond yields, despite a report late Friday from the Wall Street Journal that indicated its looking to establish a new media streaming service via YouTube.
The Journal said Google has been working on the project for around 18 months as companies scramble for position in the broader streaming market and explore parings with content and platform partners in order to win new subscribers.
YouTube already has around 5 million subscribers for its short and long-form content, Alphabet noted in its second quarter earnings, and generated ad revenues of around $7.3 billion. Netflix (NFLX) , by comparison, had overall revenues of just under $8 billion for the three months ending in June.
Google shares were marked 0.63% lower in pre-market trading to indicate an opening bell price of $121.00 each