Macro Roundup (Jul 19)

SHANGHAI, Jul 19 —This is a roundup of global macroeconomic news last night and what is expected today.

The U.S. dollar eased against a basket of currencies on Monday, retreating from the two-decade high hit last week, as traders pared bets on how aggressive the Federal Reserve will be in raising rates at its meeting later this month.

A modest rebound in investors’ appetite for riskier assets also dented demand for the safe haven currency.

Federal Reserve officials signalled Friday they will likely stick with a 75-basis-point interest rate increase at their July 26-27 meeting, though a recent high inflation reading could still warrant larger increases than anticipated later in the year.

Traders in futures contracts tied to the Fed’s short-term federal funds policy rate, who had been leaning toward a full-percentage-point rise in interest rates, shifted their bets firmly in favor of a 0.75-percentage-point increase at the upcoming meeting.

Stock futures were flat after the Dow Jones Industrial Average slumped more than 200 points during Monday’s session, reversing an earlier rally as earnings season continued in earnest.

Dow Jones Industrial Average futures rose by 9 points, or 0.03%. S&P 500 futures ticked up 0.11% and Nasdaq 100 futures rose 0.09%. Shares of IBM fell more than 4% after hours when the original tech company lowered its forecast for cash flow, even while reporting earnings that beat Wall Street’s earnings and revenue estimates.

Oil prices extended gains on Monday, boosted by mounting concerns over gas supply from Russia and a lower dollar, offsetting demand fears brought on by a possible recession and China lockdowns.

Brent crude futures for September settlement ended the dat 5% higher at $106.27, having gained 2.1% on Friday.

U.S. West Texas Intermediate (WTI) crude futures for August delivery settled 5.13% to trade at $102.60 after rising by 1.9% in the previous session.

Russian gas export monopoly Gazprom declared force majeure on gas supplies to Europe to at least one major customer, according to the letter seen by Reuters, potentially ratcheting up the continent’s supply crunch.

Gold prices firmed on Monday, as a pullback in the dollar helped bullion recover some of its recent losses, while easing fears of a 100-basis-point rate hike by the U.S. Federal Reserve also supported bullion.

Spot gold rose 0.8% to $1,720.81 per ounce by 0926 GMT, after falling to its lowest in nearly a year last week. U.S. gold futures also gained 0.8% to $1,717.40.

The pan-European Stoxx 600 index gained 0.8% by the close, with basic resources climbing 3% to lead gains as most sectors and major bourses finished in positive territory.