Macro Roundup (Jul 26)

SHANGHAI, Jul 26 —This is a roundup of global macroeconomic news last night and what is expected today.

The dollar was lower against a basket of major currencies on Monday, as investors weighed the implications of a rate hike by the U.S. Federal Reserve in an economy that may be on the verge of a recession.

The central bank is widely expected to raise interest rates by 75 basis points at the conclusion of its policy meeting on Wednesday. A hike of that magnitude would effectively close out pandemic-era support for the economy.

Expectations for a hike of 75 basis points from the Fed stand at about 75%, according to CME’s Fedwatch Tool, with a 25% chance of a 100 basis point hike.

Recent data has shown signs of an economic slowdown while inflation remains stubbornly high, with claims for jobless benefits rising to its highest in eight months last week and regional manufacturing gauges slumping.

U.S. stock futures fell on Monday night after Walmart cut its profit forecast, sending retail stocks tumbling after hours.

Dow Jones Industrial Average futures fell by 134 points, or 0.42%. S&P 500 and Nasdaq 100 futures declined 0.31% and 0.38%, respectively.

Stocks during Monday’s session traded in a narrow range, with the S&P 500 adding 0.1%. The Dow Jones Industrial Average climbed 90.75 points, or 0.3%. The tech-heavy Nasdaq Composite lagged, sliding 0.4%. All of the major averages are on track for their best month of the year.

Traders are bracing for an onslaught of mega-cap tech earnings and economic data this week, as well as the outcome of the Federal Reserve meeting, that will help Wall Street direct its expectations for the rest of the year.

Oil prices rose over 1% on Monday, bolstered by supply fears, a dip in the U.S. dollar and stronger equity markets, but prices seesawed as some worried rising U.S. interest rates would weaken fuel demand.

Brent crude futures for September settled 1.9% higher at $105.15 a barrel, while U.S. West Texas Intermediate (WTI) crude futures ended the day at $96.70 for a gain of 2.1%.

Oil futures have been volatile in recent weeks, pressured by worries that rising interest rates could limit economic activity and thus cut fuel demand growth but supported by tight supply especially since Russia’s invasion of Ukraine and Western sanctions on Moscow.

Gold prices gave up initial gains to slip on Monday as U.S. Treasury yields edged back up, while investors positioned themselves for an expected 75-basis-point interest rate hike by the Federal Reserve later this week.

Spot gold was down 0.5% to $1,718.29 per ounce. U.S. gold futures dropped 0.5% to $1,718.20.

The pan-European Stoxx 600 closed up by just 0.09%, having initially dropped more than 0.4% in early trade. Banks jumped 1.7% while travel and leisure stocks fell 1%.