MARKET WRAPS

Stocks:

European stocks extended their recent losses as disappointing earnings, particularly in the luxury sector, continued to weigh on sentiment.

Cartier owner Richemont became the latest luxury company to sound the alarm about Chinese demand, reporting a 27% drop in first-quarter sales in China, Hong Kong and Macau.

But Deutsche Bank said the sales decline came as no surprise given recent comments by some of Richemont's peers.

U.S. earnings season is in swing. Results are due from more banks, including Bank of America and Morgan Stanley on Tuesday, plus other big names, including Netflix, later in the week.

Stocks to Watch

Greek banks are emerging from the debt crisis and are now well placed to capitalize on a strong macroeconomic recovery and a strong corporate credit cycle which should counter some net interest margin compression as rates decline, UBS said,

Analysts see upside to their conservative three-year business plans, to consensus earnings and point out their significant distribution potential, given that the ECB approved the resumption of shareholder distributions recently.

"We estimate capital available for distribution until FY26 could be as much as 60% of market cap," UBS said.

It has started covering Alpha Bank, Eurobank, National Bank of Greece and Piraeus, rating the Greek lenders with buy ratings.

U.S. Markets:

Stock futures were little changed in recent trading, while benchmark bond yields fell back, as bets on a Donald Trump victory in the presidential election rose following the weekend assassination attempt.

Second-quarter earnings season is in swing. Results are due from UnitedHealth, Bank of America and Morgan Stanley among others on Tuesday.

Forex:

Increased chances of Donald Trump winning the presidential election are helping the dollar to recover from last week's falls, MUFG said, with the prospects of trade tariffs and lower taxes lifting longer-dated Treasury yields.

However, the boost to the dollar is limited by the potential for an interest-rate cut in September after Jerome Powell pointed to slowing inflation and a cooling labor market.

"Even if Donald Trump is re-elected in November it will not prevent the Fed from cutting rates," MUFG said.

ING said markets assume a Trump victory would bring expansive fiscal policy, lifting long-dated Treasury yields and the dollar.

"If markets continue to price in a Trump reelection effect into bond and FX markets, the balance of risks is tilted to the upside in the near term for the greenback."

BNP Paribas Markets 360 maintains a positive view on sterling following last week's stronger-than-expected U.K. growth data and balanced speech from Bank of England chief economist Huw Pill.

"The bar for inflation and employment data released this week to be weak enough for the BOE to strike a more dovish tone may be high."

Politics is another positive, as Labour's landslide election victory ushers in a period of political stability, which should bode well for sterling, BNP said.

Bonds:

The Treasury yield curve is steepening, primarily led by the long end, as the chances for a Donald Trump presidency spike, putting fiscal concerns high on the market's agenda, Commerzbank Research said.

On Monday, the two- to 30-year yield curve bear-steepened to zero for the first time since January, it said.

Energy:

Oil prices edged lower on concerns over China's demand outlook and despite dovish comments from Powell ramping up bets for a September rate cut.

China's weaker-than-expected economic data and soft oil imports in June were weighing on market sentiment, while a stronger dollar reduced investor appetite.

However, losses were limited by growing optimism over interest-rate cuts after Powell suggested the central bank has gained greater confidence that inflation is moving toward its 2% goal.

"Powell's comments in Washington were expectedly dovish. Cuts are coming, " Peak Trading Research said.

Metals:

Gold futures rose in a delayed bullish reaction to the attempted assassination of Donald Trump.

MKS Pamp said overall, U.S. and global political uncertainty is rising but remains underpriced.

JPMorgan said as of Friday, inflows into gold markets totaled around $10.9 billion on-week. It's bullish on gold into year-end, seeing prices rising towards $2,500 in the fourth quarter.

Phillip Nova said gold prices might push toward record highs with Fed rate cuts now in sight and as uncertainty over U.S. elections increase safe-haven flows toward bullion. It said gold might consolidate in the low $2,400s ahead of U.S. retail data later Tuesday.


EMEA HEADLINES

Hugo Boss Joins Burberry in Warning on Luxury Spending, Cuts Full-Year Sales Outlook

Hugo Boss cut its sales outlook for the year, becoming the latest high-end fashion player to warn about consumer spending levels for luxury goods.

The warning from the German premium-fashion company late Monday came after both the luxury brand Burberry and watchmaker Swatch earlier in the day sounded caution on current sales trends. The challenges also prompted Bruberry to cut its dividend and replace its chief executive.


TotalEnergies Expects Output at High End of Guidance, Warns on Weak Refining Margins

TotalEnergies expects second-quarter oil-and-gas output at the high end of its guidance range, but said weak refining margins will hamper downstream results.

The French energy major said Tuesday that it expects quarterly earnings from its exploration and production division to be boosted by oil-and-gas production coming in at the high end of its guided range and by oil prices rising since the first quarter.


Rio Tinto Gets Simandou Approvals

Miner Rio Tinto said it has got the approvals it needs for a huge iron-ore mine it is building in Africa, as it reported a rise in second-quarter shipments of the steel ingredient from its operations in Australia.

The world's second-biggest miner by market value said Tuesday that all conditions have now been fulfilled for its investment in the Simandou iron-ore deposit in Guinea, including necessary Guinean and Chinese regulatory approvals.


SEB Earnings Boosted by Improved Business Momentum

Skandinaviska Enskilda Banken posted a better-than-expected second-quarter net profit as improved business momentum helped offset a drop in net interest income.

The Sweden-based bank posted net profit of 9.42 billion kronor ($888.6 million), down from SEK9.77 billion a year earlier but ahead of the SEK8.8 billion forecast from analysts polled by FactSet.


Swedbank Net Profit Beats Forecasts Despite On-Year Fall

Swedbank reported a smaller-than-expected drop in second-quarter net profit as higher commission income, cost efficiencies and solid credit quality helped offset falling net interest income.

The Swedish lender said on Tuesday that net profit fell to 8.6 billion Swedish kronor ($810.8 million) from SEK9.12 billion in the prior-year period, as net interest income fell 4.7% to SEK12.17 billion.


Ocado Raises Cash Flow Target After Narrowing Losses

Ocado Group lifted its fiscal 2024 cash flow guidance after first-half losses narrowed on improved sales and lower costs.

The online grocer and retail-technology specialist reported a pretax loss of 153.9 million pounds ($199.6 million) for the 26 weeks ended June 2 compared with a loss of GBP289.5 million a year ago.


GLOBAL NEWS

Wall Street Has a New Way of Looking at the Stock Market. Here's What to Know.

The S&P 500 has long been a stand-in for "the stock market" among investors. But with the Magnificent Seven tech stocks playing such an outsize role, more people are talking about-and putting money behind-an alternative version.

That could be a smart move it recent market trends continue.


Abolish the Federal Reserve? Here's What Conservatives' Project 2025 Would Do.

A widely circulated conservative policy platform for the next presidential administration would put major constraints on the Federal Reserve's mandate and monetary policy tools.

The conservative Heritage Foundation think tank's so-called Project 2025's primary recommendations for the Fed include a unitary focus on controlling inflation, winding down its balance sheet, and ending its lender-of-last-resort function. Further proposals would return the U.S. to a gold standard or abolish the Fed entirely.


Trump Picks J.D. Vance as 2024 Running Mate

MILWAUKEE-Former President Donald Trump named Sen. J.D. Vance of Ohio as his running mate, ending months of theatrical buildup and settling on a much younger partner who could help appeal to working-class voters in critical Midwest battleground states.

If Trump is elected, Vance, who turns 40 in August, would be one of the youngest vice presidents in history and one with just two years of elected experience. He is a figure closely associated with the style and views of Trump's conservative, populist movement.


Elon Musk Has Said He Is Committing Around $45 Million a Month to a New Pro-Trump Super PAC

Elon Musk has said he plans to commit around $45 million a month to a new super political-action committee backing former President Donald Trump's presidential run, according to people familiar with the matter.

Other backers of the group, called America PAC, include Palantir Technologies co-founder Joe Lonsdale, the Winklevoss twins, former U.S. ambassador to Canada Kelly Craft and her husband, Joe Craft, who is chief executive of coal producer Alliance Resource Partners.


Federal Judge Dismisses Classified Documents Prosecution Against Trump

A judge on Monday dismissed the federal prosecution alleging former President Donald Trump illegally retained classified documents and impeded efforts to get them back, ruling special counsel Jack Smith wasn't lawfully appointed to bring the case.

(MORE TO FOLLOW) Dow Jones Newswires

07-16-24 0515ET