Shanghai Meltdown Drives Global Stocks Lower

Economic data

- (UK) July CBI Industrial Trends Total Orders: -10 v -6e; Selling Prices: +1 v -8e; Business Optimism: +8 v +1e
- (IE) Ireland Jun Property Prices M/M: 0.1% v 0.5% prior; Y/Y: 10.7% v 13.8% prior
- (US) Jun Durable Goods Orders: 3.4% v 3.2%e; Durables Ex Transportation: 0.8% v 0.5%e; Capital Goods Orders (Non-defense/ex-aircraft): +0.9% v +0.5%e; Capital Goods Shipments (Non-defense/ex-aircraft): -0.1% v +0.6%e; Durables Ex-Defense: +3.8 v -2.4% prior
- (IL) Israel Central Bank (BOI) leaves Base Rate unchanged at 0.10%, as expected
- (MX) Mexico Jun Trade Balance: -$0.8B v -$0.5Be
- (US) July Dallas Fed Manufacturing Activity: -4.6 v -3e

The Shanghai Composite returned to meltdown territory after a few weeks of calm, down more than 8% on the session, the largest one-day drop since 2007. Analysts pointed out that despite today's drop, Shanghai is still up 15% YTD. On the Continent, the CAC and DAX are down more than 2.2% a piece. US futures were weak in the premarket, although the three main indices regained some ground in the first two hours of trading. The 10-year UST is down 3.4 basis points around 2.228%. The DJIA is down 0.8%, the S&P500 is off 0.4% and the Nasdaq is down 0.8%.

The volatile durable goods data was better than expected in June. The non-defense capital goods orders (ex aircraft) - key for gauging business investment - rose 0.9% in June, following two straight months of decline. Shipments of capital goods - used for GDP calculations- slipped 0.1% after a 0.3% fall in May. Transportation orders were buoyed by a 66% surge in aircraft orders in June, which reversed May's 32% drop.

Earnings are due from the oil majors this week, and there have been press reports that some may announce more rounds of job and cost cuts with quarterly reports. The weekly Baker Hughes rig count report saw modest gains in working rigs, but that is hardly offsetting the weight in crude prices. WTI fell about one percent as low as $47.23 earlier and Brent is off 1.9% around $53.50.

Allergan reached a deal to sell off its generics unit to Teva for $40 billion in cash and stock. The deal is divided between $33.8 billion in cash and approximately $6.8 billion of Teva's shares, giving Allergan a nearly 10% stake in Teva. With Allergan transaction, Teva also withdrew its spurned, unsolicited $37 billion offer to acquire Mylan. TEVA is up 12% this morning, AGN is up 7% and MYL is down 14% on the news.

Looking Ahead

- 12:00 (FR) France Jun Net Change Jobseekers: +7.5Ke v +16.2K prior; Total Jobseekers: 3.600Me v 3.552M prior
- 15:00 (AR) Argentina Jun Industrial Production M/M: No est v 0.2% prior; Y/Y: -0.6%e v -0.9% prior
- 16:00 (US) Crop Condition Report
- 23:45 (JP) Japan to sell 2-Year JGB Bonds