Global equities ended last week in red territory

Market Movers

Todayâ€™s calendar of economic data releases is relatively thin.
In the eurozone activity has been supported by ECBâ€™s monetary policy easing as it has resulted in cheaper and more accessible bank lending. We expect todayâ€™s figures for money supply and credit to illustrate this.
Germany will publish Ifo Business Climate index, which we expect to have weakened in tandem with the recent (temporary) slowdown in economic figures.
In the US the June figures for durable goods orders are due for release. We expect a rebound in the figure after the drop in the past two months. Focus this week will primarily be on Wednesdayâ€™s FOMC meeting where we expect the rhetoric to turn more hawkish amid the recent significant improvement in US economic figures and with international risk factors diminished. We still expect the first rate hike in September â€“ a call that financial markets currently price at roughly 50% probability.
We expect Swedish June household lending to have accelerated a notch to 6.7 % yoy.

Selected Market News

Global equities ended last week in red territory, as the commodity bear market continued and the Chinese manufacturing PMI surprised to the downside raising concerns about a significantly weaker Chinese economy (see Weak China PMI throwscold water on signs of recovery 24 July). European equities also suffered from weaker-than-expected eurozone PMIs possibly reflecting Grexit fears. This morning market sentiment in Asia remains sour with reports of Chinese industrial company profits declining 0.3% y/y in June.
The ECB has rejected Greek proposals for opening the Greek bourse with no restrictions in place for neither Greek nor foreign traders. The Athens stock exchange has been closed since 26 June on the back of the imposition of capital controls. Meanwhile, stories of considerable differences of opinion on the way forward in the Greek negotiations have attracted attention over the weekend, see FT.
In FX markets commodity currencies continue to suffer. The NOK is no exception and EUR/NOK has now re-surpassed the 9.0 mark on the back of a period with no economic data releases, thin NOK liquidity and a sole focus on the oil price. Indeed, according to our models, the NOK correlation and beta to the oil price have risen significantly in recent weeks.
CFTC IMM positioning data show that speculators in the week to 21 July added bullish USD bets for the second consecutive week. From a historical perspective the change is not particular, although it has contributed in sending speculative USD positioning to the most bullish level since the beginning of June.

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