Marketmind: Ready for a summer lull?

A look at the day ahead from Karin Strohecker.

We are almost at the end of a pretty breathless month: The peak growth versus peak inflation debate got a fresh lease of life thanks to Delta variant surges, a cooling of commodities’ red-hot rally and of course, Beijing’s big regulation crackdown.

Actually, those obstacles did little to keep equity markets from sailing to record highs across multiple regions on Thursday. Underpinning markets is a combo of robust earnings, a dovish Fed and data, such as U.S. GDP, which has been good enough to keep recovery hopes alive but good enough to hasten policy tightening talk.

Reassurances from Beijing’s regulators and official media have also helped but not enough to make for a quiet Friday, with markets having a bit of a wobble. Chinese tech giants such as Alibaba (9988.HK) have dropped about 10%, pushing the Hang Seng index some 2.5% lower.

U.S. futures paint a similar fate after Amazon’s (AMZN.O) lower-than-expected revenue doused Wall Street’s enthusiasm. Nasdaq futures are down 1.5% .

European bourses are opening lower too but will today derail the market’s attempt to notch a sixth straight month of gains? Hopefully now and with the STOXX 600 index up 2.5% in July, it would take some pretty major selling.

It’s a busy day for Europe’s banks with BNP Paribas, UniCredit and BBVA reporting. UniCredit (CRDI.MI) is also holding exclusive talks with Italy’s government over Monte dei Paschi (BMPS.MI), bringing Rome’s favourite solution for the troubled Tuscan lender a step closer.

On currency markets, the dollar languishes near a one-month low and is set for its worst week since May after the Fed pulled the plug on a month-long rally. And government bonds across the world are their best monthly performances since at least March 2020.

Eurozone flash inflation numbers will garner attention after German data on Thursday showed inflation topping 3% and hitting 13-year highs.

Key developments that should provide more direction to markets on Friday:

-Japan’s output, job availability jump but COVID curbs to slow growth.

–German flash GDP Q2

-Euro zone flash HICP July/flash GDP/unemployment

-U.S. core PCE index/Chicago PMI/University of Michigan final index

-Auctions: U.S. 7-yr notes

-Emerging market central banks: Chile, Colombia, Azerbaijan

-European earnings: UniCredit, Caixabank, Siemens, Merlin, Linde, Amundi, Renault, Luxottica, BBVA, Eni, BAT, IAG, Natwest, Erste, Raiffeisen, BNP Paribas, Swiss Re

-U.S. earnings: Caterpillar, Chevron, Lazard, Colgate-Palmolive, Exxon Mobil, Proctor and Gamble, Goodyear Tyres.