Members of OPEC and its allies are leaning towards reducing production cuts, with an announcement possible at this week’s meeting of oil-producing nations. West Texas Intermediate for August delivery dropped below $40 a barrel this morning as investors weighed an increase in production against the risks to the virus-hit demand outlook.
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Second-quarter results for Wall Street’s biggest banks this week will probably show their worst three months since the financial crisis. Earnings reports are expected to be dominated by surging provisions for loan losses and slumping consumer spending. Banks have been one of the major stock underperformers this year, with the S&P 500 Financials index slumping 26% since the end of December. Trading and underwriting is expected to be the only silver lining, with forecasts predicting a jump in stock- and bond-trading revenues.
Global equity markets are starting the week on a positive note as traders await an earnings season which is seen as a clear barometer of the health of the economy. Overnight, the MSCI Asia Pacific Index added 1.2% while Japan’s Topix index closed 2.5% higher. In Europe the Stoxx 600 Index had gained 0.6% by 5:50 a.m. Eastern Time with every industry sector in the the green. S&P 500 futures pointed to a higher open, the 10-year Treasury yield was at 0.635% and gold was back over $1,800 an ounce.
The June U.S. budget statement is expected to show a record deficit when the data is published at 2:00 p.m. Before that, New York Fed President John Williams and Dallas Fed President Robert Kaplan speak at separate events. With bank earnings not starting until tomorrow, PepsiCo Inc.’s results will be the focus for today.