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Top 5 Things to Know in the Market on Monday

Investing.com - Here are the top five things you need to know in financial markets on Monday, July 15:

1. China shows weak growth but signs of stabilization

Although the Chinese economy registered its slowest growth in 27 years, strong readings of industrial output, retail sales and capital spending gave rise to hopes that the world’s second-largest economy may be stabilizing despite the ongoing trade conflict with the U.S.

Growth of 6.2% in the second quarter was the slowest since the first quarter of 1992 but was no worse than expectations.

In upbeat economic data, China’s industrial output jumped 6.3% in June in a solid recovery from the prior month’s 17-year low, retail sales increased at their fastest pace since March 2018 and fixed asset investment also rose more than forecast.

Despite the positive data, the latest IHS Markit survey showed that optimism among Chinese companies hit an all-time low, while the reading on its Global Business Outlook survey hit its lowest level since the global financial crisis.

On an otherwise light economic calendar, the NY Empire State manufacturing index for July will be released at 8:30 AM ET (12:30 GMT).

2. Citigroup set to kick off earnings

Citigroup (NYSE:C) will mark the unofficial start of the second-quarter earnings season when it reports in the course of the morning.

There will be a flurry of bank earnings this week with JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC) and Goldman Sachs (NYSE:GS) reporting on Tuesday, followed by Bank of America (NYSE:BAC) on Wednesday and Morgan Stanley (NYSE:MS) on Thursday.

Financial stocks in general have made solid gains this year, despite concerns that potential interest rate cuts from the Federal Reserve could hit banks’ margins.

“After hitting 27,000, earnings season could be the catalyst for the next big move in the Dow,” Investing.com’s senior financial analyst Jesse Cohen said.

3. Global stocks mixed with growth, earnings in focus

Global stocks showed no clear direction on Monday as growth worries continued to keep investors on edge.

Asian shares closed higher on the positive signs among Chinese data released Friday and hopes that the slowdown in economic growth could spur Beijing to provide additional stimulus.

European stocks started trading higher on Monday, but turned around in mid-morning trade after the German Ministry of Economy warned in its monthly report that industrial activity is subdued in part to weak global demand and that trade conflicts, geopolitical tension and the pending departure of the U.K. from the European Union were all key downside risks.

U.S. futures pointed pared earlier gains after the German economic report and pointed to a flat open. Dow futures gained 19 points, or 0.1%, by 5:46 AM ET (9:46 GMT), S&P 500 futures rose 2 points, or 0.1%, while Nasdaq 100 futures were little changed with a 3 point advance.

4. American Airlines extends Boeing 737 MAX cancellations for fourth time

American Airlines Group (NASDAQ:AAL) announced Sunday that it is extending cancellation of daily flights into early November due to the ongoing grounding of Boeing (NYSE:BA) 737 MAX jets.

The announcement came after a report from The Wall Street Journal on Saturday suggested that the grounding could run into next year.

The MAX fleet is not anticipated to return to service until January 2020, according to some Federal Aviation Administration officials and pilot-union leaders cited by the WSJ.

5. Gilead drops $5.1 billion in expanded partnership

Gilead Sciences (NASDAQ:GILD) said on Sunday that it will invest $5.1 billion to raise its stake in Belgian-Dutch biotech firm Galapagos (NASDAQ:GLPG) as part of a partnership to develop and commercialize its treatments for a ten-year period.

The investment in Galapagos will include an upfront payment of $3.95 billion and a $1.1 billion equity investment from Gilead, further cementing their relationship after the two partnered nearly four years ago to develop drugs that target inflammatory diseases.

The U.S. drugmaker will pay €140.59 ($158.49) per new share in Galapagos to increase its stake to 22% from 12.3%.

-- Reuters contributed to this report.

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