U.S. futures are hugging the flatline as investors maintain a cautious tone ahead of a two-day FOMC meeting on interest rate policy. The Federal Reserve is all but certain to keep interest rates on hold, acknowledging improved economic prospects, but offering few hints about its next move. Markets are also feeling pressure with oil at three-month lows and another round of second-quarter corporate earnings.
The Bank of England’s Martin Weale has changed his mind and now supports immediate stimulus for the U.K. economy at next week’s policy meeting. The pivot follows a series of negative business reports, culminating in last week’s poor PMI data. Only a week ago, the widely-followed policymaker called on the central bank to wait for “firmer evidence” before implementing more monetary easing.
Just two months before the yuan is to be included in the IMF’s Special Drawing Rights basket for the first time, the fund’s board has adopted a new methodology for calculating the amounts of its global reserve currencies. New weightings of the dollar, euro, yen and pound will be set on Sept. 30 and fixed for five years, pushing the yuan a step closer to being freely usable internationally.
Specialist Italian pension funds are considering a government request to pour money into a bank rescue fund, days before European stress tests are expected to show the country’s third-largest lender, Banca Monte dei Paschi (OTCPK:BMDPY), is in urgent need of capital. Italy is looking for ways to support struggling lenders without breaking EU state aid rules, but a deeper financial crisis could further undermine confidence in the eurozone’s fourth-largest banking sector.
Days before the Summer Olympics begin in Brazil, the country’s central bank will release June’s current-account figures. Brazil has a shrinking deficit, and the data could reflect potential damage from a recent strengthening of the real. While some athletes are staying away from the games this year due to Zika concerns, over 10,000 players are expected to participate.
The Democratic National Committee offered its “deepest and sincerest” apology to Bernie Sanders Monday evening in the wake of an email leak that revealed a bias towards Hillary Clinton throughout the campaign season. Sanders put the differences aside by urging his supporters to elect Clinton as president, saying he was “proud to stand with her” and branded Republican Donald Trump “a danger for the future.”
As the first oil major to report Q2 results, BP announced a loss that missed estimates due to lower refining margins and a multibillion-dollar charge relating to its 2010 oil spill. Replacement cost loss totaled $2.25B, compared with a loss of $6.27B a year earlier. Stripping out one-off items, the company’s underlying earnings fell to $720M from $1.3B. “We are very pleased to have finally drawn a line under the material liabilities for Deepwater Horizon,” said CEO Bob Dudley. BP -2.1% premarket.
Now that Yahoo has a buyer, what’s next for Marissa Mayer? “I plan to stay. I love Yahoo and am excited to see it into its next chapter,” she said during a conference call, while AOL (NYSE:VZ) CEO Tim Armstrong seemed to confirm “she will be running” the company. Mayer has already earned over $100M in reported compensation from the search giant over the past four years at the helm (and that doesn’t include the $55M she’s due if she steps down.) YHOO -1.2% premarket.
Pandora Media spiked 5.9% in the last two minutes of trading Monday, on a new report that the company has tapped Centerview to advise on strategic options. The firm was on the move again last week alongside the revelation that Liberty Media (NASDAQ:LMCA) had come to Pandora (NYSE:P) with a $15/share offer to buy the company, which it rebuffed. The rumors put shares at $13.
Amazon is partnering with the U.K. government to significantly expand drone testing, a move that could let the devices deliver packages to British homes far earlier than in the U.S. The agreement allows Amazon (NASDAQ:AMZN) to pilot its vehicles without a direct line of sight, trial its “sense and avoid” technology and permits operators to fly multiple drones at one time.
Responding to investor concerns about a slump in the pound, AB InBev (NYSE:BUD) has raised its bid for SABMiller (OTCPK:SBMRY) to £45 a share, from £44 previously, valuing the British brewer at £79B ($103B). It also increased the amount of cash for shareholders who choose a cash-and-stock alternative. The deal has already been approved by competition authorities in the U.S. and South Africa, leaving Chinese approval the last big antitrust hurdle to the combination.
Breaking up is hard to do! British telecom regulator Ofcom has called for BT’s broadband network – Openreach – to become a standalone company, but stopped short of calling for a complete separation. “This is a practical plan that can be implemented within months, unlike a sell-off of Openreach which would take years,” Ofcom chief Sharon White told BBC Radio 4’s Today program.
The Fed is readying new enforcement actions against Goldman Sachs (NYSE:GS) tied to an information leak between one of its New York employees and a Goldman banker two years ago, sources told the NYT. Goldman is expected to pay a new penalty to settle the charges and may see fresh actions against a former executive; it paid $50M to New York State two years ago due to ineffective supervision of banker Jason Gross.
Nike CEO Mark Parker’s total compensation nearly tripled to $47.6M for fiscal 2016 – compared with a year earlier – thanks to a big increase in stock awards tied to him taking over the chairman role from Phil Knight. Since becoming CEO in 2006, Parker has steered Nike (NYSE:NKE) to more than $32B in sales, more than double the level when he took over.
McDonald’s is seeking franchise partners for its restaurants in Malaysia and Singapore as part of its move to away from direct ownership and operation in Asia. The company is negotiating with “suitable candidates,” but did not provide any details or a timeline. According to Bloomberg, a sale of McDonald’s (NYSE:MCD) franchise rights in the two Southeast Asian markets could collectively fetch at least $400M.
The first round-the-world solar powered flight has been completed, after the Solar Impulse aircraft touched down in Abu Dhabi and finished a journey that began over a year ago. The ABB-engineered plane is no heavier than a car, but has the wingspan of a Boeing 747 (NYSE:BA). It’s powered by 17,248 solar cells, runs on battery power at night and has an average airspeed of 46 mph.
Deepening its European footprint in the ride-hailing business, Daimler’s (OTCPK:DDAIY) MyTaxi smartphone app will unveil an all-share merger with U.K. rival Hailo as soon as today, Reuters reports. In similar deals earlier this year, Volkswagen (OTCPK:VLKAY) took a $300M stake in Gett and General Motors (NYSE:GM) invested $500M into LYFT.
Tesla has doubled the labor force working on its $5B battery factory in the Nevada desert, aiming to meet demand for its coming Model 3. Now, 1,000 workers build seven days a week on two shifts in an effort to start churning out lithium-ion cells by late 2016. Elon Musk is set to inaugurate the Gigafactory with a media briefing today, followed by an exclusive tour and party for Tesla (NASDAQ:TSLA) customers on Friday.
Gilead Sciences (NASDAQ:GILD) -4.7% AH on disappointing Harvoni sales.
Kimberly-Clark (NYSE:KMB) -1.5% after weak guidance.
Las Vegas Sands (NYSE:LVS) +4.5% AH with a Macau turnaround.
Sprint (NYSE:S) +27.1% following record subscriber growth.
Texas Instruments (NASDAQ:TXN) +6% AH after beating expectations.
In Asia, Japan -1.4% to 16383. Hong Kong +0.6% to 22129. China +1.1% to 3050. India -0.4% to 27976.
In Europe, at midday, London +0.3%. Paris -0.1%. Frankfurt +0.2%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude -0.9% to $42.76. Gold +0.1% to $1320.60.
Ten-year Treasury Yield -1 bps to 1.55%
Today’s Economic Calendar
FOMC meeting begins
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
9:45 PMI Services Index Flash
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
10:00 New Home Sales
1:00 PM Results of $34B, 5-Year Note Auction
Companies reporting earnings today »