US equity futures rebounded from the latest China regulatory scare which saw shares of Tencent plunge as much as 11% after Chinese state media criticized online gaming as “opium for the mind,” fueling investor concerns that the companies’ popular games could be swept up into a broader regulatory crackdown. As China watcher Victor Shih noted, this showed that “even when you comply with every party dictate, you can be labeled an ‘opium’ or ‘poison‘.” But even though Eminis dipped briefly below 4380 when the Tencent news hit overnight, they have since rebounded and were trading up 15.50 or 0.35%, rising to 4,395. Dow futures were up 160 points or 0.461% and Nasdaq futs added 0.08% or 11 points.

Here are some of the biggest U.S. movers today, courtesy of BBG:

• Clorox (CLX) falls 8.5% after the household products company reported net sales and adjusted earnings per share for the fourth quarter that missed even the lowest analyst estimate.
• CureVac (CVAC) Arcturus Therapeutics (ARCT) both climb after Sanofi said it plans to buy Translate Bio for $38 a share.
• Eli Lilly & Co. (LLY) falls 1.7% after reporting second-quarter adjusted earnings that missed analysts’ estimates.
• HollySys Automation (HOLI) surges 18% after announcing its board is studying a nonbinding offer of $23/share in cash from Superior Emerald (Cayman).
• International Game Technology (IGT) jumps 9% after the company’s second- quarter results handily beat the average analyst estimate.
• Micron Technology (MU) rises 2% as some analysts say the first quarterly dividend is a sign of increased stability.
• NetEase (NTES) U.S.-listed shares slide 8.6% in premarket trading after China’s official news agency decried Tencent Holdings the “spiritual opium’; and “electronic drugs” of games.
• Outlook Therapeutics (OTLK) rallies 39% after announcing positive clinical and top-line results from its pivotal Phase 3 Norse Two safety and efficacy trial.
• Perion Network (PERI) gains about 6% after reporting adjusted earnings per share for the second quarter that beat the average analyst estimate.
• Processa Pharmaceuticals (PCSA) rises 24% after gaining its third bullish rating with an initiation by Oppenheimer, which calls the clinical-stage company “undercovered and undervalued.” The firm’s Street-high price target is 233% higher than Monday’s close.
• Reynolds Consumer Products (REYN) dips 4% as the maker of aluminum foil cut its adjusted 2021 earnings per share forecast due to what RBC’s Nik Modi called “hefty” cost pressures.
• Take- Two Interactive Software (TTWO) falls 4% as analysts say the lack of a full-year forecast boost will disappoint investors.
• Translate Bio (TBIO) shares jump 29% after the firm agreed to be acquired by Sanofi.
• ZoomInfo (ZI) gains 12% after the marketing company posted a beat-and-raise quarter.

The big story overnight was China’s latest crackdown in which the XInhua-affiliated Economic Information Daily cited Tencent’s “Honor of Kings” in an article in which it said minors were addicted to online games and called for more curbs on the industry. The broadside re-ignited investor fears about state intervention in China after Beijing had already targeted the property, education and technology sectors to curb cost pressures and reassert the primacy of socialism after years of runaway market growth.  “They don’t believe anything is off limit and will react, sometimes overreact, to anything on state media that fits the tech crackdown narrative,” Ether Yin, partner at Trivium, a Beijing-based consultancy.

In response, China’s Tencent Holdings said on Tuesday it would further curb minors’ access to its flagship video game, hours after its shares were battered by a state media article that described online games as “spiritual opium”, but the company’s did little to help its stock recover from a rout as large as 11%, as China’s largest social media and video game firm saw almost $60 billion from its market cap.

Not surprisingly, Chinese gaming stocks listed in the U.S. slump in premarket trading; among the biggest gaming-related stocks falling this morning, NetEase sinks 8.8%, Bilibili falls 6.6%, Huya declines 4.9% and DouYu International slides 6.1% as of 6:42am in New York, Other large-cap Chinese stocks are also lower in U.S. premarket trading: Alibaba -0.7%, Pinduoduo -1.6%, JD.com -1%, Baidu -0.8%, Didi -1.6%.

Stocks in Europe extended a record advance on Tuesday pushing higher after a soft start as positive earnings from some of the region’s biggest companies helped offset fresh concerns about China’s clampdown on the gaming and technology sector. The Euro Stoxx 50 reversed a 0.3% loss to trade up 0.1%. Oil & gas, household & personal goods and banking names are the strongest sectors; travel and tech weigh. CAC 40 gains 0.9% to outperform peers. Energy shares led Stoxx Europe 600 index gains after BP Plc increased dividends and share buyback following similar announcements by other Big Oil peers. BMW AG also joined peers with strong earnings but said it sees a more volatile second half due to a global chip shortage disrupting vehicle production. On the other end, tech stocks were among the biggest losers, with Prosus NV plunging as much as 5.7% after Chinese Internet giant Tencent Holdings Ltd. – in which it holds a stake – slumped on fears the authorities will set their sights on online entertainment next. A new Chinese pricing probe weighed on chipmakers, with Infineon Technologies AG’s profit miss adding to worries. Evolution AB, a maker of online casino games, led declines in the travel and leisure gauge.

Here are some of the biggest European movers today:

• Societe Generale shares rise as much as 6%. The bank’s 2Q results look strong, with net income coming in 68% ahead of consensus, according to Jefferies (buy).
• Galenica soars as much as 6.4% to a record after results that Vontobel says contained “blow-away” numbers driven by pandemic tailwinds.
• Stellantis gains as much as 5.3% in Milan trading; Oddo BHF refers to an “astonishing” 1H performance with the carmaker “clearly” beating all expectations, even the most bullish ones.
• Rotork falls as much as 9.7%, the most since March 2020, with 1H results overshadowed by the departure of its CEO.
• BMW declines as much as 4.5% after 2Q results, which Morgan Stanley (underweight) says were “very strong,” though the broker continues to prefer peers Daimler and Volkswagen.
• Smiths Group falls as much as 9.5%, the most since March 2020, after the U.K. group sold its medical unit, with the total valuation slightly below consensus, according to RBC (outperform).

Earlier in the session, Asian stocks were mixed as a selloff in Tencent offset gains in chip shares, with concerns about the delta variant’s spread also weighing on broader sentiment. The MSCI Asia Pacific Index was little changed, with Samsung and TSMC climbing after strong monthly sales data for the industry overnight. Indian shares also boosted the benchmark, with the country’s key gauges setting fresh record highs as investors bet that Asia’s third-largest economy will keep the stimulus taps flowing to recover from a deadly wave of the virus.

Tech stocks listed in Hong Kong including Tencent felt the heat after a state media commentary ignited fears that online entertainment could be Beijing’s next target amid a crackdown on the nation’s internet giants. A resurgence in virus cases also dampened sentiment across the region, with Sydney struggling to handle record-matching local Covid cases and China battling fresh outbreaks in a number of provinces including Wuhan. There are signs “that things are decelerating faster-than-expected and that the global economy may be starting to feel more of a headwind thanks to the delta variant,” said Ilya Spivak, head of Greater Asia at DailyFX. Overall, a seasonally tough month also awaits Asia equity traders if history is a guide — August has been the second-worst performing month of the year over the last decade. On Tuesday, equity gauges in Japan and Singapore fell the most. The Australian measure also posted modest declines as the country’s central bank kept its key interest rate and three-year bond yield target unchanged.

In rates, treasuries drifted lower over early European session, tracking losses in bunds and gilts. The 10-year U.S. Treasury yield edged around 2bps higher after falling as low as 1.15%; the move steepened 2s10s, 5s30s by 1bp each. Higher S&P futures also added pressure on rising yields, following gains across European stocks amid positive earnings results. Germany’s 10-year yield fell to its lowest since early February at -0.486%. It was last up less than a basis point at -0.47%. Its 30-year yield, which turned negative and sent the whole German yield curve into negative territory on Monday, was hovering around 0%.

“There is some definite downside bias in the dollar now,” said Vasileios Gkionakis, Global Head of FX Strategy at fund manager Lombard Odier in Switzerland. “You are starting to a see a rotation of growth away from the U.S.”

According to strategists the months-long advance in Treasuries which saw 10Y real yields drop to fresh record lows on Monday, points to worries that a weaker period lies ahead for the economic reopening from the health crisis, though second-quarter corporate earnings have been robust for the most part. Traders are awaiting key U.S. jobs data this week to gauge the recovery and monitoring the impact of price pressures sparked by pandemic-related disruption and bottlenecks.

“I don’t think the market is concerned about delta as much as it’s concerned about how it impacts inflation,” Shana Sissel, Spotlight Asset Group chief investment officer, said on Bloomberg Television, referring to the coronavirus variant. “The longer we have delta spread globally, the longer the supply chain disruptions will continue.”

Meanwhile, on the policy front, the tapering debate continues. Federal Reserve Governor Christopher Waller said he could back a tapering announcement by September, if the next two monthly U.S. employment reports show continued gains.

In FX, the Norwegian krone and New Zealand’s dollar led an advance against the greenback; the Canadian dollar retreated, underperforming its peers. The euro eked out an advance to a session high of 1.1885 per dollar; the pound climbed back above $1.39 and gilts halted a three-day gain as caution reigns ahead of Bank of England’s meeting on Thursday. The Australian dollar jumped after the nation’s central bank said it will stick to its tapering plan, arguing that the economy will rebound from the latest virus outbreak. Traders rushed to close short positions on the Aussie after the Reserve Bank of Australia decision on Tuesday, according to Asia-based FX traders. Existing AUD/NZD flows after the RBA decision propelled New Zealand’s dollar to a new session high.

Australia’s currency advanced after its central bank kept a plan to taper bond purchases despite a protracted lockdown in Sydney.

In commodities, crude oil reversed earlier losses as sentiment improved in broader markets even though the spread of the delta coronavirus variant, including in the key market of China, continues to pose a risk to demand. Brent crude was up 33 cents in London at $73.28 per barrel. U.S. crude inched up to $71.56 a barrel while gold and industrial metal copper were both slightly lower at $1,810.45 per ounce and 9,594.50 a tonne respectively.

Looking at the day ahead, this morning the only data due out is the June PPI print for the Euro area. This afternoon in the US June factory orders and final June revisions for durable and capital goods orders are expected as well as July vehicle sales data. Away from that the Fed’s Bowman is due to speak this evening while it’s another busy day for earnings with the likes of BP, ConocoPhillips, BMW and Amgen amongst those reporting.

Market Snapshot

• S&P 500 futures up 0.3% to 4,393.75
• STOXX Europe 600 up 0.3% to 465.71
• MXAP little changed at 200.70
• MXAPJ up 0.2% to 662.96
• Nikkei down 0.5% to 27,641.83
• Topix down 0.5% to 1,931.14
• Hang Seng Index down 0.2% to 26,194.82
• Shanghai Composite down 0.5% to 3,447.99
• Sensex up 1.1% to 53,540.62
• Australia S&P/ASX 200 down 0.2% to 7,474.48
• Kospi up 0.4% to 3,237.14
• Brent Futures up 0.4% to $73.21/bbl
• Gold spot down 0.1% to $1,810.94
• U.S. Dollar Index little changed at 91.96
• German 10Y yield rose 2.1 bps to -0.466%
• Euro up 0.1% to $1.1884

Top Overnight News from Bloomberg

• For the first time in more than five years, the U.S. Treasury in coming months will be scaling back its mammoth quarterly sales of notes and bonds, Wall Street dealers say — in a shift so large it’s likely to more than counter the Federal Reserve’s looming reduction in purchases.
• China Huarong Asset Management Co., the country’s bad-debt manager that has roiled markets with doubts about its future, will exit one unit and restructure another to focus on its core businesses as it seeks to shore up its finances
• Federal Reserve Governor Christopher Waller said that if the next two monthly U.S. employment reports show continued gains, he could back an announcement soon on scaling back the central bank’s bond purchases
• Bank of England officials who favor patience on scaling back stimulus will likely dominate the policy discussion this week, with risks to the labor market recovery outweighing a surge in inflation

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac equities adopted a cautious tone after the majors on Wall Street gave up earlier gains, whilst a hawkish tilt by Fed Governor Waller added to the gloom across equities. The S&P 500, DJIA, and R2k ended the day with mild losses whilst the Nasdaq clung on to modest gains with the aid of the softer yields. US equity futures overnight resumed trade with mild broad-based gains but thereafter drifted lower as losses across Chinese markets dampened sentiment. The Hang Seng (-0.2%) and Shanghai Comp (-0.4%) rebounded off worst levels after initially tumbling over 1% apiece amid renewed woes over Beijing crackdowns, with the Chinese gaming sector hit hard on the back of commentary from China’s Economic Information Daily calling online gaming a widespread addiction and warning of health impacts. Tencent and NetEase shares plunged 8% and 10% respectively at the open and extended their declines, whilst the Hang Seng Tech index fell over 3%. Focus also turns to global online gaming names (Microsoft, Activision Blizzard, Electronic Arts, Ubisoft) and CPU/GPU manufacturers (Nvidia, AMD, Intel) as China is estimated to be the largest consumer of games. Elsewhere, the ASX 200 (-0.2%) was pressured by losses in its heavyweight mining sector as growth concerns weighed on base metals, but losses deepened in a knee-jerk reaction after the RBA unexpectedly opted to stick to its QE taper plans. The Nikkei 225 (-0.5%) traded with losses following the prior day’s rally, with industrial and mining names pressuring the index, whilst gaming names Sony, Nintendo, Konami and Bandai Namco all retreated after getting caught in China’s crackdown crossfires. The KOSPI (+0.4%) meanwhile conformed to the caution tone across the region, and with geopolitical tensions on the radar as Seoul and Washington gear up for annual military drills.

Top Asian News

• China High-Yield Dollar Bonds Rally, Led by Property Firms
• BOK Minutes Indicate Growing Support for Rate Hike This Year
• Immoral to Blame Schools, Game Cos. or Parents Alone: China News
• SOHO China Surges Amid Speculation Blackstone Deal May Progress

European equities (Eurostoxx 50 +0.1%) trade marginally firmer after a cautious start to the session, which followed on from a similar APAC lead. Macro developments from a European perspective remain light. However, the broader backdrop continues to be clouded by further crackdowns in Beijing with Chinese market regulators launching an investigation into auto chip distributers for price manipulation. Additionally, China’s Economic Information Daily called online gaming a widespread addiction and warned of health impacts, something which hampered gaming names in the region; note, these reports were later walked back. Nonetheless, the travel and leisure sector is the European laggard given the heavy weighting of gaming names such as Evolution Gaming (-3.7%). Elsewhere, the tenor of developments in the central banking sphere have leaned hawkishly amid comments from Fed’s Waller, RBA continuing with taper plans and the RBNZ tightening lending standards to reduce risks associated with excessive mortgage borrowing. Stateside, futures are broadly firmer with outperformance in the RTY (+0.7% vs. ES +0.3%, NQ +0.1%). In a recent note, analysts at Citi have highlighted that positioning for the Nasdaq 100 remains one-sided and very extended net long, leading to an asymmetric risk from current positioning. Back to Europe, sectors are mostly firmer as earnings reports dictate some of the divergences across industries. To the upside, Oil & Gas names lead the charge higher in the wake of earnings from BP (+5.1%) who reported a beat on net income expectations and an increase in its dividend. Banking names have been supported by earnings and an increase to FY guidance from SocGen (+5.6%), whilst Standard Chartered (+2.8%) are gaining to a lesser extent after positivity from its dividend announcement was mitigated by cautious commentary. For the auto sector, Stellantis (+5.8%) are one of the top performers in Europe after raising guidance alongside earnings, whilst its German competitor BMW (-4.2%) lags after concerns over the impact of the global chip shortage overshadowed encouraging Q2 earnings; as such, the sector is little changed. Finally, Tech names are seen lower on the session amid losses in Infineon (-1.1%) as it struggles to battle with tight market conditions.

Top European News

• Naspers and Prosus Drop on Latest China Regulatory Concerns
• Richter Operating Profit Surges, CEO Sees Higher Ebit Margin
• Zurich Near Deal for Deutsche Bank’s Italian Advisers Unit
• Ukraine Sees Better Odds of IMF Deal After Georgieva Call

In FX, the RBNZ stole the limelight from the RBA overnight in some respects, and certainly in terms of price action given that the Kiwi is securing a firmer grasp of 0.7000 vs its US rival than the Aussie on the 0.7400 handle, while the Aud/Nzd cross is straddling 1.0550 ahead of NZ jobs data. In short, the former signalled its intent to tighten lending standards in an effort to reduce the risks associated with excessive mortgage borrowing, as NZ house prices are above their sustainable level in advance of the latter confounding expectations and sticking to its plan to taper QE from next month.

• DXY/GBP – In contrast to the bullish reaction down under, the Dollar has derived little or nothing from the hawkish leanings of Fed’s Waller who argues that with inflation running well above the 2% target an announcement on taper could come in September for an October start, and the FOMC should do it early and fast in order to be in position to increase rates in 2022, if needed. In fact, the Buck is still on the back foot against almost all major counterparts and EM currencies, as the index continues to pivot 92.000 and skirt round numbers vs several G10 peers, like the Pound either side of 1.3900 in the run up to ‘super’ BoE Thursday and NFP the day after.
• EUR/JPY/CHF/CAD – The Euro and Yen remain restrained just below 1.1900 and 109.00 respectively, with offers into the psychological levels keeping both in check, but the former well supported around 1.1850 where decent option expiry interest sits (1.6 bn between 1.1855-40 to be precise), while the latter is gleaning traction from a relatively favourable yield backdrop and fragile risk sentiment to offset Japan’s deteriorating COVID-19 situation. Elsewhere, the Franc is straddling 0.9050 again and taking marked improvements in Swiss consumer sentiment largely in stride, but the Loonie is lagging within 1.2489-1.2526 extremes in the run up to Markit’s Canadian manufacturing PMI and veering further away from 1.3 bn option expiries at 1.2480 regardless of relative stability in crude prices.

In commodities, a firmer start to the session for crude benchmarks although newsflow specific to the complex has been minimal aside from energy updates on a slim schedule where private inventories will be the highlight. Currently, WTI and Brent are firmer by USD 0.50/bbl, but well within yesterday’s parameters. This morning saw the Q2/half-year update from BP on the oil market the major looks for a continuation of the rebalancing process and for demand to recover throughout the year. Currently, they expect a return to pre-COVID demand levels in H2-2022. For Brent, there H2-2021 forecast is USD 60/bbl and upgrade from the USD 50/bbl expected for 2021 at the time of their FY20 earnings; further out, the 2025 view is lifted by USD 10/bbl to USD 60/bbl and 2030 maintained at USD 60/bbl. Returning to the private inventories, expectations for both tonight’s release and tomorrows EIA report looks for a headline crude draw of 2.9mln and draws for both distillate and gasoline as well; albeit, at the comparatively smaller 0.2mln and 1.4mln respectively. Moving to metals, spot gold and silver are diverging slightly around the unchanged mark though price action has been very contained throughout the European morning and spot gold continues to retain the USD 1800/oz handle. While copper prices are softer at present in a break from the overnight performance and following yesterday’s gains in the European session on Chile strike concerns, on which no updates have arisen thus far. As such, the metal has retreated further from the USD 10k/T mark, but is off the current sessions low of circa USD 9.5k/T.

US Event Calendar

• 10am: June Factory Orders, est. 1.0%, prior 1.7%
  • June Factory Orders Ex Trans, prior 0.7%
• 10am: June Durable Goods Orders, est. 0.8%, prior 0.8%
• 10am: June Cap Goods Ship Nondef Ex Air, prior 0.6%
• 10am: June Cap Goods Orders Nondef Ex Air, prior 0.5%
• 10am: June -Less Transportation, est. 0.3%, prior 0.3%

DB’s Jim Reid concludes the overnight wrap

The first business day of August was slightly starved of newsflow but sentiment progressively weakened as the day developed with the S&P 500 last night closing -0.18% as yields again dipped. Indeed 10y treasuries fell nearly 10bps from London open to the London close by which time they had dipped below 1.15%. They eventually closed at 1.178% and down -4.6bps on the session. The decline was almost entirely driven by a fall in breakevens of -4.06bps with real yields also a touch softer at -1.182% (-0.5bps). Meanwhile in Europe 10y Bunds were -2.6bps and are now at a new six-month low of -0.487%. It’s worth noting also that 30y Bunds turned negative for the first time since February 5th, closing at -0.013%. So if you want to lend the German government money until 2050 then you currently have no annual coupon and will get back a small amount less than you lent them. I would say don’t all rush at once but it’s clear that there’s already been a stampede.

The largest part of the bond market rally seemed to stem from the ISM report (more on the details below). Not even comments from the Fed’s Waller suggesting he could back a taper soon made much difference. He said on the jobs report that “… if they come in as strong as the last one, then I think you have made the progress you need. If they don’t, then I think you are probably going to have to push things back a couple of months.” He went on to say that he would be comfortable with a 5-6 month taper if the labour market proves strong. This highlights the importance of this week’s and early September’s payroll numbers. There is obviously a fair amount of disagreement at the Fed even if the doves definitely hold court at the moment. The bond market is certainly following them for now.

Back to Europe and the STOXX 600 finished +0.59% and the DAX +0.16% as sentiment in Europe held up. The VIX ticked higher, closing up +1.22pts at 19.46, slightly below the YTD average still.

A quick refresh of our screens this morning shows that Asian markets are trading on the weaker side with the Nikkei (-0.84%) and Hang Seng (-0.95%) down while the Shanghai Comp is flat and the Kospi (+0.07%) slightly higher. Not helping sentiment, the Economic Information Daily, an outlet run by the Xinhua News Agency, has carried a commentary this morning calling online gaming as “spiritual opium” and “electronic drugs” which in turn seems to be stoking concerns that China might target the online entertainment industry next in its regulatory crackdown. This has caused shares of Tencent Holdings to slip as much as -11% on the Hang Seng index. In other overnight news, the RBNZ Deputy Governor has said in a statement that the central bank is planning to reduce the amount of low-deposit lending banks can make from Oct. 1, and will also consider introducing debt-to-income limits and/or interest-rate floors later this year, to cool off New Zealand’s hot property markets. This is also leading to market participants pricing in an early hike from the RBNZ and as a result the NZ dollar is up +0.60% this morning.

We also saw the RBA rate decision this morning where the central bank decided to keep its taper plan intact (after September) as against the market expectations of a delay while keeping the cash rate and yield target unchanged. The central bank though added that it will continue to review the bond purchases program “in light of economic conditions and the health situation, and their implications for the expected progress towards full employment and the inflation target.” So they could still change the taper plan if things worsen. The Australian dollar is up +0.56% after the decision. Outside of Asia, futures on the S&P 500 are up +0.17% while those on the Stoxx 50 are down -0.32% as they try to catch up with yesterday’s late move in US markets. Yields on 10y USTs are broadly flat.

Back to yesterday, and ahead of a reasonably busy data week it was the July ISM manufacturing report in the US that garnered the most attention and took some of the wind out of the sails of equity markets. While still elevated, the 59.5 headline reading is the lowest since January and was down 1.1pts from June and also well below expectations for 61.0. However the details were better than the headline suggested with both new orders (64.9 vs. 64.2 expected) and employment (52.9 vs. 51.7 expected) bettering expectations. Notably we also saw a bigger than expected drop in the prices paid component, of 6.4pts to 85.7 compared to expectations for 89.0. Its difficult to gauge the true momentum in the US economy as the report strongly hints at supply constraints still being a big issue. It’s also worth noting that the manufacturing PMI out shortly before the ISM was less exciting with the 63.4 print revised up 0.3pts from the flash.

In Europe the focus was also on the final July manufacturing PMI revisions. The Euro area reading was revised up slightly from 62.6 to 62.8 which marks a slight decline from the recent record high of 63.4 in June. Germany was revised up 0.3pts to 65.9 while France was revised down 0.1pts to 58.0. As for the periphery, Spain (59.0 vs. 59.5 expected) and Italy (60.3 vs. 61.5 expected) both disappointed. In the UK there was no changes to the data, with 60.4 confirmed for July and therefore the second consecutive monthly decline, albeit a still very high reading.

Staying with the UK, Chancellor Sunak confirmed that the government has no plans to extend furlough which shouldn’t come as a great surprise. Interestingly the latest ONS furlough data showed only a modest fall in furlough in early July, which suggests that it’s getting stickier as the scheme starts to unwind. Worth keeping an eye on how this evolves when we get data covering ‘Freedom Day’. Meanwhile, confirmed covid cases in the UK yesterday were 21,952 which is down 12% on the week.

In terms of other pandemic related developments, the head of US FDA has said that the agency is working quickly on Pfizer’s application for full approval of its vaccine and added that the country is experiencing a “very real fourth wave.” Full approval will likely help to reassure vaccine holdouts that the shots are safe while also making it easier for more schools and workplaces to put immunisation mandates in place. Given the recent surge in cases, San Francisco and its surrounding counties have reinstated mask requirements in indoor public spaces for all individuals, regardless of vaccination status. Across the other side of the world, the spread of the delta variant seems to be expanding in China as the country reported a total of 90 cases across several regions and in Beijing, where local authorities have discouraged people from traveling.

In terms of the day ahead, this morning the only data due out is the June PPI print for the Euro area. This afternoon in the US June factory orders and final June revisions for durable and capital goods orders are expected as well as July vehicle sales data. Away from that the Fed’s Bowman is due to speak this evening while it’s another busy day for earnings with the likes of BP, ConocoPhillips, BMW and Amgen amongst those reporting.