Australia

Australian shares are expected to drag this morning following gains in the US and losses in Europe. Chinese shares performed poorly following disappointing economic data, while financial stocks helped to lift US indices.

ASX futures were 19 points or 0.3% lower as of 7:00am on Tuesday, indicating losses at the open.

US stocks rose Monday, riding momentum from last week's encouraging reports on inflation and bank earnings.

Initially weighed down by data showing the Chinese economy barely grew in the second quarter, US stock indices gathered strength in early trading and then built on those gains as the day progressed.

The Dow Jones Industrial Average added 0.2%, or about 76 points. The S&P 500 rose 0.4%, while the tech-heavy Nasdaq Composite advanced 0.9%. Canadian stocks did not perform as strongly, however, as the S&P/TSX Composite shed 0.2%.

US stocks got a boost last week, finishing with gains by all three major indices, after data showed that the consumer-price index rose less than anticipated in June. That report was followed by similarly hopeful data on supplier prices. On Friday, the country's biggest banks reported better-than-expected earnings, buoyed by resilient consumer borrowing.

In commodity markets, Brent crude oil dropped 1.8% to US$78.46 a barrel while gold was little changed at US$1,954.91.

Australian government bonds were little changed, with the 2 Year yield slightly higher at 3.97% and the 10 Year yield hinting down to 3.98%. US Treasury notes were higher, with the 2 Year yield rising to 4.74% and the 10 Year yield increasing to 3.81%.

The Australian dollar dipped to 68.15 US cents from its previous close of 68.34. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, moved up to 94.86.

Asia

Chinese shares ended lower, extending morning losses after 2Q GDP data and a series of other economic indicators added to evidence of China's fading post-Covid recovery momentum. "More policy support is needed, particularly for the harder hit property sector, in order to push forward the recovery in the coming quarters," said HSBC economists in a research note. Consumer and property stocks weighed on the market. Shanghai Jahwa United dropped 3.9% and Poly Developments & Holdings Group declined 1.1%. The benchmark Shanghai Composite Index ended 0.9% lower at 3209.63, the Shenzhen Composite Index dropped 0.5% and the tech-heavy ChiNext Price Index fell 0.75%.

The Hong Kong stock market was closed Monday as Typhoon Talim threatened the city’s safety.

The Tokyo Stock Exchange of Japan was closed in observance of Marine Day.

Indian stocks ended higher, extending a winning streak for the third straight trading day. A risk-on sentiment has been gaining momentum recently amid easing worries over US inflation and the Federal Reserve's policy tightening. The benchmark Sensex index gained 0.8% to settle at 66589.93. Banks led gains, with State Bank of India climbing 2.8%, HDFC Bank up 2.1% and Kotak Mahindra Bank gaining 1.45%. IT-services providers further supported the market. Wipro rose 2.5%, Tech Mahindra added 1.2% and HCL Technologies inched up 0.2%.

Europe

European stocks fell after mostly lower trading in Asia and an expected negative open on Wall Street. The pan-European Stoxx Europe 600 dropped 0.6%, the German DAX backtracked 0.2% and the French CAC 40 slipped 1.1%. Luxury-goods stocks were among the biggest fallers after Compagnie Financiere Richemont first-quarter sales fell short of expectations.

Stocks in mainland China, Australia and South Korea closed lower after Chinese retail sales missed forecasts. "The data highlights the need for increased [Chinese] government spending, but it doesn't seem like Beijing is prepared to fulfill this need at the moment," IG analysts wrote.

The British FTSE 100 declined 0.4% to 7406 points, in line with European peers. The index was mainly dragged by miners as investors remained cautious ahead of the earnings season, IG Group chief market analyst Chris Beauchamp said in a note. "Equity markets have come a long way over the past half-year, and the optimists are hoping for a solid earnings season all around," he added.

Coca-Cola HBC was the worst performer in the index, with shares closing down 4.2%, followed by Flutter Entertainment and miner Glencore, down 3.4% and 2.8% respectively.

North America

US stocks rose Monday, riding momentum from last week's encouraging reports on inflation and bank earnings.

Initially weighed down by data showing the Chinese economy barely grew in the second quarter, US stock indices gathered strength in early trading and then built on those gains as the day progressed.

The Dow Jones Industrial Average added 0.2%, or about 76 points. The S&P 500 rose 0.4%, while the tech-heavy Nasdaq Composite advanced 0.9%. Canadian stocks did not perform as strongly, however, as the S&P/TSX Composite shed 0.2%.

US stocks got a boost last week, finishing with gains by all three major indices, after data showed that the consumer-price index rose less than anticipated in June. That report was followed by similarly hopeful data on supplier prices. On Friday, the country's biggest banks reported better-than-expected earnings, buoyed by resilient consumer borrowing.

While smaller and midsize lenders are not expected to show such strong results, banks of all stripes helped lead indices higher Monday. Shares of Wells Fargo, which on Friday reported a 57% jump in profit in the second quarter from a year earlier, rose 2.7%, while JPMorgan Chase gained 2.4%. The KBW Nasdaq Regional Banking index climbed 2%.

Telecom stocks fell sharply for a second consecutive session, reaching multiyear lows, amid continued fallout from The Wall Street Journal's investigation into toxic lead cables left behind by the companies.

Shares of AT&T sank 6.7% to $13.53, their lowest close since 1993, and Verizon shares fell 7.5% to $31.46, their lowest since 2010. The declines followed demands by environmental groups that the Environmental Protection Agency ensure "immediate removal" of all abandoned aerial lead-covered cables hung up on poles.

Despite the encouraging economic data recently, some investors remain cautious. The Federal Reserve is expected to continue raising interest rates at its meeting next week, and higher rates could still trip up the economy in ways that might not be widely expected, these investors argue.

"We did see some of that with the banking crisis in March, but the market seems to have forgotten all about that," said Celia Hoopes, a portfolio manager at Brandywine Global.

Other analysts, though, said that stocks could still have room to run if inflation continues to ease and the risk of a near-term recession recedes further.

Michael Antonelli, market strategist at Baird, said he would be closely watching earnings results in coming weeks to see how individual stocks respond to results that are better than expected.

If the stock of a company rises sharply in response to an earnings beat, he said, that would be a sign that "the market still has not priced in enough optimism about earnings."

After a quiet day on Monday, a clutch of major companies are scheduled to report earnings over the rest of the week, including Bank of America before the market opens on Tuesday, Tesla and Netflix on Wednesday, and the regional lender KeyCorp on Thursday.