Daily Briefing: Oil and euro zone inflation take centre stage

Brent crude’s continued climb above $52 to its highest levels since late May now has it clocking year-on-year gains of about 24 percent, courtesy of slightly skewed base effects from this time last year. 

As a result its gains will remain on inflation-watchers’ radars and, if nothing else, remind everyone that price pressures have not disappeared altogether and the likelihood of a renewed deflation scare is pretty remote right now. 

Euro zone flash inflation numbers are due out later and are expected to show headline inflation in June coming in unchanged at an annual 1.3 percent in July, but with the core rate dipping to 1.1 percent from 1.2 percent last month. While there’s nothing in there to scare the European Central Bank either way right now, energy prices show the picture will be muddy at least for a few months. 

Another negative day for Wall Street stocks on Friday, following a number of high-profile earnings misses last week, has not rippled through world markets early Monday.  

Asia bourses were mostly positive, with Shanghai and HK stocks advancing after official Chinese business surveys were broadly in line with forecasts and showed ongoing growth in July of both manufacturing and service sectors. Tokyo and Seoul underperformed, with the latter on edge after North Korea on Friday launched its latest long-range missile into the seas off Japan. 

European stocks are expected to rise first thing. Earnings are set to dominate the session once again with some well-received results in Asia from HSBC, whose Hong Kong-listed shares have risen 2.7 percent after its pretax profit beat expectations and the lender also announced a share buyback of up to $2 billion. 

Sanofi and Heineken will also be in focus today. So far around 45 percent of MSCI Europe firms have reported Q2 results, 58 percent of which have either met or beaten analysts’ expectations, a figure which is slightly lower for euro zone firms, of which just over half have met or beaten expectations.  The dollar and Treasury yields were a touch  firmer, even though euro/dollar remained above $1.17 level it captured last week.