Top 5 Things to Know in the Market on Monday

La Bourse de New York a ouvert vendredi en baisse dans la foulée de la séance de la veille après le relèvement largement anticipé des taux d'intérêt mercredi par la Réserve fédérale. La séance pourrait être marquée par une volatilité accrue en cette journée des "quatre sorcières", lorsque plusieurs contrats d'options et de futures sur indices et actions expirent. Le Dow Jones perd 0,83% dans les premiers échanges, le Standard & Poor's 500 recule de 0,68% et le Nasdaq Composite cède 0,37%. /Photo prise le 17 décembre 2015/REUTERS/Lucas Jackson – Here are the top five things you need to know in financial markets on Monday, July 29:

1. U.S.-China talks set to restart amid low expectations

U.S. and China trade negotiators are prepped to restart meetings in Shanghai this week after trade talks broke down in May.

Expectations for any major breakthrough are low although hopes may center on more details over “goodwill” gestures made since the G-20 truce. These include Chinese purchases of U.S. farm commodities and the U.S. allowing firms to resume some sales to China’s tech giant Huawei Technologies.

Concrete progress is still lacking with China’s U.S. soybean purchases hitting their lowest level in more than a decade while Washington said it would respond to requests for waivers to sell products to Huawei in the coming weeks.

U.S. President Donald Trump also showed no signs of backing down as he threatened to not recognize China’s status as a “developing country” at the World Trade Organization.

China said Monday that it hopes the U.S. will create positive conditions for the talks.

2. U.S. futures muted ahead of Fed decision

U.S. futures pointed to a flat open to start off the week ahead of the Federal Reserve’s two-day policy meeting that begins on Tuesday.

The Fed is widely expected to cut interest rates for the first time in more than a decade. Money markets have priced in a quarter percentage point rate cut, after expectations for a half percent cut briefly soared mid-month, before pulling back.

The Fed’s decision will likely overshadow other policy announcements by the Bank of Japan and the Bank of England which are both expected to hold steady.

Without making a move, the BoJ may reinforce its commitment to keep interest rates at record lows, while the BoE may offer its assessment of British economy’s current downturn, and how it might respond in the event of a hard Brexit.

The European Central Bank’s decision to hold last week gives the BoJ some breathing room amid a shift to a more dovish stance by central banks worldwide

3. Earnings season plows ahead

Investors can look forward to another slew of U.S. earnings this week with 170 companies listed on the S&P 500 set to report results, putting the global benchmark on track to pass the halfway mark.

76% of companies that have reported so far have beat profit expectations on 5.5% growth, while 62% has topped sales estimates on 4.4% growth, according to The Earnings Scout.

While markets will have to wait another day for Apple (NASDAQ:AAPL), arguably the star of the week, Booz Allen Hamilton (NYSE:BAH), Cooper Tire & Rubber Company (NYSE:CTB), Oil States International (NYSE:OIS) and Sanofi (PA:SASY) are among firms to release quarterly numbers ahead of Monday’s open.

Beyond Meat (NASDAQ:BYND), AK Steel (NYSE:AKS) and Arch Capital (NASDAQ:ACGL) are set to report after the market close.

4. Global M&A revs up

Corporate moves ramped up on a global level after London Stock Exchange Group (LON:LSE) said late Friday it was in discussions to buy Refinitiv Holdings Ltd in deal worth $27 billion including debt.

Pfizer (NYSE:PFE) was reportedly in talks to merge its off-patent drugs business with Mylan (NASDAQ:MYL).

Amsterdam-based online food delivery firm (AS:TKWY) has agreed to buy Just Eat (OTC:JSTTY) in an all-share deal valuing the combined group at about 8.2 billion pounds ($10.1 billion).

Southeast Asian ride-hailing firm Grab on Monday said it will invest $2 billion into Indonesia over five years using capital received from Japan’s Softbank Group Corp. (T:9984), which wants to increase its exposure to the region’s most populous market.

5. Pound slides to fresh 2-year low amid hard Brexit fears

The pound fell as far as $1.2322, its lowest level since Mar. 15, 2017, after Michael Gove, a senior figure in the new government, indicated that there is now a “very real” possibility of the U.K. crashing out of the European Union on Oct. 31 without transitional arrangements.

Hopes of reaching a last-minute deal faded further as British Foreign Secretary Dominic Raab said that it was the EU that needed to change its “stubborn” position to avoid a no-deal break.

Newly appointed U.K. Prime Minister Boris Johnson has no plans to visit EU capitals this summer, according to the Daily Mail.

— Reuters contributed to this report.