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China looks set to monopolize the headlines on Monday, with the market reacting to news that the World’s second largest economy could be holding considerably less gold than previously expected. The precious metal coincidently fell sharply pre market with rumours of a fund divesting its holdings. Analysts have cited renewed US dollar and economic sentiment for recent range bound movements. In other news, Chinese officials over the weekend confirmed that they would be implementing tight controls on informal lending, in an effort to stabilize equity market volatility.
On the macro front, a relatively quiet week ahead with the Housing Price Index, and Existing Home Sales on Wednesday, Initial Claims, Continuing Claims and Leading Indicators on Thursday and June New Home Sales on Friday.
Dow futures are pointing to a solid rise on the open on Monday with investors awaiting key earnings from blue chips Morgan Stanley, IBM and Halliburton. Renewed market vigour coupled with record breaking gains on the Nasdaq could see the Dow Jones push higher. Greek banks look set to open for the first time in three weeks, with new controls placed on withdrawal limits. In light of the bailout agreement, account holders will now be able to access €420 a week. German Chancellor Merkhel and Prime Minister Tsipras have confirmed that these limits could rise further if aid talks occur this week.
No important economic news will be released during the session..
Investors will be analyzing comments from Microsoft CEO Satya Nadella on Tuesday, with the market looking for revenue growth in their cloud services. The company has recently shifted its focus from the traditional PC platform software model to capitalize on the growth in the mobile and cross device market.
Existing Home Sales could be an important economic growth metric with the market expecting a slight rise in June. This will follow the release of the MBA Mortgage Index and the FHFA Housing Price Index during the morning session.
Initial Claims, which measures jobless benefit filings; will be released on Thursday with economists looking for a figure in the range of 278,000 to 279,000. Continuing Claims however are forecast to rise for the period.
Rounding out the week on the economic front will be New Home Sales, with a slight rise from the previous period expected. Earnings will once again command headlines with American Airlines, Moody’s, Rockwell Collins and State Street to report.
Attention will shift away from Greece this week, with company earnings stepping up a gear. Markets will also have one eye on China, after the announcement over the weekend of the implementation of new stabilization measures.