Here are the top five things you need to know in financial markets on Thursday, July 25:



1. ECB takes spotlight among central bank activity

The European Central Bank will announce its monetary policy decision at 7:45 AM ET (11:45 GMT) amid speculation over a cut to its key deposit rate, currently at -0.4%. The likeliest alternative is that President, Mario Draghi signals a cut in September with a change to the bank's guidance.

Weak Eurozone business surveys released this week, not least another drop in the closely watched German Ifo index this morning, have strengthened the case for ECB action already today.

The ECB's announcement comes against a global backdrop of easier monetary policy, with the U.S. Federal Reserve widely expected to cut interest rates next week.

Reserve Bank of Australia Governor Philip Lowe said overnight that it was “reasonable to expect an extended period of low interest rates”, barely a month after cutting the country's key interest rate to an all-time low.

Ahead of the ECB announcement, Turkey is forecast to announce a big cut to its policy rate at 7:00 AM ET (11:00 GMT). President Recep Tayyip Erdogan - who recently fired the last central bank governor - has reportedly asked for a 3 percentage point cut.


2. Dollar hovers near 1-month high thanks to rivals' weakness

Even though markets fully expect a quarter-point reduction to U.S. interest rates on July 31 and place odds at more than 25% for a 50 basis point cut, weakness in the U.S. dollar’s major rivals has seen the greenback rise for a fifth straight session to hover near a one-month high reached on Wednesday.

Expectations for a dovish ECB announcement, the RBA’s cautious guidance and fears of a hard Brexit after Boris Johnson took over as prime minister in the U.K. have all put pressure on their respective currencies.

Traders in the greenback will still keep an eye on U.S. economic data due at 8:30 AM ET (12:30 GMT). June durable goods orders and weekly jobless claims will be watched for their potential impact on Fed policy.


3. Facebook leads tech earnings parade

Shares in Facebook (NASDAQ:FB) were up nearly 2% in premarket trade after it managed to top earnings expectations thanks to better-than-expected average revenue per user.

Chief Financial Officer David Wehner officer warned, however, that revenue growth could decelerate in the coming quarters.

The earnings news came after the Federal Trade Commission announced a $5 billion settlement with Facebook (NASDAQ:FB) in an agreement that will require the company to establish an internal privacy oversight committee.

The U.S. Department of Justice meanwhile is investigating whether big technology companies - likely including Facebook (NASDAQ:FB), Google (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) - are engaged in anticompetitive behavior, addressing a rising tide of criticism that they have become too powerful, to the detriment of consumers.


4. Tesla, Ford results hit sentiment in swirl of auto sector news

Shares in Tesla (NASDAQ:TSLA) tumbled more than 10% in premarket trade after the company once again pushed back its timeline for reaching profit. The company's net loss was bigger than expected and it also announced that battery pioneer J.B. Straubel will step down from his role as chief technology officer.

The quarterly loss was deeper than expected, and despite record deliveries in the quarter, revenue came in lighter than analysts' expectations.

Shares in Ford (NYSE:F) sank as second-quarter profit missed consensus and the company offered weaker-than-expected full-year guidance.

Japanese rival Nissan (T:7201) also said it would cut 12,500 jobs worldwide, a 2,500 increase to the previously announced number, after quarterly profits plunged by 98.5%.

Shares in German automaker Volkswagen (DE:VOWG_p) bucked the trend with an increase in second-quarter operating profits by 10%, but its shares still slipped.

Elsewhere, Toyota (NYSE:TM) announced a $600 million investment in Chinese ride-hailing giant Didi Chuxing and a new joint venture to expand collaboration with the firm in China.


5. U.S. futures mixed ahead of next round of earnings

U.S. futures pointed to a mixed open on Wall Street as traders prepped for another round of earnings.

With 138 S&P 500 firms having reported earnings as of Wednesday’s close, The Earnings Scout countered fears of a potential earnings recession, saying that, so far, “S&P earnings growth has certainly slowed, but it’s not negative."

Shares of Anheuser Busch Inbev (NYSE:BUD) jumped 6% in premarket trade after the brewer of Budweiser beat consensus, registering its fastest growth in beer sales in more than five years in the second quarter.

Still to come, 3M (NYSE:MMM), Bristol-Myers Squibb (NYSE:BMY), Comcast (NASDAQ:CMCSA) and Dow (NYSE:DOW) will report before the bell. After the market close, Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) release quarterly earnings.


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