Here are the top five things you need to know in financial markets on Tuesday, July 23:



1. Trump pens deal with Congressional leaders over debt ceiling

U.S. President Donald Trump reached a deal over the debt ceiling with congressional leaders overnight that paves the way for more government spending through at least 2021.

The agreement, which still must be ratified by both chambers of Congress, would clear the path for hundreds of billions in new spending and avoid the threat of a government shutdown.

The increase in the debt ceiling included in the two-year budget neuters it as an issue for the 2020 presidential campaign. House Speaker Nancy Pelosi admitted that avoiding a stock market crash was a key consideration behind the agreement.


2. Earnings flood from the real economy

With approximately 25% of the S&P 500 releasing earnings this week, reports will accelerate on Tuesday with a slew of top names.

Coca-Cola (NYSE:KO), Travelers (NYSE:TRV) and United Technologies(NYSE:UTX) will be the Dow components reporting ahead of the open, along with other notable stocks such as Lockheed Martin (NYSE:LMT), Biogen (NASDAQ:BIIB), Harley-Davidson (NYSE:HOG), Kimberly-Clark (NYSE:KMB) and Fifth Third Bancorp(NASDAQ:FITB) (NASDAQ:FITB).

After the market close, Visa (NYSE:V) will take the Dow baton, while bellwether Texas Instruments (NASDAQ:TXN), Chipotle Mexican Grill (NYSE:CMG) and Snap(NYSE:SNAP) will also release earnings.

Out of the 85 S&P 500 firms that had reported earnings by Monday, 76% had beaten profit forecasts, while 65% topped consensus on sales, according to The Earnings Scout.


3. U.S. futures point to higher open ahead of earnings

U.S. futures pointed to a slightly higher open on Tuesday as the debt ceiling deal supported risk appetite, averting a possible liquidity squeeze later in the year that could have hit markets unduly.

Global stocks in general stayed in positive mood, lifted by earnings reports and by expectations that the Federal Reserve and European Central Bank will begin to ease policy.

The Federal Reserve is widely expected to cut rates at the end of the month, while some are expecting the European Central Bank to cut its deposit rate by 10 basis points this Thursday. The Bank of England, too, appears to have backtracked on its previous warnings about a possible need for higher rates. Michael Saunders, considered one of the BoE's most hawkish policymakers, told Bloomberg that he was concerned that the U.K. might not achieve a smooth exit from the European Union, suggesting he may have changed his mind about pushing rates higher.

On the U.S. economic agenda, market focus will be on the housing market with the publication of June existing home sales and data on housing prices for May.


4. Deal activity revs up with Apple-Intel, Starbucks (NASDAQ:SBUX) purchase

Corporate dealmaking made morning headlines as The Wall Street Journal reportedthat Apple (NASDAQ:AAPL) was close to buying Intel’s (NASDAQ:INTC) 5G smartphone modem chip unit.

The report, published after Monday’s market close, suggested that the deal could be finalized next week and be valued at $1 billion or more.

Separately, Starbucks (NASDAQ:SBUX) announced that it will license aspects of the software that power its mobile ordering system to restaurant tech firm Brightloom, formerly eatsa, in return for an equity stake and a seat on the board of directors.


5. IMF set to update forecasts amid positive U.S.-China news

The International Monetary Fund will present an update to its World Economic Outlook at 9:00 AM ET (13:00 GMT).

The report is expected to provide a forecast of how the IMF sees issues such as the U.S.-China trade dispute and the post-Brexit outlook for the U.K., where Boris Johnson is expected to be confirmed as the new Conservative Party leader today.

The report comes as The South China Morning Post reported that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will meet with Chinese Vice-Premier Liu He for high-level trade talks in Beijing next week, supporting hopes for progress on an eventual deal.


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