Here are the top five things you need to know in financial markets on Monday, July 8:



1. Stocks drop as Fed rate cuts expectations cool

The strong U.S. employment report released last Friday continues to make itself felt in global equity markets. U.S. futures pointed to a lower open after a negative close in Asia and while European stocks also slipped in morning trade.

The creation of 224,000 jobs in the U.S. forced markets to lower their expectations for aggressive policy easing by the Federal Reserve, effectively ending hopes of a half-point reduction at the July 30-31 meeting.

Fed Chairman Jerome Powell is due to testify Wednesday and Thursday to Congressional committees, in appearances that will likely shed light on his interpretation of the employment report. Markets price in a quarter-point reduction to interest rates at the end of the month.


2. Deutsche Bank cuts 18,000 jobs in massive overhaul

Deutsche Bank (DE:DBKGn) announced on Sunday that it would cut 18,000 jobsaround the world in a €7.4 billion ($8.3 billion) overhaul that will shrink its global footprint by around a quarter.

The bank plans to scrap its global equities business and will also scale down its much larger fixed-income activities.

The lender also plans to set up a new "capital release unit" to wind down some €74 billion ($83.1 billion) in risk-weighted assets. Deutsche shares rose as much as 2.5% in early trade before reversing later to trade down 0.5%.


3. Boeing under pressure after losing $6 billion Saudi order

Shares in Boeing (NYSE:BA) fell more than 1% in pre-market trade Monday after Saudi Arabia’s flyadeal cancelled a provisional order for 30 Boeing 737 MAX jets, valued at $5.9 billion at list prices.

The Saudi budget airline had indicated it was reconsidering the purchase after two fatal crashes of the 737 MAX model. It has now opted to switch its fleet to planes from Boeing rival Airbus (PA:AIR).

The loss of the order is the latest setback for Boeing whose 737 MAX has been grounded pending updates to ensure its safety. The Federal Aviation Association has said it will only lift the prohibition “when we deem it is safe to do so”.


4. WeWork to raise up to $4 billion in debt ahead of IPO

WeWork is looking to raise $3 billion to $4 billion in debt before it goes public, according to sources cited by Reuters.

Money-losing WeWork has faced questions about the sustainability of its business model, which is based on short-term revenue agreements and long-term loan liabilities.

A substantial debt offering could allow it to present a more secure funding base before it pitches itself to potential investors in a planned initial public offering (IPO).


5. Dollar surges against Turkish lira after move in central bank

Although the dollar dipped against major rivals on Monday, it surged against the Turkish lira after President Recep Tayyip Erdogan removed central bank governor Murat Cetinkaya during the weekend.

Erdogan reportedly made the move after Cetinkaya repeatedly refused his demands for rate cuts.

His decision revived concerns about the safety of the lira, given his previous pressure on the central bank to cut interest rates despite an annual inflation rate that was still over 15% in June.


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