Here are the top five things you need to know in financial markets on Monday, July 22:



1. Oil rises on Middle East tensions; Libya restarts output

Oil prices jumped around 2% overnight as tensions in the Middle East showed no signs of cooling.

U.K. Prime Minister Theresa May was set to hold an emergency meeting on Monday after a British-flagged tanker was seized by Iran in the Gulf last Friday. Media reports suggested the country's politicians were looking at freezing Iranian assets.

The British committee is expected to discuss procedures to maintain the security of shipping in the Strait of Hormuz, the bottleneck for shipping in and out of the Persian Gulf.

Capping gains in oil, Libya's largest oilfield resumed production at half capacity on Monday after being shut down since Friday.


2. Hawkish Fed official sees no reason for rate cuts

Boston Federal Reserve President Eric Rosengren forced markets to reevaluate their expectations for policy easing from the U.S. central bank at the July 30-31 meeting.

Rosengren said other monetary authorities such as the European Central Bank or the Bank of Japan may have reasons for policy easing, but the U.S. economy did not require stimulus.

“I don’t want to ease if the (U.S.) economy is doing perfectly well without the easing,” he said in an interview with CNBC, aired after Friday’s market close.

After the interview, markets toned down odds for a 50 basis point cut at the next meeting, although the implied probability of a quarter-point reduction remained at 100%.


3. U.S. stocks set for bounce with earnings in focus

U.S. futures pointed to a higher open as Wall Street looked set for a slight recovery from last week’s weekly decline in the S&P 500 and Nasdaq , the largest since late May.

With no major U.S. macro data on the agenda, markets will focus on company earnings reports ahead of the open from the likes of Halliburton (NYSE:HAL) and RPM International (NYSE:RPM).

Whirlpool (NYSE:WHR) and TD Ameritrade (NASDAQ:AMTD) will release their quarterly earnings after the market close.

In European earnings, rising healthcare spending by the Chinese government helped Dutch health-technology company Philips (NYSE:PHG) post better-than-expected sales growth for the second quarter.

Outside of earnings, Bridgewater Associates (NASDAQ:BWB) reportedly saw its flagship fund Pure Alpha tumble 5% in the first half of the year. That was one of its worst performances in two decades, according to the Financial Times. The fund, which bets on macro trends, was surprised by a positive reaction from global stocks and bonds to hopes of looser monetary policy.


4. China’s new Nasdaq-style market soars

Despite wider concerns over the global economy putting a dent in Asian stocks, a new Nasdaq-style board for Chinese firms - the Science and Technology Innovation Board, or STAR Market - soared overnight in its first day of trading.

Sixteen of the first batch of 25 companies - ranging from chipmakers to health care firms - more than doubled their already frothy initial public offering prices on the STAR Market, operated by the Shanghai Stock Exchange.

The firms posted average gains of 140% in a raucous first day of trade that tripped the exchange’s circuit breakers, which were designed to keep activity within reasonable limits. The day’s weakest performer leapt 84%.


5. Pound under pressure from Brexit-related political strife

Voting in the British Conservative party's leadership contest, which will effectively decide the identity of the next U.K. Prime Minister, ends at 12:00 PM ET (16:00 GMT),with former Foreign Secretary Boris Johnson widely expected to win against rival Jeremy Hunt. The pound was off 0.3% against the U.S. dollar and the euro after two senior ministers threatened their resignation if Johnson wins.

Chancellor of the Exchequer Philip Hammond and Justice Secretary David Gauke said on Sunday they cannot support his willingness to accept the risks of leaving the European Union on Oct. 31 without a deal. Alan Duncan, a junior foreign office minister, already resigned on Monday.

The final vote will decide who replaces Theresa May as party leader when she departs on Wednesday. The winner would still have to be confirmed in office as Prime Minister by the House of Commons. That step has been a formality for most of recent history, but may be complicated this time, given that Johnson in particular may struggle to command a majority if Hammond and others follow through with their threats of rebellion.


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