Good morning,
All eyes turn to the Federal Reserve this afternoon, which releases the minutes from its June meeting at 2 p.m. ET. Fed watchers will be looking for hints of when the central bank is ready to raise rates. Many had been betting on September. But in the three weeks since the committee met to discuss the U.S. economy so much has happened: The Greek crisis worsened with a Grexit increasingly possible; China stocks have plunged 30%, and wage growth in the U.S. remains stuck in neutral. Meanwhile, the second quarter earnings season kicks off the U.S. after the close of trading Wednesday with a report from aluminum-maker Alcoa. Estimize expects earnings to come in stronger than the Wall Street consensus at $0.26/share.
China, Hong Kong indexes drop sharply again as 40% of mainland firms suspend trading. The halts involve companies with a total market cap of $2.6 trillion. Despite extraordinary measures, the Shanghai Composite Index closed down 5.9% to its lowest in four months, dragging along the Hang Seng Index, which dipped 8%, closed 5.8% lower. China’s three futures index also plunged, as investors were “extremely bearish on all type of stocks.” Shanghai and Shenzen markets have erased $3.2 trillion in value during the market rout of the last month. Reuters/The Wall Street Journal (paywall) Bloomberg
Europe snaps four-day losing streak. The FTSE 100 is up 0.77%; France’s CAC 40 gained 0.9%, and Germany’s DAX rose 0.65%. Greek Prime Minister Alexis Tsipras addressed the European Parliament on Wednesday; the country has requested emergency funds which will be considered in a teleconference call. The European Commission has ordered Greece to submit a reform plan by Friday, which all 28 Eurozone members will consider at an extraordinary session on Sunday, the deadline for forging a deal. Greek banks remain closed. MarketWatch
Microsoft may be set for another round of layoffs. The New York Times reports the cuts for the 118,000-person firm will come from hardware and the recently acquired phone maker Nokia. Last year Microsoft announced plans to lay off 18,000 employees. New York Times (paywall)
Barclay’s CEO Anthony Jenkins gets the boot. Jenkins replaced the controversial Bob Diamond three years ago amid the Libor trading scandal, which cost the bank a record fine. Chairman John McFarlane will fill the CEO slot while the bank hunts for a replacement. McFarlane joined the bank just three months ago and is known for decisive action. According to reports, independent directors felt Jenkins wasn’t moving fast enough to improve earnings at the bank; investment banking has been a laggard under his tutelage. Reuters
Russia, BRICs meet to make their mark on global finance. Vladimir Putin will be leading the summit, which is planning a developmental bank to rival Western institutions. The group, which also includes South Africa, is putting together $100 billion in reserves to fund projects and show that they can manage just fine with the support of the West. BBC
Buyout deals worth $25 billion for U.S.-listed Chinese firms may not push through. With tumbling prices, shares of at lease 23 U.S.-listed firms that were the target for buyouts were trading at an average of 22% below their buyout offers, “indicating investors are becoming more skeptical the deals will go through.” Bloomberg
Japan posts 11th straight monthly current account surplus. In May, the surplus reached 1.88 trillion yen ($15.3 billion), beating the 1.57 trillion forecast of a surplus. Direct and portfolio investments flowing into the country were among the main drivers for the healthy current account position. Financial Times (paywall)