US futures fall to open a week heavy with retail news

NEW YORK (AP) — U.S. futures are falling ahead of a week of quarterly financial reports from retailers as well as government data that may shed light on how American shoppers and businesses are weathering stubborn, four-decade-high inflation.

Futures for the Dow Jones industrials slipped 0.5% as did futures for the S&P 500. Oil prices fell more than 5% and are nearing levels not seen since Russia invaded Ukraine in late February.

Walmart and Home Depot kick off a host of retail earnings reports on Tuesday, followed by Lowe’s and Target on Wednesday. U.S. markets were roughed up three months ago when first-quarter financial reports from major retailers revealed a seismic shift in spending by Americans, and a significant struggle to deal with surging inflation on food and fuel and higher costs from a snarled global supply chain.

On Wednesday, the U.S. releases data on July retail sales. Economists surveyed by FactSet expect modest 0.2% growth from June, when sales rose 1%. That increase largely reflected higher prices, particularly for gas. But it also showed that Americans continue to spend, providing crucial support for the economy, though some economists suggest that’s mostly coming higher-income households.

Businesses have been raising prices on everything from food to clothing to offset higher costs. The impact from Russia’s invasion of Ukraine worsened inflation pressures by fueling higher energy and key food commodity costs.

Global shares were mixed after China’s central bank cut a key interest rate and Japan reported its economy picked up momentum in the last quarter.

The People’s Bank of China cut its rate on a one-year loan to 2.75% from 2.85% and injected an extra 400 billion yuan ($60 billion) in lending markets after government data showed July factory output and retail sales weakened.

Beijing is aiming to shore up sagging growth in the world’s second largest economy at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power.

The ruling Communist Party effectively acknowledged last month it can’t hit this year’s official 5.5% growth target after anti-virus curbs disrupted trade, manufacturing and consumer spending. A crackdown on corporate debt has caused activity in the vast real estate industry to plunge.

In Europe at midday, Germany’s DAX lost 0.2% and the CAC 40 in Paris slipped 0.2%. Britain’s FTSE 100 declined 0.4%.

In Asia, Tokyo’s Nikkei 225 index rose 1.1% to 28,871.78 after the government reported the economy, the world’s third largest, expanded at a 2.2% rate in April-June from a year earlier, as consumer spending rebounded with the lifting of COVID-19 restrictions.

In Sydney, the S&P/ASX 200 climbed 0.4% to 7,062.50. The Shanghai Composite index edged less than 0.1% lower to 3,276.09, while Hong Kong’s Hang Seng index gave up 0.4% to 20,040.86.

South Korean markets were closed for a holiday.

Bangkok’s SET index rose 0.2% after the Thai government reported the economy expanded at a 0.7% quarterly pace in April-June, slowing from 1.1% growth in the first quarter of the year.

Tourism has rebounded after two years of tight controls to fight COVID-19, but only to about a quarter of the pre-pandemic level.

“The outlook for the rest of the year will depend in large part on how quickly tourism recovers,” Gareth Leather of Capital Economics said in a commentary.

In other trading Monday, U.S. benchmark crude oil shed $4.46 to $87.63 per barrel in electronic trading on the New York Mercantile Exchange. It lost $2.25 per barrel on Friday.

Brent crude oil, the basis for pricing for international trading, gave up $4.62 to $93.53 per barrel.

The U.S. dollar slipped to 133.09 Japanese yen from 133.43 yen. The euro weakened to $1.0196 from $1.0261.

On Friday, Wall Street capped a choppy week of trading with a broad rally, as the S&P 500 notched its fourth consecutive weekly gain.

Major indexes got a big bump on Wednesday after a report showed that inflation cooled more than expected last month. Another report on Thursday showed inflation at the wholesale level also slowed more than expected.

They raised hopes among investors that inflation may be close to a peak and that the Federal Reserve could ease off on interest rate hikes, its main tool for fighting inflation.

The aggressive pace of rate hikes has investors worried that the Fed could steer the economy into a recession.