MORNING BID EUROPE-Wall Street in measured mood as Biden bows out

The day began with the, not unexpected, news of President Joe Biden dropping out of the race and the market reaction so far has been measured. Wall Street futures are a shade firmer, bond yields down a tick and the dollar little changed overall.

Biden backed his VP Kamala Harris for the job, putting her in pole position for the nomination which is officially scheduled for the Democratic convention on Aug. 19-22. It is also possible the party will consider a virtual nomination ahead of the convention.

Online betting site PredictIT showed pricing for a victory by Donald Trump had fallen 5 cents to 59 cents, while Harris climbed 13 cents to 40 cents. California Governor Gavin Newsom, another possible Democratic challenger, trailed at 3 cents.

Goldman Sachs in a note said they did not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.

The other main event was a surprise rate cut from China’s central bank, which trimmed its seven-day repo rate by 10 basis points. That saw longer-term borrowing costs decline by a similar amount, while bond yields dipped across the curve despite recent efforts by the PBOC to push them higher.

The yuan also eased, though the move was modest. Analysts had thought the PBOC was reluctant to ease as that might put downward pressure on the currency.

As so often with Beijing’s policy changes, investors seemed underwhelmed with the move in part because it merely underlines how anaemic the recovery has been. Chinese blue chips retreated around 0.6%, having enjoyed a rare bounce last week.

Much of Asia was also in the red, with Taiwan taking a beating amid worries about U.S. restrictions on chip sales and the risk a Trump administration would slap tariffs on a host of imports, possibly triggering a global trade war.

Tech stocks saw notable rotation out to smaller caps and banks last week, erasing about $900 billion from the S&P 500 technology sector. A pullback was no surprise given Alphabet , Tesla, Amazon.com, Microsoft , Meta Platforms, Apple and Nvidia have accounted for around 60% of the S&P 500’s gains this year.

That set the stage for a host of second-quarter earnings this week, with Tesla and Google-parent Alphabet starring for the “Magnificent Seven” megacap group.

Expectations are high with annual earnings seen climbing 17% for tech and 22% for communications.

Key developments that could influence markets on Monday:

– Bank of England Executive Director Victoria Saporta speech

– Federal Reserve Bank of Chicago issues National Activity Index for June

– Company earnings include Verizon, Nucor and Brown & Brown

This article was generated from an automated news agency feed without modifications to text.