MORNING BID-"No flood-like stimulus"

Aug 10 – A look at the day ahead from Danilo Masoni.

China’s central bank has set the record straight by ruling out “flood-like” stimulus. That dented hopes for more aggressive policy easing just as Wall Street banks cut their growth forecasts on the world’s No. 2 economy.

That stance and rising COVID-19 cases curbed risk appetite in Asia, and the cautious mood looks set to spill over to Europe and Wall Street with stock futures pointing to a directionless start, while the stellar Q2 season winds down.

Gold bounced back after crashing on Monday to four-month lows while dollar remains buoyant on bets the Fed could soon start tapering its massive bond purchases.

More insight may come later today from regional Fed presidents Mester and Evans. Their views will be keenly monitored after the Atlanta Fed’s Bostic said he is eyeing Q4 for the start of a taper but is open to an even earlier move. Treasury yields rose further above 1.3%.

However, as America prepares for less central bank support, more fiscal stimulus is making its way through Congress. The Senate will vote today on a $1 trillion bipartisan infrastructure bill before starting debate on a more far-reaching $3.5 trillion bill.

In corporate news, heavily indebted Chinese property developer Evergrande rallied over 7% on reports it could sell its EV and property management business. Eyes also on crypto exchange Coinbase which posts results, one day after Bitcoin climbed back above $46,000 for the first time since May.

In European earnings, duty free retailer Dufry hiked on its 2021 savings guidance on better-than-expected cash consumption.

Key developments that should provide more direction to markets on Tuesday:

* Japan’s SoftBank reports 39% fall in Q1 net profit

* British consumer spending rises in July,

* Munich Re says to meet 2021 profit goal as COVID-related costs rise

* German ZEW

* Fed speakers expected: Chicago Fed’s Evans and Cleveland Fed’s Mester

* Auctions: U.S. 12-month t-bills, 3-year Treasury note

* U.S. earnings: Coinbase

* European earnings: Holiday Inn owner IHG Plc swung to an H1 profit but scrapped its interim dividend.

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