U.S. corporate earnings ahead, Chinese GDP underwhelms - what's moving markets

© Reuters.

Investing.com -- Investors prepare for a raft of fresh corporate earnings this week that will include some of the largest U.S. banks and major tech industry players. Elsewhere, Chinese quarterly growth figures provide further evidence of the country's sputtering recovery from the pandemic. Plus, Microsoft signs a licensing agreement with PlayStation over the "Call of Duty" gaming franchise that could bring the tech giant's mega-merger with Activision Blizzard one step closer to completion.

1. U.S. stock futures mixed

U.S. stock futures were mixed on Monday as investors looked ahead to a busy week of corporate results and digested underwhelming economic growth data out of China.

By 05:06 ET (09:06 GMT), the Dow futures contract had lost 50 points or 0.14%, S&P futures slipped slightly by 2 points or 0.03%, and Nasdaq 100 futures edged up by 18 points or 0.11%.

All three of these indices ended Friday with weekly gains of over 2%, driven in part by softer-than-expected inflation data for June that boosted hopes that the Federal Reserve may soon begin to step away from its recent policy tightening campaign. Traders also had a chance to parse through earnings from several major banks, including the biggest U.S. lender JPMorgan Chase (NYSE:JPM).

Meanwhile, sentiment heading into U.S. dealmaking was dented by data out of China that showed that growth in the world's second-largest economy had slowed substantially in the second quarter (see below).

2. Second-quarter earnings season kicks into gear

The earnings calendar on Monday will be relatively light compared to the parade of companies due to deliver their latest results this week.

Big financial industry players Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) are all scheduled to unveil quarterly earnings in the coming days. Bank balance sheets have come under heavy scrutiny in the wake of the failure of several regional rivals earlier this year, an event that plunged the financial services industry into crisis.

On Friday, lenders JPMorgan and Wells Fargo (NYSE:WFC) posted surges in year-on-year net income, although peer Citigroup's (NYSE:C) profit tumbled by over a third. Collectively, net interest income, the difference between what a bank earns for loans and loses from deposits, at the three groups rose 30%, boosted by a spike in interest rates.

Elsewhere this week, Elon Musk-led electric carmaker Tesla (NASDAQ:TSLA), streaming giant Netflix (NASDAQ:NFLX), and carrier United Airlines (NASDAQ:UAL) are among the key businesses to report.

3. Chinese economic growth cools

The Chinese economy expanded at a much slower rate in the second quarter, casting further doubt over the country's nascent rebound from draconian pandemic-era restrictions.

China's second-quarter gross domestic product increased by 0.8% from the prior three-month period, slightly above expectations for an uptick of 0.5%, but cooling significantly from 2.2% in the first quarter.

On an annualized basis, GDP expanded by 6.3% thanks largely to a lower basis for comparison from the corresponding COVID-hit quarter last year. But this reading missed estimates for growth of 7.3%.

Faltering property sector, sputtering exports, and weak retail sales have combined to weigh on an economic recovery in China that had seemed to be gathering momentum at the beginning of 2023.

4. Microsoft signs "Call of Duty" licensing agreement with Sony

Microsoft's (NASDAQ:MSFT) contentious push to acquire Activision Blizzard (NASDAQ:ATVI) received a major boost over the weekend when the tech giant agreed to keep the mega-popular gaming franchise "Call of Duty" on Sony's (TYO:6758) PlayStation console.

The deal helps overcome a key hurdle facing Microsoft's $69 billion purchase of Activision, which would be the biggest in the history of the video gaming industry. Shares in Activision surged by more than 4% in premarket trading on Monday.

Sony (NYSE:SONY) has previously stood in opposition to the tie-up, arguing that Microsoft will use it to in effect prevent access to lucrative titles like action shooter "Call of Duty" to PlayStation.

The announcement comes after U.S. antitrust regulators, who have voiced concerns over lessening competition, had multiple attempts to prevent the merger from closing rejected by a federal court in San Francisco last week.

The decision in turn led the U.K.'s competition watchdog, which had blocked the deal in April, to offer Microsoft and Activision a new chance to remedy their worries.

5. Oil volatile in the wake of Chinese data, Russian grain deal uncertainty

Oil prices moved lower in choppy trading on Monday, with traders gauging the health of demand in the top crude importer China and uncertainty around the West's response to Russia withdrawing from a U.N.-brokered Black Sea grain deal.

Meanwhile, two of the three Libyan oil fields that were shut down on Thursday resumed production over the weekend, adding supply to the global market.

By 05:31 ET, the U.S. crude futures traded 1.25% lower at $74.38 a barrel, while the Brent contract shed 1.09% to $79.00 per barrel.

Both benchmarks recorded a third straight week of gains last week, touching their highest levels since April. Some support came from slower-than-expected U.S. inflation data as well as anticipated output cuts by Saudi Arabia and Russia later this summer.