* A look at the day ahead from EMEA markets editor Mike Dolan. The views expressed are his own.
LONDON, July 22 (Reuters) - World stocks are slipping lower, with expectations for a Federal Reserve rate cut next week scaled back to just 25 bps after what appears to have been a concerted attempt to curb more aggressive calls for 50 bps. The Fed itself downplayed market interpretations of comments by New York Fed chief John Williams, and both the Wall Street Journal and today’s Financial Times predicted 25 bps. Futures markets now see less than one chance in five of 50 bps.
Thursday’s European Central Bank meeting is the big policy focus before next week’s Fed decision. Otherwise, it’s a monster earnings week with a Big Tech focus on both sides of the Atlantic. After U.S. stocks ended in the red on Friday, Asia’s markets were mostly lower. Shanghai and Hong Kong lost about 1%. European stocks opened flat to lower.
The dollar has mostly held Friday’s gains, with sterling steady before tomorrow’s UK leadership election. U.S. 10-year Treasury yields were higher, with the yield curve between three months and 10 years now close to zero. Brent crude oil prices rose after Iran seized a UK oil tanker in the Gulf at the weekend, raising tensions in the region. Italy’s stocks are likely to remain volatile after their worst day in months on Friday — this could be a make-or-break week for the country’s fractious coalition partners that determines whether the government will collapse, triggering autumn elections, or survive to the end of the year. Simmering tensions in the euro zone’s No. 3 economy have stirred speculation that Italy may have a snap election, which could usher in a new, more centre-right coalition government. Prime Minister Giuseppe Conte will hold more consultations today with the hope of presenting a final proposal by Friday. Italian sovereign debt yields and spreads remain subdued despite a small pop higher on Friday.
In corporate news, the Dutch health technology company Philips has delivered a better-than-expected 6% rise in comparable sales for the second quarter, helped by strong demand for its hospital equipment in China and the United States. Dealers see the shares up 1% to 3%. Swiss private bank Julius Baer has reported a 19% decline in adjusted net profit in the first six months as tepid trading continued from its wealthy clients, which it nonetheless hailed as a pick-up from challenging conditions late last year. Its shares may come under pressure. Bayer shares are falling in pre-market Frankfurt trade after a supervisory board member renewed worries about the speed of the German chemical company’s moves to settle its damaging and costly glyphosate litigation. * Europe corp events: Philips, Julius Baer, BTG
* Belgium OLO government bond auction
* Irish foreign minister Coveney gives keynote speech on Brexit in Dublin
* Ghana central bank policy decision
* Israel May industrial output
* US earnings: Halliburton, Whirlpool (by Mike Dolan, editing by Larry King)