Daily Agenda: Markets Shrug Off Oil Prices for Now

After reaching new highs last week, the U.S. large-cap equity market appears to remain resilient despite the shadows cast by concerns over growth prospects abroad. One of the key weak points that was a focus of bearish sentiment during the first half — rising yields in the low-credit-rated portion of the bond markets — appears to be dissipating. After an initial spike on concerns over defaults in the energy sector driven by石油价格暴跌,junk bond marketappears to be stabilizing despite a crude rally that now appears to have stalled out. Despite the decline of futures contracts for West Texas Intermediate below $40 last week, a potentially important psychological line in the sand for investors, high-yield spreads have not expanded to the levels seen in February. As markets digest the news thatOPEC will hold a special meetingto address a supply-glut-driven pullback in energy prices, the question on many managers’ minds will be if a further decline could again spread to bond and equity markets.

U.K. factory output sputters. The Office for National Statistics in London today released data that indicated the pace of activity growth in U.K. factories slowed in June despite the fact that the impact of the nation’s vote to depart from the European Union had not yet been felt. The headline industrial output index rose by 0.1 percent for the month following a decline in May. Manufacturers of transport equipment and vehicles were the hardest hit as buyers reconsidered commitments ahead of theBrexit vote.

Erdogan to meet with Putin.In his first overseas appearance following the unsuccessful military coup July 15,Turkish President Recep Tayyip Erdoganwill meet with Russian President Vladimir Putin in Saint Petersburg today. Tensions between the two nations peaked in late 2015 after Turkish armed forces shot down a Russian fighter over the border with Syria, resulting in economic sanctions imposed by the Kremlin. The potential lifting of those sanctions and discussions over the ongoing conflict in Syria are expected to be the primary topics of discussion.

Gap sales slow. San Francisco–based apparel retailer Gap yesterday reported same-store sales for July that were weaker than forecast, with a 4 percent decline. The critical metric for retail operators was offset in part by preliminary second-quarter earnings with a range exceeding consensus analyst estimates. Company management took a cautious view in the accompanying statement, suggesting that the second half may be challenging. The company will report complete second-quarter financial results on August 18.

Murdoch profits slump.Print and digital media giant News Corp. announced financial results for the company’s fiscal fourth quarter that fell short of consensus analyst estimates on the back of falling advertising revenues. Despite total revenues for the period that exceeded forecasts, the media giant reported earnings per share of $0.10, falling short of an anticipated $0.13. Currency fluctuations impacted the company’s earnings on advertising in the critical news unit.