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Markets down ahead of US earns; euro hits 2-yr low

Financial markets were subdued Monday ahead of a raft of US corporate earnings statements that should shed more light on the state of the US economic recovery, while the euro fell to a fresh two-year low against the dollar amid ongoing concerns over Europe’s debt crisis.

Coming off a buoyant session on Friday, when investors cheered a round of positive earnings from JPMorgan Chase & Co. and Wells Fargo Bank, the spotlight will remain on the banks. Citigroup is due to unveil its second-quarter earnings before the market opening bell.

“This should help to set the tone for much of the day,” said David Morrison, senior market strategist at GFT Markets.

Over the course of the week, around 90 companies listed on the S&P 500 are due to report earnings. They include Bank of America, Coca-Cola, Goldman Sachs, Google, IBM, Intel, Microsoft and Morgan Stanley.

“It is worth noting that earnings expectations have been massaged down again this quarter, so the majority of companies should once again hit analysts’ targets,” said Morrison. “Assuming that they do, then this reporting season should be uneventful.”

That appears to be the view in the markets, which started the week on a subdued note.

In Europe, the FTSE 100 index of leading British shares was down 0.2 percent at 5,654 while Germany’s DAX fell the same rate to 6,545. The CAC-40 in France was 0.4 percent lower at 3,169.

Wall Street was poised for modest losses at the open — both Dow futures and the broader S&P 500 futures were down 0.2 percent.

Besides earnings, investors this week will also monitor global economic indicators. Over the past month, evidence has accumulated that the three major drivers of the global economy — the US, Europe and China — are struggling.

Investors think there’s a higher likelihood that central banks will enact more easing measures to get the global economy going again.