Chinese Growth, U.S. Jobless Claims, Netflix Gaming - What's Moving Markets

1. Chinas growth slows

China's economy grew more slowly than expected in the second quarter, with GDP rising 7.9% from a year earlier, missing expectations for a rise of 8.1%. Rising commodity prices and new Covid-19 outbreaks weighed on the numbers.

At the same time, industrial output grew 8.3% in June from a year earlier, slowing from a 8.8% rise in May, while retail sales rose 12.1% from a year earlier, in a welcome sign of rebalancing toward domestic consumption.

China's economy has largely rebounded from the coronavirus hit last year, but recent data has suggested the recovery is losing some steam.

The People's Bank of China cut the reserve requirements for its banks last week, prompting speculation that it could cut its benchmark loan prime rate in the near future, just as other central banks are thinking about exiting their pandemic-era stimulus measures.

2. A heavy day for U.S. data; Powell reprise also eyed

It's a heavy day for U.S. data, with weekly jobless claims numbers and industrial production data for June topping the bill. Initial claims for benefits, due at 8:30 AM ET (1230 GMT), are expected to have inched down to 360,000 from 373,000 a week earlier. Such a development would harden suspicions that the improvement in the labor market is slowing down.

Industrial production data at 9:15 AM ET and will be scanned in particular for signs of progress on the issue of supply chain bottlenecks, which appear to have been a major factor behind the leap in producer price inflation this year. The New York and Philadelphia Federal Reserve's monthly business surveys are also due, while Federal Reserve chair Jerome Powell returns to Capitol Hill for the second day of his semi-annual testimony, this time facing the Senate banking panel.

In day one of his submission Powell reiterated that the current inflationary pressures, although stronger than he had expected, would still likely moderate shortly and that it was too soon to scale back the central bank‘s powerful monetary support for the economy. It’s unlikely that Powell will stray much from the substance of these remarks during the second day of his testimony.

3. Stocks seen mixed; Netflix in focus

U.S. stocks are seen opening mixed Thursday, with investors readying themselves for more earnings reports as well as the release of key unemployment data.

By 6:30 AM ET, Dow Jones futures were down 142 points, or 0.4%, S&P 500 futures were 0.2% lower but and Nasdaq 100 futures climbed 0.2%.

Morgan Stanley (NYSE:MS) will be the last of the major banks to report quarterly results later. So far the big U.S. lenders have all reported a rebound in earnings, although some have also reported sluggish loan activity as stimulus-flush households kept borrowing low.

Earnings are also expected from the likes of U.S. Bancorp, UnitedHealth (NYSE:UNH), Cintas (NASDAQ:CTAS) and Progressive (NYSE:PGR).

Netflix stock will also be in the spotlight, as a recent hire strengthened hopes that it will incorporate video games into its streaming service.

4. Crypto stabilizes after hit from Powell; Binance banned in Italy

Cryptocurrencies have stabilized somewhat overnight but remain under pressure after Fed Chair Jerome Powell expressed openness to the idea of creating a digital dollar. In his testimony, Powell roughly endorsed arguments advanced by others on the Fed such as Lael Brainard that an official digital currency could bring meaningful improvement in handling transactions, without the latent volatility risk of private cryptocurrencies and so-called stablecoins.

By 6:15 AM ET, Bitcoin was up 0.6% at $32,522, while Ethereum was up 1.8% at $1,971 (it's still lost more than half its value from its peak two months ago). Dogecoin was down 0.6% at 19.3c.

Elsewhere, Italy's financial regulator became the latest to warn that crypto trading firm Binance has no license to operate in its jurisdiction.

5. Crude weighed by rising U.S. stocks, OPEC+ talk

Crude oil prices weakened Thursday, weighed by an unexpected rise in U.S. gasoline stocks as well as talk that OPEC+ is nearing an agreement on increasing production levels.

By 5:30 AM ET, U.S. crude futures were down 0.6% at $74.82 a barrel, while Brent futures were down 0.5% at $76.10 a barrel.

The Energy Information Administration reported late Wednesday an eighth weekly draw in U.S. crude stockpiles, but the market was surprised by a rise in gasoline inventories last week, particularly during the peak driving season.

Adding to the pressure were reports that Saudi Arabia and the United Arab Emirates were close to resolving the standoff that has prevented a group of top producers, known as OPEC+, from supplying the global market with the additional output needed to balance the growing demand as economies reopen after the pandemic shutdown.