MORNING BID-Fog, stall ... rally

(A look at the day ahead from Sujata Rao, deputy markets and financial services editor, EMEA. The views expressed are her own.) As U.S. coronavirus cases hit records and reopenings are dialled back, Federal Reserve officials admitted economic growth forecasts from the June policy meeting did not factor in the risk of a second wave. Fed Governor Lael Brainard summed it up as "a thick fog of uncertainty" and said "downside risks predominate."

A similar message from the corporate world -- Delta Airlines CEO Ed Bastian said the industry was "at a stall right now."

Are there signs of when the fog might lift? Markets reckon so, focusing on positive news on Moderna's Covid-19 vaccine. There is also hope that company earnings, while dire, will beat forecasts and can only improve from here.

It's shaping up to be an event-packed day. President Donald Trump ordered an end to Hong Kong's special status and China threatened retaliation. Markets seem unfazed, with U.S. futures up 0.8% and safe-haven assets flatlining. Chinese stocks are down, but other Asian markets and Europe are trading on the vaccine news.

Moderna shares surged 18% on Tuesday, its news potentially laying the ground for rallies across sectors hit by lockdowns – cruise firms, hotel operators and airlines. European leisure shares are up 1.5%.

Elsewhere, a European Union court will rule on an appeal by Apple and Ireland that Apple must pay 13 billion euros in back taxes. The case is key for low-tax EU jurisdictions and for companies such as Nike and Ikea, which have sweetheart tax deals with other EU states.

Then we have an OPEC meeting that's likely to boost output by 2 million barrels per day.

On results, Sweden's Handelsbanken and SEB are the latest to please investors, following DNB's earnings beat yesterday. Both posted a smaller-than-expected fall in net quarterly earnings, and SEB reported robust income from its trading arm.

We also saw that story on Tuesday, when JPMorgan, Citi and Wells Fargo reported second-quarter profit declines and set aside a collective $28 billion for loan losses, but JPM and Citi reported bond-trading revenues up 99% and 68% respectively. That bodes well for other U.S. banks reporting this week; watch for Goldman Sachs, BNY Mellon and Bancorp today.

No fireworks on the central bank front, with an uneventful Bank of Japan meeting. Nor are the Bank of Canada and the European Central Bank expected to do anything in their upcoming meetings.

On currencies, the risk-on mood has sent the dollar index tumbling to the lowest in a month, while the euro jumped past $1.14 to its highest since March 10 on hopes Friday's EU summit will approve a crucial 750 billion-euro recovery fund proposal.

Trade and growth-linked currencies are on a roll, with the Aussie dollar up 0.4% and an index of emerging market currencies up 0.3%

In European corporate news, Scandinavia got second-quarter second earnings off to a decent start with SEB and Handelsbanken shares surging on the profits beat. Swedish telecoms operator Tele2 beat quarterly earnings forecasts. Norway's Mowi, the world's largest fish farmer, and Finnish telco Elisa also posted higher than expected earnings.

But Dutch navigation and digital mapping company TomTom posted a 41% drop in second-quarter sales. ASML Holding, equipment supplier to computer chipmakers, also underwhelmed.

British electricals retailer Dixons Carphone has its annual group profit halved and fashion brand Burberry said demand was hurt by COVID-19, with comparable sales falling 45%. Sales at online fashion retailer ASOS rose 10% in the four months to June 30.

Emerging-market stocks are up 0.6%. The biggest currency mover is the Indonesian rupiah, down 1.4% on the prospect of a fourth interest rate cut this year.

(Editing by Larry King)