OPENING CALL
Stock futures pointed to an extension of losses for Wall Street on Thursday as Salesforce issued a weak outlook and equities struggled as bond yields traded higher.
The jump in government bond yields in developed economies seems to have triggered a bout of broad risk-aversion, with equities and industrial commodities, such as copper, slipping on Thursday.
Consequently, traders were moving into perceived havens such as the Japanese yen and, ironically, Treasurys, German Bunds and U.K. Gilts, causing yields to inch lower.
Meanwhile, in the background is Friday's personal consumption expenditure data for April, the Federal Reserve's favored inflation gauge, which is likely to set the mood in coming weeks.
Premarket Movers
Agilent Technologies reduced its fiscal-year forecast for adjusted earnings and revenue, saying that while it sees the market for its products improving it has been "improving at a slower pace than anticipated." Shares fell 13%.
C3.ai reported better-than-expected fiscal fourth-quarter revenue. Shares rose 9.4%.
Faraday Future Intelligent Electric was down 12%. The stock dropped 62% on Wednesday after it reported disappointing 2023 results.
HP earned 82 cents a share on an adjusted basis in the second quarter, just beating estimates of 81 cents, as revenue fell 0.8% to $12.8 billion but still managed to top expectations of $12.61 billion. The stock was up 2.7%.
Nutanix fell 11% after the cloud-computing company issued weak revenue guidance for its fiscal fourth quarter and year.
Okta boosted its forecast for the fiscal year, saying it now expects revenue of $2.53 billion to $2.54 billion, up from a prior forecast of $2.495 billion to $2.505 billion. Shares rose 5%.
Pure Storage was up 11% after first-quarter revenue jumped 18% and the data storage company narrowed losses in the period.
Salesforce reported first-quarter adjusted earnings that topped Wall Street predictions but its shares were down 17% after revenue came up short and its outlook for the current fiscal second quarter missed estimates.
UiPath was down 29% as the automation-software company said it expects fiscal second-quarter revenue of $300 million to $305 million, well below analysts' estimates.
Postmarket Movers
American Eagle Outfitters' sales rose 6% from a year earlier in the fiscal first quarter, but missed Wall Street's expectations. Shares fell 9.1%.
Watch For:
GDP Second Estimate for 1Q; Weekly Jobless Claims; EIA Weekly Petroleum Status Report; Fed speakers include John Williams, Lorie Logan; earnings from Best Buy, Costco, Dell, Dollar General, Royal Bank of Canada
Today's Headlines/Must Reads:
- This Record Stock Market Is Riding on Questionable AI Assumptions
- Tariffs Are More Than Just Taxes. They Are a Tool of Geopolitics
- Follow-On Stock Sales Are Picking Up Momentum
- A New Way to Make Solar Panels Cheaper Outside China
MARKET WRAPS
Forex:
The dollar has continued the progressive recovery as risk aversion prevails across markets and as U.S. interest-rate cuts look unlikely any time soon, lifting the DXY dollar index above 105, UniCredit Research said.
Japanese companies' increasing appetite for acquisitions overseas could push USD/JPY above 160, BofA said.
M&A flows can cause the currency of the target nation to strengthen relative to that of the acquiring country, in this case Japan. BofA now sees USD/JPY at 161 in end-September versus 157 previously, as Japanese firms ramp up overseas acquisitions.
The pace of M&A announcements this year has been the fastest since 2019, he adds. BofA maintains its year-end forecast for the pair at 155, expecting the Fed to start cutting rates in December, which may weigh on the dollar.
Bonds:
Bund yields hit a new year-to-date high early on Thursday, making the 10-year bonds appealing a week before the European Central Bank will likely cut interest rates, Commerzbank Research said.
That said, as major flows in recent weeks have failed to slow the bearish repricing and with 10-year Treasury yields still some 15 basis points below their year-to-date highs, markets remain vulnerable and a lasting trend reversal isn't in sight, Commerzbank said.
Energy:
Oil prices were slightly lower on a stronger dollar and as traders remained on edge ahead of U.S. inflation data and OPEC+'s meeting later this week.
"The ugly geopolitical situation in the Middle East does trigger short-term price spikes, but price rallies due to geopolitical tensions tend to remain short-lived," Swissquote Bank said.
Metals:
Base metals and gold weakened, weighed by a stronger dollar and rising Treasury yields.
Copper was down more than 2% as tightness eased in the market, offering investors a clearer view of potential future prices.
"Although prices are likely to remain high in the medium term due to underlying fundamental factors, we might see a slight correction soon to ease some of the recent market upside that took place in recent months," Sucden Financial said.
TODAY'S TOP HEADLINES
Google Plans $2 Billion for Malaysia Data Center, Cloud Services
Alphabet's Google will invest $2 billion to establish its first data center in Malaysia to power new cloud services, the latest in a string of multibillion-dollar plans by Western tech giants to meet growing computing needs in Southeast Asia.
Google said Thursday that it would add a data center in Malaysia, to help power search, maps and cloud services capable of handling artificial intelligence computing demand.
Proxy Advisor Endorses Pay Package for Tesla CEO Elon Musk
A proxy advisor said shareholders should approve a pay package for Tesla CEO Elon Musk.
The electric vehicle maker's annual shareholder meeting is June 13, and shareholders are voting whether to reinstate Musk's 2018 pay package worth some $56 billion at the time of the award. In January, a Delaware judge voided the package citing inadequate disclosure for investors voting on the compensation.
OpenAI's Tie-Up With Grab to Give Southeast Asian Firm an AI Boost
Grab Holdings is partnering with OpenAI to upgrade its popular ride-hailing and delivery app, tapping the artificial-intelligence pioneer's technology to enhance its services and integrate AI across its business.
New York-listed Grab said Thursday that the tie-up will help it update maps more quickly, build better customer-support chatbots and use text and voice capabilities to make its services more accessible to elderly customers and people with visual impairments.
Golden Goose, Maker of Super-Star Sneakers, to IPO in Milan
Italy's Golden Goose, the maker of Super-Star sneakers worn by celebrities including Taylor Swift and sold for hundreds of dollars a pair, said it intends to launch an initial public offering in Milan next month.
The Italian company said it will issue new shares as part of the listing, while current shareholder Astrum-an entity controlled by private-equity group Permira-will also sell shares. Golden Goose plans to raise 100 million euros, or about $108 million, through the offering of the newly issued shares.
BHP-Anglo Deal Is Off-the Mining Land Grab Is Still On
Mining's big deal is officially off, but an expensive race to reshape mining portfolios for a new era may be just getting started.
Iron-ore giant BHP said Wednesday that it wouldn't mount a formal offer for U.K.-listed Anglo American following a five-week courtship. Under Britain's takeover rules, BHP is now barred from approaching the company for six months.
The World's Top Miner Abandoned Its Proposed Megadeal. Here's What Could Be Next for BHP
BHP Group thought it could buy its way to becoming the world's top copper producer. Now, it may need to expand or build its own mines to get there, a potentially fraught journey given inflation and other risks.
The Australia-based miner's weekslong pursuit of London-listed Anglo American ended abruptly Wednesday after its rival said it wouldn't further engage in talks on what would have been the industry's largest-ever deal. BHP's failed tilt at the storied, century-old Anglo shows the challenges that even arguably the world's most powerful miner faces in adding to its copper stable.
Blinken Signals U.S. May Allow Ukraine to Strike Inside Russia With American Weapons
CHISINAU, Moldova-U.S. Secretary of State Antony Blinken signaled on Wednesday that the U.S. is weighing the idea of allowing Kyiv to strike Russian territory with American-provided weapons in light of the evolving battlefield situation in Ukraine.
It was the first time that a top Biden administration official has publicly indicated that the U.S. is considering the policy shift. Previously, the U.S. has said it wouldn't allow Ukraine to attack targets on Russian territory with ATACMS missiles or other U.S. weapons.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
Canadian Imperial Bank 2Q
Canopy Growth 4Q
Champion Iron 4Q
Laurentian Bank of Canada 2Q
Royal Bank of Canada 2Q
Economic Calendar [ET]:
0830 Mar Payroll Employment, Earnings, Job Vacancies
0830 1Q Balance of Payments
Stocks to Watch:
WestJet Encore Pilots Issue 72-Hour Strike Notice
The union representing pilots at WestJet Airlines' regional-carrier unit issued a 72-hour strike notice on Wednesday, with labor disruptions at Canada's second-biggest airline starting as early as Saturday evening.
Diederik Pen, WestJet's president and chief operating officer, said the company has worked on a revised deal within the company's financial parameters, but is prepared to hold firm "on what is reasonable as we cannot sacrifice our ability to provide affordable air travel."
Pen said the tentative deal that ALPA members rejected earlier this month would have made WestJet Encore pilots the highest paid among regional carriers.
WestJet is owned by Onex, a buyout firm that trades on Canada's main stock exchange.
Expected Major Events for Thursday
(MORE TO FOLLOW) Dow Jones Newswires
05-30-24 0619ET
