MARKET WRAPS
Watch For:
CPI for May; Janet Yellen testifies to annual House committee hearing on The State of the International Financial System
Today's Top Headlines/Must Reads:
- Fed-Rate Projections Could Rise to Underscore Inflation Anxieties
- Inflation Has Likely Been Cut in Half but Is Still Too High
- The Profit Squeeze Is On
- Stock-Market Bulls See Room to Run
Follow WSJ market coverage here
Opening Call:
Stock futures rose after China eased monetary policy and traders waited for inflation data that may cement a Federal Reserve rate-hike pause.
China's central bank unexpectedly trimmed a key lending rate, a sign of policy makers' growing unease over a sputtering recovery that likely foreshadows further steps to nudge China's economy back on track. Read more here .
However, the broad positivity will be tested when the consumer price index will be published, as investors hope to see it cool to 4%.
Such a decline in price pressures should help the Fed leave interest rates unchanged after its policy meeting Wednesday, a scenario that has contributed to a sturdy equity market rally of late.
The trading desk at JPMorgan has produced a trading scenario analysis for what may happen to the market given various CPI outcomes. If headline CPI is between 4% to 4.2% then the bank reckons the S&P 500 may quickly gain 0.5% to 1.25%.
A reading of 3.9% or lower may spark a 1.5% to 2% spike, while a stronger-than-forecast 4.9% or higher could trigger a 2.5% to 3% dive, JPMorgan said.
Overseas, Asian stocks gained with Japan's Nikkei 225 rising 1.8%, while Hong Kong's Hang Seng rose 0.6%. In mainland China, the Shanghai Composite added 0.2%.
European stocks also gained, with the Stoxx 600 rising 0.3% and the U.K.'s FTSE 100 rising 0.2%.
Stock Movers
Activision Blizzard rose slightly in premarket trading, while Microsoft was up 0.8% after the FTC on Monday said it was requesting an emergency court order to block Microsoft from closing its $69 billion acquisition of Activision Blizzard.
Apple was down 0.8% premarket after closing at a record high Monday.
Carnival rose 4%, having rallied Monday after it was upgraded by analysts, who cited rising demand for cruises.
Oracle shares were rising 4.1% in premarket trading after it reported fiscal fourth-quarter adjusted earnings and revenue that topped analysts' forecasts.
Tesla was up 1% in premarket trading. Shares have been boosted by optimism over tax credits, its charging network, and the Cybertruck.
Post-Close Movers
Sandstorm Gold said it would remain a component of the NYSE Arca Gold Miners Index. Shares rose 6.1% in after-hours trading.
NexTier Oilfield Solutions and Patterson-UTI Energy are holding talks over a possible merger that would create a bigger player in the oilfield-services industry, according to WSJ. Shares of NexTier climbed 9.6%, with shares of Patterson-UTI Energy rising 6.3%.
Forex:
The dollar was weaker as traders looked ahead to inflation data for hints on the Fed's interest-rate path.
A fall might convince investors the Fed will announce a pause in rate rises at Wednesday's meeting, UniCredit Research said.
"However, the market has certainly not rejected the possibility of a last rate hike in either July or September, which the U.S. forward curve is pricing in."
---
Sterling gained after data showed the U.K. labour market remained tight, fuelling expectations for further interest-rate rises by the Bank of England.
ING said sterling should remain supported in the near-term after the "ultra-tight" data.
Noting that average earnings growth accelerated in the three months to April, ING said sticky wage inflation means "very low chances" the BOE will cut interest rates before 2024 although "we are less convinced this will lead to several more rate hikes" as the market expects.
It said sterling remains at risk of a scaling back of BOE rate expectations down the road but it's "hard to buck the bullish GBP trend" in the near-term with data pointing consistently to further rate rises.
Read UK Jobless Rate Falls But No Sign of Slowing Wage
Energy:
Oil prices recovered some of their steep previous-session losses in Europe, with investors eyeing Wednesday's Fed decision.
"The rate decisions will be watched closely for broader economic projections and crude oil demand expectations," ING said.
Metals:
Base metals and gold prices rose in early London trading, as investors looked to the U.S. inflation data, but strong economic activity suggests a hawkish Fed in the short term, which could see the gold price consolidating, ANZ said.
However, when the Fed does stop raising rates, this could act as a tailwind for gold, as would a falling U.S. dollar, ANZ added.
Read Mining Capex to Rise, But to Remain Below Peak
Read Commodities Unlikely to Stage Strong Comeback This Year
TODAY'S TOP HEADLINES
Breakup of Google Ad-Tech Business Now on Table in Europe, Too
European Union antitrust regulators are considering pursuing a breakup of Google's advertising-technology business as part of a new antitrust complaint, according to people familiar with the matter, escalating a trans-Atlantic push to loosen the search giant's hold on digital ads.
The European Commission, the EU's top antitrust regulator, is expected as soon as Wednesday to file a formal antitrust complaint against Google alleging that the company abuses its role as one of the largest brokers, suppliers and online auctioneers of digital ads on third-party websites and apps, the people said.
Oil-Field-Services Companies Hold Merger Talks
NexTier Oilfield Solutions and Patterson-UTI Energy are holding talks over a possible merger that would create a bigger player in the oil-field-services industry, according to people familiar with the matter.
A deal isn't imminent, and it's not certain that the talks will result in a transaction, the people cautioned.
Netflix to Enter Live-Streamed Sports With Celebrity Golf Event
Netflix is in talks to live-stream its first sporting event this fall: a celebrity golf tournament featuring professional golfers and Formula One drivers, according to people familiar with the situation.
The company is in early discussions about the golf tournament, some of the people said. Set in Las Vegas, the event would feature celebrities from "Drive to Survive," a docuseries about Formula One auto-racing, and "Full Swing," which followed professional golfers during the 2022 season, they said.
Pro Take: JPMorgan's Fedspeak Evaluator Is Unsure About This Week's Rate Decision
A new tool from JPMorgan Chase that scans and scores speeches of Federal Reserve officials to help predict the direction of interest rates says it is a tossup whether the central bank will raise rates again this week.
The natural language processing tool puts a 50% probability on the Fed raising rates by a quarter percentage point Wednesday, which is more hawkish than some real-life economists and market players.
China Banks' New Yuan Loan Issuance for May Misses Expectations
Chinese banks' new yuan loan issuance for May missed market expectations as the economy's postpandemic recovery lost steam, official data showed Tuesday.
Lenders issued 1.36 trillion yuan ($190.33 billion) worth of loans, according to data released by the People's Bank of China. That was lower than the CNY1.62 trillion expected by economists surveyed by The Wall Street Journal and also CNY541.8 million less than the amount extended at the same time last year.
Renters Are About to Get the Upper Hand
Apartment rent growth is declining fast, shifting the rental market to the tenant's favor for the first time in years.
The average of six national rental-price measures from rental-listing and property data companies shows new-lease asking rents rose just under 2% over the 12 months ending in May.
Donald Trump to Make Initial Court Appearance in Miami
MIAMI-Donald Trump is set to surrender to authorities Tuesday and make his first appearance in a federal courtroom to face charges that he illegally held on to classified national-security documents after leaving the White House.
The history-making, if brief, hearing is expected to draw crowds of the former president's supporters and detractors, authorities said. Reporters and television crews already had staked out positions Monday outside the Wilkie D. Ferguson Jr. federal courthouse.
U.S. Set to Approve Depleted-Uranium Tank Rounds for Ukraine
The Biden administration is expected to provide Ukraine with depleted-uranium rounds following weeks of internal debate about how to equip the Abrams tanks the U.S. is giving to Kyiv, U.S. officials said Monday.
A senior administration official told The Wall Street Journal there appear to be no major obstacles to approving the ammunition.
Write to ina.kreutz@wsj.com TODAY IN CANADA
Earnings:
Valeo Pharma 2Q
Economic Events (ET):
Nothing major scheduled
Stocks to Watch:
Cineplex May Box Office Revenue C$48 M
---
Corby Spirit And Wine Limited To Acquire Ace Beverage Group; to Acquire 90% of Ace Beverage for C$148.5M; Has a Path to 100% Ownership of Ace Through Call Options on the Remaining Shrs Exercisable in 2025 and 2028
---
Sandstorm Gold Royalties to Remain in NYSE Arca Gold Miners Index
Expected Major Events for Tuesday
04:01/US: 3Q Manpower U.S. Employment Outlook Survey
06:00/GER: May CPI
06:00/UK: May UK monthly unemployment figures
08:00/ITA: 1Q Labour Cost Index
08:30/UK: 1Q Mortgage Lenders and Administrators Return (MLAR) statistics
09:00/GER: Jun ZEW Indicator of Economic Sentiment
10:00/US: May NFIB Index of Small Business Optimism
12:30/US: May CPI
12:30/US: May Real Earnings
12:55/US: 06/10 Johnson Redbook Retail Sales Index
16:59/GER: Apr Balance of Payments
20:30/US: 06/09 API Weekly Statistical Bulletin
23:01/UK: May Scottish Retail Sales Monitor
(MORE TO FOLLOW) Dow Jones Newswires
06-13-23 0617ET
