OPENING CALL
Stock futures were rising Tuesday as Wall Street returned from a long weekend and traders looked ahead to inflation data at the end of the week.
Government bond prices also rose, pulling the yield on 10-year Treasurys slightly lower.
Overseas markets were mixed. The Stoxx Europe 600 was flat while indexes slipped in Japan, Hong Kong and mainland China.
Ahead
A big energy brawl heads to Wall Street today.
Hess shareholders are voting on its $53 billion sale to Chevron. But Exxon Mobil has muddied the waters. It is a partner of Hess in a huge offshore oil field in South America, and says it has a right of first refusal over that holding.
Several investors plan to abstain due to the feud. Even if shareholders give the go-ahead that wouldn't be the end of the matter. The Federal Trade Commission is investigating the merger and Exxon has filed an international arbitration claim.
Premarket Movers
Apple rose 2.1% after Bloomberg, citing figures from the China Academy of Information and Communications Technology, reported that iPhone shipments in China rose 52% from a year earlier.
Cava was up 4.3% ahead of quarterly earnings expected after the closing bell Tuesday.
GameStop gained 17% after the videogame retailer on Friday said it completed an equity offering of 45 million shares for proceeds of about $933.4 million.
Nvidia was up 2.9%. Its shares were boosted by an announcement by Elon Musk that his xAI start-up raised $6 billion in its latest round of fundraising.
Watch For:
Conference Board Consumer Confidence
Today's Headlines/Must Reads:
- A $4 Trillion Question For Republicans: Should They Pay for Extending Trump Tax Cuts?
- Wall Street's Favorite Recession Indicator Is in a Slump of Its Own
- Bullish Investors Are Piling Into Stock and Bond Funds
- Private-Equity Giants Near Settlements with SEC Over Texting Violations
MARKET WRAPS
Forex:
The dollar weakened as speculation grows that Friday's U.S. PCE data will show easing inflationary pressures and reignite prospects of U.S. interest-rate cuts, Swissquote Bank said.
If this indeed proves the case, then EUR/USD could extend gains and break above 1.09, Swissquote Bank said.
Expectations of Fed cuts would also boost bets on European Central Bank rate cuts, however, limiting any gains for the euro.
ING said the DXY dollar index has fallen very close to important chart support at 104.40--the lower boundary of this year's dollar rally--which, if broken, could encourage traders to take profit on their hefty long dollar positions.
"Investors [are] positioning once again for a soft U.S. landing," ING said.
Brown Brothers Harriman said resilient global economic activity is supporting risk assets and for now undermining the dollar, but the currency should soon resume the rising trend it has enjoyed so far this year.
Global purchasing manager surveys in May showed that momentum in economic growth "has shifted back in favor of the U.S.," Brown Brothers Harriman said.
The favorable U.S. economic backdrop justifies the Federal Reserve's recent narrative that interest rates are likely to stay higher for longer, it added.
EUR/CHF's medium-term uptrend may extend if key pivotal support at 0.9830 holds, based on technical charts, Oanda said.
Under such a scenario, the currency pair could undergo another potential impulsive upmove to test medium-term resistance in 1.0040-1.1000 area, which also confluences closely to the long-term descending trendline from the April 2018 high, Oanda said.
However, a break of EUR/CHF below 0.9830 would negate its bullish tone to expose medium-term support levels at 0.9680 and 0.9575.
Energy:
U.S. crude futures were higher, buoyed by expectations of stronger fuel demand, as Memorial Day weekend marked the start of the summer driving season.
"Early signs indicate a relatively strong level of holiday travel," ANZ Research said.
Oil was are also supported by increased geopolitical risks after an Israeli airstrike resulted in the deaths of dozens of civilians in Rafah and a cross-border clash left an Egyptian officer dead.
All eyes are now on Friday's U.S. PCE price index data and OPEC+'s upcoming output policy decision at a meeting on Sunday.
Metals:
Metal prices were higher as investors pivoted their attention to this week's inflation dataset release.
Bauxite, Alumina
China's reliance on imported bauxite and alumina is rising, Morgan Stanley said, and reckons the global alumina market is now especially vulnerable to disruptions and could experience spikes in prices. "Contrary to market perceptions, bauxite and alumina [supply] is tight in China."
Domestic bauxite output year-to-date is down 20% on a year earlier, weighing on alumina output. As a result, imports from Australia and Guinea are climbing, at a time when global alumina supplies are also facing headwinds.
TODAY'S TOP HEADLINES
Toyota to Develop New Engines That Run on Carbon-Neutral Fuels
Toyota Motor plans to develop new, smaller engines that can run on carbon-neutral fuels, the latest move by the world's largest carmaker to navigate the industry's bumpy transition away from conventional internal combustion engines.
The Japanese automaker said that to help decarbonize such engines, it will make smaller versions of them, compatible with various fuels that it says will produce net zero carbon-dioxide emissions.
Shein's Quest to Win Over America Gets Stuck in U.S.-China Tensions
Fast-fashion giant Shein seemed to be on a roll. The purveyor of $3 T-shirts, $10 jeans and other ultra-low-priced clothing had become one of the world's biggest fashion companies, with hundreds of millions of customers. In November, it filed to go public in New York, raising expectations it would be one of the biggest IPOs in years.
Its U.S.-based executive chairman, Donald Tang, shuttled across the country meeting politicians, optimistic he could sell them on his vision of Shein as a model of compliance and transparency.
Elon Musk's xAI Valued at $24 Billion After Latest Fundraising Round
Elon Musk's xAI said it raised $6 billion in its latest fundraising round, as the OpenAI rival looks to invest more in research and development amid fierce competition in the burgeoning sector.
The funding round brings the valuation of the year-old startup to $24 billion, including the newly raised funds, making it the second-most valuable AI startup outside of OpenAI.
China Evergrande's EV Unit Shares Soar on Potential Investor Support
Shares of China Evergrande Group's electric-vehicle unit surged, fueled by optimism that some businesses may survive despite the property giant's liquidation.
China Evergrande New Energy Vehicle shares jumped 92% to 73 Hong Kong cents (9 U.S. cents) on Monday after the EV startup said liquidators were in talks to sell a 29% stake in the unit to an unnamed buyer. The buyer would also have the option to purchase an additional 29.5% stake.
Kashkari says 'many months' of good inflation data needed before a rate cut
Minneapolis Federal Reserve President Neel Kashkari on Tuesday said in an interview there should be "many months" of benign U.S. inflation data before he would support an interest rate cut.
"Many more months of positive inflation data, I think, to give me confidence that it's appropriate to dial back," Kashkari told CNBC, when asked what would be needed for the Fed to cut. Kashkari is due to make a speech later on Tuesday.
Bankruptcies Have Left More Stores Vacant, but the Space Doesn't Sit Empty for Long
Red Lobster became the latest national chain to enter bankruptcy when the seafood-restaurant company filed for chapter 11 this month, saying it would break leases at 108 of its 550 locations.
Kimco Realty owns one of those restaurants marked for closure. While that would have caused concern for the property owner a few years ago, these days it is more of an opportunity. The firm is already fielding inquiries about the space located outside of Tampa, Fla., including from fast-food joint Raising Cane's, coffee chain Dutch Bros and Fifth Third Bank.
Israel's Deadly Rafah Strike Turns Up Political Pressure on Biden
WASHINGTON-President Biden is facing fresh political tension at home following an Israeli airstrike on Rafah that Palestinian authorities said killed dozens of civilians.
Israel said the strike killed two top Hamas officials, but Palestinian authorities said it also led to the deaths of at least 45 Palestinian civilians and wounded others, including women and children. Israeli Prime Minister Benjamin Netanyahu called the civilian deaths a "tragic mistake" and promised to investigate.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
Bank of Nova Scotia 2Q
Economic Calendar [ET]:
0830 Apr Industrial Product, Raw Materials Price Indexes
Expected Major Events for Tuesday
06:00/GER: Apr WPI
10:00/UK: May CBI Distributive Trades Survey
10:00/FRA: 1Q OECD trade statistics release
12:30/CAN: Apr Industrial product and raw materials price indexes
13:00/US: 1Q U.S. Quarterly House Price Index
13:00/US: Mar U.S. Monthly House Price Index
13:00/US: Mar S&P CoreLogic Case-Shiller Indices
14:00/US: May Consumer Confidence Index
14:30/US: May Texas Manufacturing Outlook Survey
17:00/US: Apr Money Stock Measures
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
Bank of Nova Scotia (BNS,BNS.T) is expected to report $1.14 for 2Q.
BowFlex Inc (BFXXQ) is expected to report $-0.06 for 4Q.
Box Inc (BOX) is expected to report $0.05 for 1Q.
CAVA Group Inc (CAVA) is expected to report $0.06 for 1Q.
D-Box Technologies (DBO.T,DBOXF) is expected to report for 4Q.
Digital Turbine Inc (APPS) is expected to report $-0.18 for 4Q.
Exicure Inc (XCUR) is expected to report for 4Q.
Fresh Tracks Therapeutics Inc (FRTX) is expected to report $-0.19 for 1Q.
(MORE TO FOLLOW) Dow Jones Newswires
05-28-24 0623ET
