UKX FTSE 100 Index

MARKET WRAPS

Watch For:

Eurozone M3, Business/Consumer Surveys; Germany Provisional CPI; UK Capital Issuance; updates from Traton, Deutsche Boerse, MFE-MediaForEurope, Galp Energia, H&M, Harbour Energy, Meggitt, Provident Financial, Sberbank, VEON, Orsted

Opening Call:

Renewed doubts over the resilience of the global economy, faced with tightening monetary policy, will dampen the mood in Europe on Wednesday. In Asia, stocks were lower across the board; Treasury yields, the dollar and oil were lower and gold was flat.

Equities:

European stocks faces opening losses on Wednesday after Wall Street fell for a second consecutive day as downbeat economic data sowed fears about the outlook for corporate earnings.

"There's some nervousness that companies will miss their numbers or deliver negative guidance," said Steve Sosnick, chief strategist at Interactive Brokers.

"Earnings expectations haven't really been lowered in the face of economic news that seems to dictate that we should [lower expectations]. And the market is going to have to reconcile this over the next month or so," he added.

John Lynch, chief investment officer for Comerica Wealth Management, warned that poor consumer confidence readings risked becoming self-fulfilling, which could in turn threaten an economic contraction in the U.S.

"The persistent weakness in confidence surveys suggests a recessionary environment can become self-fulfilling," said Lynch.

On Tuesday, Federal Reserve Bank of New York President John Williams said the central bank will be weighing another large rate rise when it meets next month, while noting that he also believes the economy can escape falling into recession.

"We've got to get interest rates higher and we need to do that expeditiously," Williams said. "In terms of our next meeting. I think, you know, 50 [basis points] or 75 [basis points] is clearly going to be the debate" among policy makers, although the actual size of the rate increase will be driven by the data, he said.

Read more from Williams here

Stocks to Watch:

Grubhub CEO said parent company Just Eat hopes to find a strategic partner to invest in the U.S. online ordering company, though an outright sale isn't off the table. Adam DeWitt said no sale was imminent and that Just Eat was exploring options to strengthen Grubhub as its U.S. division encounters challenges.

Read more here

Forex:

The dollar lost ground against major peers in Asia despite the risk-off environment.

The buck had strengthened on Tuesday, firming early in the day and extending gains following the disappointing consumer confidence data, reinforcing fears of a recession.

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Sterling's recent performance shows the market's indecisiveness, said Saxo Bank.

"GBP/USD has posted a remarkable string of six days with almost no daily change in the closing price level, even as intraday volatility hasn't been extremely quiet over the last week."

That comes after GBP/USD collapsed below 1.2000, a massive long-term chart level, earlier in June before recovering. The pause in the price action helped unwind downside momentum but increased uncertainty, Saxo Bank said. EUR/GBP was in a similar state, having reversed lower earlier this month but unable to sustain that move.

Bonds:

Treasury yields retreated early Wednesday having lost steam during New York trading but still managing to end the day higher, while the spread between the two-year and 10-year yields have widened a little over the past three days.

U.S. GDP data due later Wednesday and Thursday's PCE inflation print will be in focus for bond traders.

Energy:

Oil futures turned negative in Asia, reversing initial gains, as demand concerns continued due to fears of a recession.

However, prices may be supported in the near term, helped by reports that excess spare capacity from Saudi Arabia and UAE has not been as high as previously thought, said SPI Asset Management.

News that China has reduced its quarantine times for inbound travellers may also boost sentiment.

Other News:

The American Petroleum Institute reported inventories of crude oil in the U.S. fell by a hefty 3.8 million barrels in the latest week, according to a source citing the data, while gasoline supplies rose by 2.9 million barrels.

The results, bullish for crude and bearish for product, were released ahead of official inventory data from the EIA. Average forecasts in a WSJ survey indicate the EIA report will show crude inventories fell by 800,000 barrels from the previous week and that gasoline supplies also decreased by 800,000 barrels.

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Seaborne coal shipments are estimated to have climbed 12% on-year in the second quarter of 2022, to 344.4 million metric tons, according to S&P.

It attributed the increase in part to higher Russian coal shipments to places including China, India and northwestern Europe. In recent weeks, China's imports have been down amid increasing domestic output and softened power demand due to lockdowns.

"The market will be keeping a very watchful eye on Q3 demand from China as a rise in demand here could see international coal prices rise to unimaginable levels," said S&P.

Metals:

Gold was little changed as investors continue to weigh the probability of tightening monetary policy against the outlook for global economic growth, said ANZ.

Bullion prices could find support from haven demand as geopolitical tensions threaten to heat up. Investors were also weighing reports that the U.S., U.K., Japan and Canada plan to announce a new ban on Russia gold imports, ANZ added.

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Copper extended gains, buoyed by China's easing on Tuesday of Covid-19 quarantine requirements for international travelers coming into the country.

TD Securities said industrial metals have been gaining on this news, but given the brokerage's view that base metals have entered into a bear-market trading regime, this could be a short-covering move after the latest CFTC report highlighted aggressive short positions.

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Iron-ore futures were higher too, aided by China's quarantine move.

The drop in the seven--day average of new Covid-19 cases in China suggests that additional unwinding of Covid-related restrictions are likely and supports the case that its economic slowdown is bottoming out, said CBA.

TODAY'S TOP HEADLINES

Fed's Williams Sees Another Large Rate Rise at July Meeting as Possible

Federal Reserve Bank of New York President John Williams said Tuesday that the U.S. central bank will be weighing another large rate rise when it meets next month, while noting that he also believes the economy can escape falling into recession.

"We've got to get interest rates higher and we need to do that expeditiously," Mr. Williams said. "In terms of our next meeting. I think, you know, 50 [basis points] or 75 [basis points] is clearly going to be the debate" among policy makers, although the actual size of the rate increase will be driven by the data, he said.

G-7 Bid to Cap Russian Oil Price Faces Hurdle of Global Enforcement

PARIS-The Group of Seven major economies wants to impose a price cap on Russian oil exports. The challenge is enforcing it on buyers worldwide.

The G-7 leaders said Tuesday after their summit they were exploring a ban on the provision of maritime services to tankers carrying Russian oil, unless the oil were sold below a particular price. Backers say the proposal would achieve two goals: cutting Russian oil sales that are fattening Moscow's foreign-exchange coffers and lowering global oil prices that have surged since the war in Ukraine.

War, Weather Endanger Global Food Supplies, Farm Leaders Say

CHICAGO-War and weather are imperiling global food supplies, according to U.S. agriculture officials and executives, as rising food prices drive shortages and protests around the world.

The pressures are playing out this year as conflict in Eastern Europe disrupts exports from Ukraine, one of the world's top crop producers, and drought and poor weather afflict major crop-growing regions.

Grubhub CEO Says Sale Isn't Imminent, as Owner Seeks a Partner

CHICAGO-Grubhub Chief Executive Adam DeWitt said company parent Just Eat Takeaway.com NV hopes to find a strategic partner to invest in the U.S. online ordering company, though an outright sale isn't off the table.

In some of his first public remarks about the company since Just Eat said in April it would consider selling Grubhub, Mr. DeWitt said no sale was imminent and that Just Eat was exploring options to strengthen Grubhub as its U.S. division encounters challenges.

U.K. June Retail Price Inflation Highest Since 2008

U.K. retail price inflation increased on year in June, accelerating from the prior month and marking the highest rate of inflation since September 2008, according to the latest report by Nielsen IQ and the British Retail Consortium.

Prices at U.K. stores rose 3.1% on-year for June 1 to June 7, up from 2.8% in May, the report found. This greatly exceeds the six month and 12 month average price increases of 2.3% and 1.0% respectively.

Turkey Backs NATO Membership for Sweden, Finland

MADRID-The North Atlantic Treaty Organization is on a course to admit Finland and Sweden following an agreement with Turkey, a move that would add vast territory and new military abilities in the wake of Russia's invasion of Ukraine.

The two Nordic countries, which had long shunned joining the alliance, abruptly changed their stance following Moscow's attack on its neighbor on Feb. 24.

Oil Tanker Is Stopped by U.S. in Transit From Russian Port to New Orleans

U.S. authorities have stopped a ship traveling from Russia to Louisiana with a cargo of fuel products, say people familiar with the matter.

The Daytona tanker is owned by Greek shipowner TMS Tankers Ltd. and was chartered by Vitol, a commodity trading house based in Switzerland. It sailed from Russia's Taman peninsula in the Black Sea in early June carrying fuel oil and vacuum gasoil, the data showed, and was planning to arrive in New Orleans on Sunday.

Write to paul.larkins@dowjones.com

Expected Major Events for Wednesday

04:30/NED: Jun Producer confidence survey

06:00/DEN: Jun Business tendency survey

06:45/FRA: May Housing starts

07:00/SWE: Jun Monthly Business Tendency Survey

07:00/SWE: Jun Consumer Tendency Survey

07:00/SPN: May Retail Sales

07:00/SPN: Jun Flash Estimate CPI

07:00/SVK: Jun Business tendency survey

07:00/SVK: Jun Economic sentiment indicator

08:00/EU: May Monetary developments in the euro area (M3)

08:00/ICE: May PPI

08:00/ICE: Jun CPI

08:00/GER: Jun Bavaria CPI

08:00/GER: Jun Brandenburg CPI

08:00/GER: Jun Hesse CPI

08:00/GER: Jun Baden-Wuerttemberg CPI

08:30/UK: May Capital issuance

08:30/GER: Jun North Rhine Westphalia CPI

09:00/CYP: Apr Industrial Production Index

09:00/EU: Jun Business & Consumer Surveys - Business Climate Indicator & Economic Sentiment Indicator

09:00/GER: Jun Saxony CPI

09:30/BEL: Jun CPI

12:00/GER: Jun Provisional CPI

23:01/UK: May UK monthly automotive manufacturing figures

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

June 29, 2022 00:38 ET (04:38 GMT)

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