U.K. monthly retail sales figures; Consumer confidence survey
for France, Italy; Italy business confidence survey; no major
corporate trading updates
Cautious opening for stock in Europe on Friday as investors
tracks progress in the U.S. debt-ceiling negotiations. In Asia,
stock benchmarks were broadly higher; Treasury yields were little
moved; the dollar weakened; oil fell and gold advanced.
European stocks could be little moved amid cautious sentiment,
as the looming U.S. debt-ceiling deadline continues to cause worry
Top House Republicans and the White House on Thursday sounded
upbeat on Washington's debt-ceiling talks with President Biden
saying negotiations were "making progress." But policy makers and
analysts are warning of a market calamity should the limit not be
raised in time.
Marko Papic, chief strategist at the Clocktower Group, said
markets are trading in line with how negotiations have
"I'm pleasantly surprised with how well negotiations have gone,
and how well the market has taken it," he said. "But I'm still
"People are nervous and a bit concerned about if the government
is going to miss an interest payment," said Robert Pavlik, senior
portfolio manager at Dakota Wealth Management, adding that his
expectation was for talks to go past the June 1 deadline, rattling
markets, but then for a resolution to be found.
Meanwhile, a slate of economic data showed U.S. economic growth
and inflation remain hot, adding to fears of persistently tight
monetary policy from the Federal Reserve.
Gross domestic product, personal consumption, and Core PCE-the
Fed's preferred inflation gauge-all came in hotter than expected
for the first quarter. Jobless claims increased slightly last week,
but remained at historic lows.
Recent remarks by senior Fed officials show there's little
consensus on what to do in June. Several say interest rates need to
go higher this year while most others have taken a wait-and-see
The president of the Boston Federal Reserve Thursday said signs
of waning inflation suggest the central bank may be "at, or near,
the point" where it can stop raising interest rates.
"While inflation is still way too high, there are some promising
signs of moderation," said Susan Collins, president of the Boston
Collins said she would base her judgment on upcoming reports on
inflation, employment and economic growth before the Fed's next big
meeting on June 13-14.
The dollar weakened as investors track Fed officials' commentary
and Treasury yields.
There are core tailwinds supporting USD's investment case, said
Chris Weston, head of research at Pepperstone.
There's a cyclical element where U.S. economic data has recently
been better than expected, Weston said.
There are also U.S. mega-cap tech companies that attract
international capital, Weston adds, noting this has led to USD
becoming the "best house in the street."
"While broader market attention is highly focused on debt
ceiling negotiations...the dollar's rise has occurred amidst
ongoing resilience in US economic data, softer data abroad, and
ever-evolving Fed expectations," Bank of America's Alex Cohen
Recent remarks from Fed officials also "suggest that the Fed may
not be at terminal after all," Cohen said.
Navellier & Co. chairman Louis Navellier pointed to the
jobless claims that came in lower-than-expected which he said "led
to forecasts for Fed cuts to be pushed into early 2024 and the
likelihood for another Fed increase by July to 60%, with a pause in
June increasingly being heard in Fed-speak."
Treasury yields were little changed as traders priced in a
greater chance of further interest-rate hikes by the Federal
Reserve through July.
Debt-ceiling concerns and Federal Reserve policy continued to
impact different parts of the market for U.S. government paper.
Fed funds futures traders saw a growing likelihood that the
central bank will hike interest rates again in June, following
Wednesday's release of the Fed's May meeting minutes.
Markets are pricing in a 52.8% probability that the Fed will
hike by another 25 basis points, to 5.25%-5.5%, on June 14,
according to the CME FedWatch Tool.
Traders also see a 24.9% chance of another hike of that size in
July, assuming the June move takes place.
Oil futures are lower in Asia on possible position
The downside for oil prices should be supported in the longer
term due to OPEC+ production cuts and a
more-resilient-than-expected U.S. economy, says Fawad Razaqzada,
market analyst at City Index and
, in an email.
The more time that transpires, the tighter the oil market will
become, as the OPEC+ cuts filter through, Razaqzada added.
"The debt ceiling talks debacle that have gone into overtime is
raising concerns of a default," said Phil Flynn, senior market
analyst at The Price Futures Group.
"These concerns have misdirected the oil market focus from the
lurking supply shortage that may end up doing more damage to the
economy than a default by the United States."
Gold gained early Friday amid focus on the U.S. debt
"The debt ceiling drama is getting most of the attention, but a
hawkish shift in tone by a list of [U.S. Federal Reserve] officials
recently has holstered the dollar and sent policy-sensitive rates
(beyond those durations reacting to the debt negotiations) higher,"
analysts at Sevens Report Research said.
"Bottom line for gold, if the dollar continues higher and yields
extend their recent advance, the 2023 uptrend will likely break,"
the Sevens Report analysts said.
U.S. economic data such as personal income and spending due
later today could be the next big catalyst for gold, in the absence
of any shocking Fed commentary, Oanda said.
Copper prices rose in Asia, as some investors deemed the recent
selloff as overdone.
"Sentiment was boosted by comments from major producers that
good times are not far away," ANZ analysts said.
They cited BHP's positive view on China's property-market
recovery and mining investor Robert Friedland's bullish view on the
Chinese iron-ore futures were lower amid weak demand from steel
"[The] crude steel production cut policy began to ferment
recently. Coupled with the off-season steel price pressure, it
remains doubtful that the steel mills will resume production,"
Baocheng Futures analysts said.
Looking ahead, weak iron-ore demand will likely persist, and
pressure on prices is set to remain, the analysts say.
TODAY'S TOP HEADLINES
Biden, McCarthy See Progress but No Deal on Debt Ceiling
WASHINGTON-The House of Representatives left for its Memorial
Day weekend recess with some progress but no deal in place to raise
the nation's debt ceiling, as the White House and top Republicans
sought to agree on the central issue of government-spending
Negotiators are narrowing in on a two-year spending deal that
would raise the debt ceiling for the same amount of time, extending
it past the 2024 election, people familiar with the discussions
said, but noted nothing has been finalized.
U.S. Regulator Vows Tough Line on Problem Banks
Large U.S. banks found to have consistently poor risk management
and other failings will face more heavy-handed government
intervention, including demands to shore up capital or exit lines
A policy unveiled Thursday creates a new set of guardrails
targeting complex banks that fail to fix "persistent weaknesses,"
said Michael Hsu, head of one of the nation's top banking
regulators, the Office of the Comptroller of the Currency.
Pressure Mounts for U.S. Response After China's Micron Ban
Commerce Secretary Gina Raimondo and her Chinese counterpart
held a pivotal meeting on U.S.-China ties as pressure was building
on the Biden administration to respond to Beijing's blacklisting of
the U.S. semiconductor maker Micron Technology.
Any retaliation by the U.S. over Micron carries the risk of
setting back a fragile rapprochement after months of bruising
acrimony. Raimondo's dinnertime meeting Thursday with Chinese
Commerce Minister Wang Wentao was the latest in a series of
high-level talks intended to restart dialogue and the first one to
take place in Washington.
Lufthansa Buys Minority Stake in ITA Airways
Germany's Deutsche Lufthansa said it had reached an agreement
with the Italian Ministry of Economy and Finance to acquire a 41%
stake in ITA Airways, the Italian carrier formerly known as
Alitalia, building on its exposure to what Lufthansa called the
third-largest airline market in Europe.
The German carrier group said Thursday that it would inject 325
million euros ($349.4 million) into ITA to buy the stake, with the
Italian government pledging a further EUR250 million. The deal,
which is subject to regulatory approvals, enables Lufthansa to
increase its stake in the carrier or even acquire it outright,
making ITA's purchase price dependent on the achievement of jointly
agreed targets for net debt and earnings.
Tesla, Ford Team Up in EV Charging Deal
Tesla is opening some of its fast-charging network to Ford Motor
customers in the U.S. and Canada, the companies' chief executives
said in a joint appearance Thursday.
The deal would give Ford customers access to more than 12,000
fast-chargers, known as Superchargers, beginning in early 2024. The
Detroit company also plans to adopt Tesla's charging port.
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Expected Major Events for Friday
06:00/UK: Apr UK monthly retail sales figures
06:00/SWE: Apr PPI
06:00/SWE: Apr Retail sales
06:00/NOR: Apr Retail Sales
06:30/HUN: Apr Employment & unemployment
06:45/FRA: May Consumer confidence survey
07:00/SVK: Apr PPI
08:00/ITA: May Consumer Confidence Survey
08:00/ITA: May Business Confidence Survey
08:00/AUT: May Austria Manufacturing PMI
08:00/ICE: May CPI
09:00/LUX: Mar Trade
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(END) Dow Jones Newswires
May 26, 2023 00:14 ET (04:14 GMT)
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