MARKET WRAPS
Watch For:
Germany labor cost index; Italy industrial production; no major
corporate trading updates expected
Opening Call:
European shares may open slightly higher Friday as attention
turns to next week's central bank rate decisions. In Asia, stock
benchmarks tracked Wall Street higher; the dollar rose slightly;
Treasury yields were little changed; oil futures fell while gold
advanced.
Equities:
Stock futures edged higher early Friday, as traders look ahead
to next week's interest-rate decisions from the European Central
Bank and the Federal Reserve.
U.S. stocks rose Thursday, ending the S&P 500's longest bear
market since the 1940s and marking the start of a new bull run. The
broad index powered higher over the past few months, in large part
because of a handful of companies posting outsize gains.
Positioning in futures markets suggests many traders are betting
the Fed will keep interest rates unchanged in June. That might
offer markets some relief in the short-term, although investors
warn that there could still be more policy-tightening ahead.
"Right now, the market feels reasonably comfortable that the
expectation is for the Fed to stay put where it is for interest
rates and not raise rates again," said Yung-Yu Ma, BMO Wealth
Management's chief investment strategist. "We think that's the most
likely scenario. We think a lot of the interest rate increases that
already happened have yet to really play out through the
economy."
"A pause does not mean they are done with rate hikes," said Tim
Courtney, chief investment officer at Exencial Wealth Advisors.
Traders are betting volatility could pick up in the coming
months. The options contracts with the biggest positions tied to
the Cboe Volatility Index, or Wall Street's "fear gauge," are
wagers that it will surge to 30-a level associated with investor
anxiety-or 60, a level only seen during stock-market crashes.
Read: S&P 500 exits longest bear market since 1948. What
stock-market history says about what happens next.
Forex:
The dollar strengthened slightly early Friday ahead of next
week's events. It is a relatively quiet day for the U.S. economic
calendar, with market participants awaiting key data and the FOMC
decision due next week, MUFG Bank senior currency analyst Jeff Ng
said.
As such, there may be some consolidation in the foreign-exchange
markets after prior movements, Ng added.
Meanwhile, U.S. weekly jobless claims data overnight tempered
renewed concerns that the Fed may keep borrowing costs higher for
longer, and could be the start of another upward trend after
stabilizing over the last few months, according to Oanda's Craig
Erlam.
"The timing ahead of next week's Fed meeting is interesting as
it may add just a tad more comfort to policymakers leaning towards
holding rates steady," he said.
In the last batch of data before next week's Fed decision, May's
CPI is slated for the first day of the FOMC meeting and PPI is
slated for the second day.
Bonds:
Treasury yields were little changed in Asia, after falling
overnight as new jobless claims showed the number of people who
applied for unemployment benefits in early June jumped to a nearly
two-year high, while investors reassessed the Fed policy trajectory
following unexpected interest-rate rises by central banks in
Australia and Canada.
Markets are pricing in a 72.5% probability that the Fed will
leave interest rates unchanged at a range of 5.0% to 5.25% after
its meeting on June 14, according to the CME FedWatch tool.
However, the chance of an additional 25-basis-point rate
increase in July has risen to nearly 50%, up from just 10% a month
ago. And whereas a few months ago the Fed was expected to have
begun cutting rates from current levels by this fall, the market is
now pricing in no such reduction until next year.
Energy:
Crude-oil futures fell early Friday. There are fears that a
possible U.S.-Iran nuclear deal could lead to more oil supply
entering the market, ANZ said, citing media reports from the Middle
East of progress in talks.
Any agreement to restore the 2015 nuclear deal could lead to the
removal of U.S. sanctions that have curtailed exports of Iranian
oil into the global market, ANZ added.
Metals:
Gold futures were a tad higher in Asia. The outlook for the
yellow metal appears mixed as there is a lack of economic data
toward the end of the week, which means market sentiment will
likely drive prices, said DailyFX contributing senior strategist
Daniel Dubrovsky.
Gold prices had risen sharply earlier due to a softer U.S.
dollar, he noted.
-
Copper prices were little changed, with the tone of the session
likely to be set by newly released China CPI and PPI figures, which
should provide cues on the country's economic growth.
While the metal's prices are likely to remain under pressure if
macroeconomic headwinds persist, any shift in sentiment could lead
to gains for industrial commodities, said ANZ.
-
Chinese iron ore prices rose, extending recent gains. The
steelmaking material has been rebounding from an earlier selloff on
an expected improvement in real estate construction activities, a
major source of iron ore and steel demand in China.
The rebound could continue further in the coming months, SDIC
Essence Futures said, adding that many steel producers have been
running low on iron ore inventory levels, which could lead to
restocking demand and support prices.
TODAY'S TOP HEADLINES
China's Producer Prices Declined Further in May
China's factory-gate price index tumbled to its lowest reading
in more than seven years, while consumer prices edged up slightly
in May, thanks to higher food prices, official data showed
Friday.
The producer-price index declined 4.6% from a year earlier in
May, compared with the 3.6% decline in April and marking the
weakest reading since February 2016, when PPI fell 4.9% from a year
earlier, according to data released by the National Bureau of
Statistics.
Ukraine Targets Russian Lines, as Counteroffensive Gathers
Pace
KHERSON, Ukraine-Ukraine launched armored assaults on entrenched
Russian forces in the southeast of the country, as a high-stakes
counteroffensive by Kyiv designed to decisively shift the momentum
of the 15-month war gathered steam.
Ukrainian officials said they were carrying out what they
described as local attacks in the southeastern Zaporizhzhia and
eastern Donetsk regions, while Russia's defense minister said
Moscow's forces had repelled Ukrainian attempts to break through
Russian lines.
Meta Reveals Twitter Competitor It Plans to Launch as
Stand-Alone App
Facebook parent Meta Platforms unveiled to employees a
stand-alone app it plans to launch through Instagram to compete
with Twitter, according to people familiar with the matter.
The app was demonstrated during an all-hands meeting Thursday
with Meta workers by Chief Product Officer Chris Cox, who called it
Meta's response to Twitter, the people said.
Write to singaporeeditors@dowjones.com
Expected Major Events for Friday
04:30/NED: Apr Manufacturing output
05:00/FIN: Apr Industrial Production
06:00/SWE: Apr New orders & deliveries in industry
06:00/SWE: Apr Industrial Production Index
06:00/GER: 1Q Labour cost index
06:00/DEN: Apr Balance of payments (provisional figures)
06:00/DEN: Apr External trade (provisional figures)
06:00/ROM: Apr International trade
06:00/NOR: May PPI
06:00/NOR: May CPI
07:00/SVK: Apr Foreign trade
07:00/SVK: Apr Industrial production
07:00/AUT: Apr Production Index
07:00/TUR: Apr Industrial Production Index
08:00/BUL: Apr Industrial Production
08:00/ITA: Apr Industrial Production
09:00/CRO: Apr Foreign Trade
09:00/CYP: Apr Foreign Trade (provisional)
09:00/MLT: Apr International Trade
09:00/GRE: May CPI
09:00/LUX: Apr Industrial Production
09:00/MLT: Apr Industrial Production Index
09:00/GRE: Apr Industrial Production Index
10:00/POR: Apr International trade statistics
15:59/UKR: 1Q GDP
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(END) Dow Jones Newswires
June 09, 2023 00:16 ET (04:16 GMT)
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