MARKET WRAPS
Watch For:
Walmart formal business & shareholders meeting; U.S. Housing
Starts for May; EIA Weekly Petroleum Status Report; U.S. Federal
Reserve economic projections and interest rate decision; Canada
Consumer Price Index for May.
Opening Call:
Stock futures wavered Wednesday ahead of the Federal Reserve's
latest projections, which could provide cues on when policy makers
may begin to dial back support for the economy.
Futures tied to the S&P 500 edged down less than 0.1%,
pointing to a tepid drop at the opening bell. The broad market
index ended Tuesday down 0.2%. Nasdaq-100 futures ticked up 0.1%
Wednesday, suggesting muted gains in technology stocks.
Stocks are hovering close to all-time highs with many developed
economies moving toward ending lockdowns while central banks keep
easy-money policies in place. Investors this week are watching for
any changes in Fed policy makers' views on inflation, the labor
market, and other economic indicators that may offer hints on when
they would begin tapering bond purchases. Data Tuesday showed that
retail sales dropped in May while producer prices rose, offering a
mixed picture of the recovery.
"We've had the initial exuberance and we are catching up a
little bit to reality. Markets are less liquid-being summertime-and
they are also digesting some of this anticipation," said Shaniel
Ramjee, a multiasset fund manager at Pictet Asset Management.
"There have been some data points that have come in lower than
expected, such as retail sales. It has reduced the cause for
concern that the Fed could taper faster than expected."
The Fed will release its latest monetary policy decision at 2
p.m. ET. The central bank will also release individual policy
makers' updated quarterly economic projections. The new forecasts
could show officials expecting to raise interest rates sooner than
they anticipated in March. They are also likely to begin discussing
when and how to start scaling back bond purchases.
"We are in the camp that everything we've seen so far isn't the
kind of thing that will make the Fed change its policy outlook at
all. Employment comes first, inflation second," said Samy Chaar,
chief economist at Lombard Odier. "The Fed will stick to its
pre-set course and tolerate inflation until the labor market
improves."
Data on housing starts in the U.S. in May is due at 8:30 a.m.
Economists are expecting an increase from strong demand, at the
same time that higher costs for building materials and worker
shortages are propelling house prices.
Forex:
The dollar may rise if the Federal Reserve signals it will soon
begin talks about tapering bond purchases but gains are unlikely to
be strong or long-lasting, Unicredit said.
The dollar's moves would also probably depend on the reaction of
stocks and bonds in particular, considering the 10-year U.S.
Treasury yield is struggling to rise above 1.50%, Unicredit
analysts said.
"Recent EUR/USD lows of around 1.2090 will probably be breached
on the Fed announcement, but we doubt that the USD recovery will be
strong enough to drag the common currency below the 1.2050-1.20 key
support levels and test additional downside potential." EUR/USD was
last flat at 1.2128.
The pound rose after data showed annual U.K. inflation reached
2.1% in May, above a Wall Street Journal poll forecast of 1.9% and
exceeding the Bank of England's 2.0% target for the first time in
almost two years.
Gains are limited, however, ahead of a Fed decision later which
has the potential to boost the dollar and weigh on risk appetite,
sending the pound lower.
Bonds:
In bond markets, the yield on the benchmark 10-year Treasury
note was relatively flat at 1.496%, compared with 1.498% on
Tuesday.
Perhaps the best one can expect from the Fed's meeting is "some
slightly more detailed guidance on the conditions that need to be
met before the Fed will consider tapering initiatives," said David
Norris, head of US credit at TwentyFour Asset Management.
This could include more of the same that Fed Chairman Jerome
Powell has said before as substantial further progress on inflation
and employment goals is needed before the Fed will look at cutting
its $120 billion of monthly bond purchases, Norris said.
TwentyFour AM will focus its attention on comments from the
various regional Fed presidents on conditions that could prompt
tapering in the future, he said.
Commodities:
Oil prices rose, with both benchmarks' early gains softening
despite sharper-than-expected draws in U.S. crude inventories shown
in API data on Tuesday.
Investors are also awaiting EIA inventory data due out later
Wednesday. Traders remain optimistic about the short-to-medium
future for oil prices, according to DNB Markets' Helge Andre
Martinsen.
At an event in London this week, Trafigura's CEO reportedly said
he sees a chance of $100 a barrel oil, while the CEOs of Gunvor and
Vitol both expect elevated prices in the coming months. UBS on
Wednesday lifted its September oil forecast by $3 a barrel to $78 a
barrel for Brent.
Gold prices edged higher as investors awaited the Fed meeting.
Comex gold futures rose 0.3% to $1,862 a troy ounce. Gold, which
has edged down 2.3% so far this month, is likely pricing in
expectations that the Fed will offer clues on tapering, suggesting
it won't move greatly on such news, said Carsten Fritsch, an
analyst at Commerzbank.
TODAY'S TOP HEADLINES
Regeneron's Antibody Drug Cuts Risk of Death in Some Covid-19
Patients
An antibody treatment developed by Regeneron Pharmaceuticals
Inc. has been shown to significantly cut the risk of death among
certain hospitalized Covid-19 patients, raising hopes for a
valuable new tool for tackling severe cases.
A large U.K. trial involving nearly 10,000 patients showed that
administering REGEN-COV on top of usual care reduced the risk of
dying by a fifth among hospitalized coronavirus patients who hadn't
produced antibodies to the virus. The drug had no effect among
patients who had already produced antibodies.
Read More ->
Chinese Trucking Startup Seeks to Raise Up to $1.6 Billion in
U.S. IPO
Full Truck Alliance Co., a Chinese startup that provides an
Uber-like service for the road-haulage industry, aims to raise as
much as $1.57 billion from its U.S. initial public offering, a
filing showed.
The company, also known as Manbang Group, runs a mobile app
connecting truck drivers to businesses that need to transport goods
within China. It has a number of high-profile investors including
Alphabet Inc. and SoftBank Group Corp.'s Vision Fund.
Read More ->
FDA Authorizes More Covid-19 Vaccine Doses From Troubled
Baltimore Plant
The Food and Drug Administration cleared an additional batch of
Johnson & Johnson Covid-19 vaccine doses Tuesday from a
troubled production plant in Baltimore.
The agency cleared 15 million doses, bringing the total doses
authorized for export to 25 million, according to a senior U.S.
official.
Read More ->
Platinum Equity Strikes Deal to Buy McGraw Hill From Apollo
Private-equity firm Platinum Equity has struck a deal to buy
McGraw Hill from Apollo Global Management Inc.
The deal for the textbook publisher and educational-technology
company, announced Tuesday following an earlier report by The Wall
Street Journal, is valued at about $4.5 billion, including
debt.
Read More ->
Southwest Airlines Flights Thrown Into Disarray by Technical
Problems
For the second day in a row, a technical problem snarled
Southwest Airlines Co.'s operations, leading to hundreds of delays
and prompting the airline to cancel 500 flights.
Southwest said it was in the process of resuming normal
operations following what it called a system issue that created
disruptions throughout its network. An airline spokeswoman said
multiple systems had experienced connectivity issues.
Read More ->
Oracle Reports Record Annual Profit, Revenue
Oracle Corp. reported an 8% revenue increase in the latest
period, ending the year with a record $40.48 billion in
revenue.
The business software giant also reported a record $13.75
billion profit for the year ended May 31 and pointed to
accelerating growth rates of both its applications and
infrastructure cloud businesses.
Read More ->
Fed Meeting Likely to Signal Possible Policy Shifts
WASHINGTON-Federal Reserve officials are set to provide updated
details on their plans for eventually scaling back easy-money
policies as they conclude a two-day policy meeting amid signs of
accelerating economic growth and inflation.
The Fed on Wednesday is likely to say after the meeting that it
will maintain short-term interest rates near zero and keep buying
at least $120 billion a month of Treasury and mortgage bonds. The
central bank will also release individual policy makers' updated
quarterly economic projections.
Read More ->
Derby's Take: Consumer and Market Views on Inflation Diverge as
Fed Meeting Looms
Federal Reserve officials are approaching this week's monetary
policy meeting at a moment when consumers and markets are diverging
on what they think the future path of inflation will be.
On Monday, the Federal Reserve Bank of New York said respondents
to its May Survey of Consumer Expectations believe that a year from
now, inflation will surge to a series high of 4%, while three years
from now, they see inflation jumping to 3.6%. What is more,
consumers expect nearly all the key real-world things people spend
their income on-home buying, rent, food, gasoline, medical care-to
see big price increases over the next year.
Read More ->
China to Release Metal Reserves in Effort to Tame Commodities
Rally
SINGAPORE-China plans to release national reserves of major
industrial metals in an effort to rein in surging commodities
prices fueled by a resumption of global economic activity.
The state stockpiling body, China's National Food and Strategic
Reserves Administration, said Wednesday that it plans to release
copper, aluminum, zinc and other national reserves in batches in
the near future to ensure the supply and price stability of bulk
commodities.
Read More ->
Turkey's Troubles Point to Emerging-Market Risks as Economies
Recover
Any signal that the Federal Reserve will tighten policy on
Wednesday could ripple across emerging markets that are dependent
on the U.S. dollar. Prime among them is Turkey.
The Turkish lira has come under pressure in recent weeks as
investors try to assess whether the country's central bank will
heed the demands of its president to cut interest rates. But a rate
cut could drag the lira down further at the same time that the
country's high inflation rate is already diminishing the currency's
buying power.
Read More ->
China's Economic Growth Moderates in May
China's economic growth moderated in May as the favorable base
effect faded.
Industrial production rose 8.8% in May from a year earlier,
slowing from April's 9.8% pace, according to data released
Wednesday by the National Bureau of Statistics. The growth in
industrial production matched the 8.8% pace expected by the
economists polled by The Wall Street Journal.
Read More ->
Ifo Institute Cuts Its 2021 German Economic Growth Forecast to
3.3%
The Ifo Institute has lowered its forecast for economic growth
for Germany in 2021 to 3.3% from 3.7% forecast in March, because of
bottlenecks in the supply of intermediate products.
"Reopening businesses triggered a strong recovery, but this is
now getting pushed back a bit further than we thought in the
spring," Timo Wollmershaeuser, head of forecasts at Ifo, said.
Read More ->
UK Inflation Rose Above Bank of England's 2% Target in May
Annual inflation in the U.K. exceeded the Bank of England's
target in May for the first time in almost two years.
The data add to signs of inflationary pressure worldwide, though
BOE officials have said they expect any pickup in price growth to
prove transitory.
Read More ->
Democratic Leaders Start Talks on Second Infrastructure Bill
WASHINGTON-Democratic leaders began to discuss the contours of a
broad-ranging child care, climate and education package Tuesday in
an effort to appease the concerns of the party's liberal wing over
the narrower scope of a bipartisan infrastructure proposal under
discussion.
Progressive Democrats in both chambers criticized the size and
breadth of a more limited agreement reached late last week by a
bipartisan group of 10 senators. They threatened to withhold their
votes unless they received assurances that it would be accompanied
by a far-reaching package that could pass with only Democratic
votes.
Read More ->
Political Summits Signal International Focus on Ransomware
The attention of world leaders to ransomware in a series of
high-level meetings highlights how quickly the destructive
cyberattacks have climbed the political agenda as a string of
recent attacks disrupted companies and critical infrastructure in
the U.S. and other countries.
On Wednesday in Geneva, President Biden is expected to pressure
Russian President Vladimir Putin to curb ransomware groups based in
Russia. Meanwhile, at the North Atlantic Treaty Organization summit
on Monday and the Group of Seven meeting last weekend, leaders
committed to disrupting ransomware networks and holding attackers
accountable in documents published at the end of both summits.
Read More ->
Israeli Airstrikes Hit Gaza As Nationalist March in Jerusalem
Stokes Tensions
JERUSALEM-Israeli police fired rubber bullets at Palestinians
trying to disrupt a right-wing nationalist march in Jerusalem,
while Hamas militants launched incendiary balloons into Israel that
triggered Israeli airstrikes in the Gaza Strip, raising the specter
of renewed violence in the region.
The Israeli military said it carried out a limited series of
airstrikes on the militant group's compounds across the Gaza Strip,
marking the first time the rival forces have traded blows since the
two sides agreed to a May 21 truce that brought an end to an 11-day
conflict.
Read More ->
Federal Judge Stops Biden Administration From Blocking New Oil
and Gas Leases
A federal judge in Louisiana issued a preliminary injunction
blocking the Biden administration from pausing new oil and gas
leases on federal land.
Judge Terry A. Doughty of the U.S. District Court in Monroe said
the administration doesn't have the legal right to stop leasing
federal territory for oil-and-gas production without approval from
Congress.
Read More ->
Write to sarka.halas@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Indicators (ET):
0830 May CPI
0830 Apr Wholesale trade
1830 Bank of Canada Governor Tiff Macklem appears before the
Standing Senate Committee on Banking, Trade and Commerce via video
conference
Stocks to Watch:
No items published
Other News:
When Will the Canada-U.S. Border Reopen? What We Know
For the past 15 months, the U.S. and Canada have turned away
tourists at entry points across the 5,500-mile land border in an
effort to contain further spread of Covid-19. In light of progress
in both countries on the Covid-19 vaccination front, business
groups are now pushing Washington and Ottawa to reopen border
crossings -- to the fully vaccinated, at least at the start.
Such a move "would sustain jobs, boost business confidence and
allow more families to reunite," according to a joint statement
issued by six U.S. and Canadian business lobbies, among them the
U.S. Chamber of Commerce. "It would help facilitate a safe and
gradual return to a more normal life."
The U.S. and the U.K. have agreed to open up travel between the
two trans-Atlantic allies as soon as possible. Canadian Prime
Minister Justin Trudeau said he spoke with President Biden at the
margins of the Group of Seven leaders' summit in England about
reopening the border.
When will the Canadian border reopen?
Theoretically, it could open as soon as June 22, or at the end
of the current monthly ban on nonessential travel. U.S. and
Canadian officials have mutually agreed to renew the 30-day ban
around the 21st of each month since it was first imposed in March
2020.
The Centers for Disease Control and Prevention earlier in June
downgraded its warning about travel to Canada by one level, from
"very high" to "high," coinciding with a steep drop in Covid-19
cases in Canada after a destabilizing third wave of infections.
The third wave prompted authorities in Canada to impose strict
economic and social-distancing restrictions. However, nearly all
regions across Canada have started to relax some of the
restrictions, based on vaccination rates -- nearly two-thirds of
the population has received one dose of a Covid-19 vaccine -- and a
sharp drop in infections.
Market Talk:
No items published
Expected Major Events for Wednesday
06:00/UK: May UK producer prices
06:00/UK: May UK monthly inflation figures
08:00/GER: Ifo Economic Forecast
08:30/UK: Mar Card Spending statistics
08:30/UK: Apr UK House Price Index
11:00/US: 06/11 MBA Weekly Mortgage Applications Survey
12:30/US: May Import & Export Price Indexes
12:30/US: May New Residential Construction - Housing Starts and
Building Permits
12:30/CAN: May CPI
12:30/CAN: Apr Wholesale trade
14:30/US: 06/11 EIA Weekly Petroleum Status Report
18:00/US: Federal Reserve economic projections
18:00/US: U.S. interest rate decision
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
AEterna Zentaris Inc (AEZS,AEZS.T) is expected to report for
1Q.
Andrew Peller (ADW.A.T,ADW.B.T) is expected to report for
4Q.
Ashford Inc (AINC) is expected to report $-5.92 for 1Q.
BeyondSpring Inc (BYSI) is expected to report $-0.54 for 1Q.
Culp Inc (CULP) is expected to report $0.08 for 4Q.
Genesis Healthcare Inc (GENN) is expected to report $-0.33 for
1Q.
Lennar Corp - A Share (LEN,LENB) is expected to report $2.38 for
2Q.
Neptune Wellness Solutions Inc (NEPT,NEPT.T) is expected to
report for 4Q.
Oatly Group AB - ADR (OTLY) is expected to report for 1Q.
Progressive Corp (PGR) is expected to report.
Simply Inc (SIMP) is expected to report for 1Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Broadstone Net Lease Cut to Neutral From Overweight by JP
Morgan
Bruker Corp Raised to Buy From Neutral by Cleveland Research
Ceridian HCM Cut to Hold From Buy by Needham
Cimarex Cut to Neutral From Buy by UBS
Crane Co Raised to Buy From Neutral by DA Davidson
Fastenal Cut to Underweight From Equal-Weight by Morgan
Stanley
Finance of America Raised to Strong Buy From Outperform by
Raymond James
Olin Corp Raised to Buy From Neutral by UBS
Principal Financial Cut to Neutral From Overweight by Piper
Sandler
Spirit Airlines Raised to Buy From Neutral by Citigroup
W. P. Carey Raised to Overweight From Neutral by JP Morgan
Welltower Raised to Strong Buy From Market Perform by Raymond
James
This article is a text version of a Wall Street Journal
newsletter published earlier today
(END) Dow Jones Newswires
June 16, 2021 06:03 ET (10:03 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.