UKX FTSE 100 Index

MARKET WRAPS

Stocks:

European stocks inched up on Wednesday as investors waited for the outcome of a Federal Reserve policy meeting due later. Miners were lower as China took aim at soaring commodity prices.

The Stoxx Europe 600 index rose 0.1%, the German DAX was down 0.3%, the French CAC 40 was up 0.1% and the FTSE 100 index was up 0.1%.

U.K. consumer prices rose 2.1% on the year in May, the fastest pace of growth since July 2019, the Office for National Statistics said on Wednesday. The rise exceeded the Bank of England's target for the first time in almost two years. But like the Fed and other central banks, U.K. officials have said they expect price rises to be transitory.

Germany's Ifo Institute lowered its forecast for economic growth for the country in 2021 to 3.3% from 3.7% forecast in March, citing bottlenecks with supplies of intermediate products.

Economic data from China showed a moderating of growth in May, with industrial production, while retail sales and fixed-asset investment all rising, but slowing from the pace seen in year-earlier periods.

Mining stocks fell after China's state stockpiling body said Wednesday that it will release national metals reserves such as copper and aluminum batches in the near future to keep supply and prices stable.

Commodity prices have been soaring around the world as some economies speed up recoveries from the pandemic.

Shares of Anglo American fell 1.8% and Glencore nearly 2%. Rio Tinto shares slipped 0.5%. Copper and palladium prices shifted lower on Wednesday.

Shares of German business software group fell SAP fell on the heels of results from U.S. rival Oracle which soundly beat expectations for earnings and sales to close out its fiscal year on Tuesday. However, Oracle shares slipped amid softer-than-anticipated guidance for the August quarter.

U.S. Markets:

Stock futures wavered 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:

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 after oil proved an exception to downbeat commodities trading Tuesday. Brent broke through levels not seen since April 2019 and is gaining further after the API reported that U.S. crude inventories fell by much more than expected in the most recent reporting week, according to ING's Warren Patterson.

Still, "while the recent move higher in the oil market has been driven by optimism over the demand outlook, refinery cracks suggest that the rally in crude oil may be getting a bit ahead of itself," he added.

If demand were as strong as crude prices suggest, gasoline and heating oil cracks wouldn't be coming under pressure, Patterson said.

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.

EMEA HEADLINES

HSBC Reshuffles Top Team as Alternatives Push Takes Off -- Financial News

HSBC Holdings PLC's fund management arm has created a new division that will bring together 150 staff and alternative assets representing more than $50 billion, shaking up its top team in the process.

The unit called HSBC Alternatives will draw from HSBC Alternative Investments --which includes third party hedge funds and private market funds-- as well as teams from its private debt, venture capital and direct real estate businesses.

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.

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.

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.

SSAB, Volvo Cars Explore Development of Fossil-Free Steel for Use in Automotive Industry

Swedish steelmaker SSAB AB said Wednesday that it is teaming up with Volvo Cars to jointly explore the development of fossil-free steel for use in the automotive industry.

As part of the collaboration, Volvo Cars will be the first car maker to secure SSAB steel made from hydrogen-reduced iron from the company's Hybrit pilot plant in Lulea, Sweden. This steel will be used for testing purposes and may be used in a concept car, it said.

Made.com Group to Be Valued at $1.09 Bln in London IPO

Made.com Group PLC has priced its initial public offering at 200 pence a share, implying a market capitalization of 775.3 million pounds ($1.09 billion) when conditional trading starts on the London Stock Exchange on Wednesday.

The homewares and furniture company, which confirmed its IPO plan earlier this month, said it is raising GBP100 million of new money which will be used toward growth in existing markets, improving its service, scaling its homeware range and giving the group increased working capital flexibility.

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.

Iran Election Underdog Contends With Hard-Liner, Voter Apathy

TEHRAN-As Iranians prepare to head to the polls on Friday, the only way for the leading moderate candidate to make any headway against the hard-line presidential front-runner is to convince millions of Iranians to bother voting at all.

Former central bank chief Abdolnaser Hemmati is pitching himself as a reform-friendly centrist to revive Iran's relations with the West and allow more personal freedoms, including a more prominent role for women. He is currently polling in the low single digits, with many Iranians saying they will skip the ballot in protest at the way the country is run.

JPMorgan, Other Major Banks Excluded From Landmark European Bond Program

The European Union excluded some of the world's largest banks from working on a huge new debt-issuance program, citing recent cases in which regulators punished them for forming cartels in the bond and currency markets.

The banks include Barclays PLC, JPMorgan Chase & Co., Nomura Holdings Inc., UniCredit SpA, Bank of America Corp., Citigroup Inc. and Credit Agricole SA, according to an EU official.

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.

Hungary Bill to Restrict How Media Depicts Homosexuality, Transgender Rights

Hungary's parliament approved legislation on Tuesday banning broadcasters, advertisers, and media organizations from promoting homosexuality or transgender rights in any content available to children, a move that drew condemnation from the U.S. and leaders within the European Union.

The bill, first drafted as a series of new measures against pedophilia, was tweaked to include those restrictions on media in the last days before Tuesday's vote, which several parties boycotted. It passed 157-1, mainly with support from the Fidesz, the conservative-nationalist party of Prime Minister Viktor Orban.

GLOBAL NEWS

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.

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.

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.

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.

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.

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.

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

(END) Dow Jones Newswires

June 16, 2021 06:14 ET (10:14 GMT)

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