MARKET WRAPS

Watch For:

U.S. Current Account for 1Q; U.S. New Home Sales for May; EIA Weekly Petroleum Status Report; Canada Retail Trade for April.

Opening Call:

Stock futures ticked higher Wednesday, signaling that the major indexes may inch toward all-time highs ahead of data on growth in the service and manufacturing sectors.

Stocks and bonds have steadied after the Federal Reserve whipsawed markets last week by signaling it might raise interest rates sooner than previously expected to ward off higher inflation. A scramble to adjust portfolios in response to that guidance has subsided, investors say. Fed Chairman Jerome Powell said Tuesday he has "a level of confidence" inflation will abate, bolstering the view that it will be many months yet before the central bank shifts its monetary policy stance.

"We should expect markets to show a heightened sensitivity to economic data from here on, now that investors have embraced the idea the monetary cycle is turning," said Paul O'Connor, head of the multiasset team at Janus Henderson Investors. "We should expect markets in the months ahead to be more volatile and more uncertain than they have been maybe over the past six months."

Surveys of purchasing managers at U.S. manufacturing and service firms are due to be released at 9:45 a.m. ET. Analysts polled by FactSet expect them to show the economy has continued to grow at a fast clip in June.

Data on sales of new homes are scheduled for 10 a.m.

Some investors have viewed the shake-up that followed the Fed's pivot as an opportunity to add to positions in value stocks and commodity markets such as copper. Sectors such as banking and energy, along with industrial metals, slid last week after benefiting from bets on higher growth and inflation for much of the year.

"There was an overreaction in bond yields and, as a second derivative of that, in bank stocks," said Matthew Quaife, heat of multiasset investment management for Asia at Fidelity International. "Growth will be pretty strong over the medium term."

Forex:

The dollar was broadly steady, edging higher against the euro and yen but falling against riskier commodity-linked and emerging-market currencies after Federal Reserve Chair Jerome Powell played down inflation risks. While acknowledging short-term risks of higher inflation, he stressed Tuesday that these would be temporary.

"After the hawkish surprise from the Fed last week, this should further help to stabilize the market and translate into a supportive environment over the summer for those cyclical currencies where local central banks have opted for meaningful tightening cycles," said ING.

These include the Brazilian real, Russian ruble, Hungarian forint and Norwegian krone, it said.

Bitcoin rose 3.3% from its 5 p.m. ET Tuesday level to $33,973.61. The cryptocurrency briefly dropped below $30,000 on Tuesday, erasing all of its gains for 2021.

The euro could struggle to rise above key psychological resistance at $1.2000, said Steen Jakobsen, chief investment officer at Saxo Bank.

A level of $1.2100 or higher would be needed to indicate a reversal of the euro's recent selloff. The rebound in the euro from last week's 2.5-month low of $1.1847 "looks modest," he said.

"The growing theme of tightening central banks globally sees little anticipation that the European Central Bank is about to send any strong message on that front."

Bonds:

The yield on 10-year Treasury notes ticked up to 1.472% from 1.471% on Tuesday.

The U.S.-German 10-year government bond yield spread doesn't seem to be correctly pricing a disparity between central-bank support in the eurozone and the U.S., UniCredit said.

The Italian bank expects this spread to widen in the coming months to reflect the difference in central-bank support, especially once the U.S. Fed starts a formal discussion on tapering of its asset purchases.

In the near term, UniCredit expects Bund yields to remain at current levels on the back of the European Central Bank's continuing accelerated pace of asset purchases, while strong data are likely to drive 10-year U.S. Treasury yields higher and the 10-year UST-Bund spread wider.

The 10-year UST-German Bund yield spread is just below 169 basis points, according to Tradeweb.

Commodities:

Oil prices rose after data showed U.S. crude oil stockpiles shrank last week. API's weekly data on U.S. oil inventories released Tuesday showed stocks fell by 7.2 million barrels last week. The decline was larger than the consensus estimates, said Helge Andre Martinsen, senior oil analyst at DNB Markets.

Focus is on OPEC+'s July 1 meeting, amid reports that some cartel members are considering advocating increasing supply.

"A potential supply hike of 0.5 million barrels a day from OPEC+ for August, will probably be too little too late, as the oil market will continue in undersupply and further erode OECD oil inventories," he said.

Copper prices rose as fears of tightening from the Federal Reserve ease while China outlines plans to sell its metals reserves.

Three-month copper on the LME was up 0.9% at $9,353.00 a metric ton. China's state reserve body said it would auction 20,000 tons of copper, 30,000 tons of zinc, and 50,000 tons of aluminum. The details helped ease uncertainty about the planned sales which had been weighing on metals markets.

Gold inched higher in early European trade. However, OCBC noted the precious metal may break the crucial support at $1,770 this week if U.S. Fed officials produce more hawkish rhetoric in the coming days.

TODAY'S TOP HEADLINES

Amazon and Other Tech Giants Race to Buy Up Renewable Energy

The race to secure electricity deals for power-hungry data centers has tech companies reshaping the renewable-energy market and grappling with a new challenge: how to ensure their investments actually reduce emissions.

Amazon.com Inc. said it planned Wednesday to announce commitments to buy 1.5 gigawatts of production capacity from 14 new solar and wind plants around the world as part of its push to purchase enough renewable energy to cover all of the company's activities by 2025.

Read More ->

Vizio Looks to Boost Software Business With IPO Cash

Vizio Holding Corp. is ramping up investment in its software business amid growing consumer demand for streaming content.

Vizio, which was founded in 2002, earns the bulk of its revenue-about 90%-from selling hardware such as internet-connected TV sets and sound bars, but its software business promises fatter margins. The software unit's profit margin was 73.7% for the quarter ended March 31, substantially higher than Vizio's hardware business, at 10.6%.

Read More ->

Apple's Fight for Control Over Apps Moves to Congress and EU

Apple Inc. is stepping up its fight to maintain tight controls over which apps can be installed onto customers' iPhones, as political pressure grows in Washington, D.C. and Brussels to upend those restrictions.

In a report released Wednesday, the company argues that allowing users to download apps directly onto their iPhones without having to use Apple's App Store would harm customers by threatening privacy protections, complicating parental controls and potentially exposing users' data to ransomware attacks.

Read More ->

South Korea's Answer to Robinhood and Venmo Lands a $7 Billion Valuation

A South Korean company whose app lets users transfer money, take out loans, trade stocks and check their credit scores has raised funds at a valuation of more than $7 billion, making it one of the world's most valuable financial-technology startups.

Viva Republica Inc., which operates the multifunction app Toss, said Wednesday it completed a round of fundraising worth 460 billion Korean won, the equivalent of $406 million, with investors including Alkeon Capital Management, Altos Ventures and Greyhound Capital.

Read More ->

Electric Car Maker XPeng Gets Approval for Hong Kong Listing

Electric car maker XPeng Inc. has secured approval for an initial public offering from Hong Kong regulators, making it the latest U.S.-listed Chinese company looking toward its home market, a person familiar with the situation said.

XPeng, which is already listed on the NYSE stock exchange with a market capitalization of over US$30 billion, is planning to raise up to US$2 billion in the offering, the person said.

Read More ->

Zohar Funds Seek Answers on Defunct Company's $16 Million Cash Pile

The bankrupt Zohar investment funds are again at odds with their creator, Lynn Tilton, over another of the companies to which they lent money, this time clashing over the proceeds of the 2016 wind-down of former textile manufacturer Galey & Lord LLC.

The Zohar funds have asked the U.S. Bankruptcy Court in Wilmington, Del., to remove an affiliate of Ms. Tilton's Patriarch Partners LLC investment firm as the loan agent responsible for collecting from the now-defunct Galey & Lord, according to court papers filed earlier this month and made public on Tuesday.

Read More ->

FDA Approved Biogen Alzheimer's Drug Despite Some Staff Concerns

The U.S. Food and Drug Administration approved the first new Alzheimer's drug in decades over the objection of agency statisticians who said there was insufficient evidence to support approval, according to newly released internal memos.

In the internal memos released Tuesday, FDA officials discussed whether to approve the drug from Biogen Inc. over objections from the agency's drug statistics office, which said that clinical trial data fell short of the proof typically required to put a new product on the market.

Read More ->

Fed's Powell Plays Down Inflation Threat

WASHINGTON-Federal Reserve Chairman Jerome Powell said it's highly unlikely that inflation will rise to levels seen in the 1970s but acknowledged significant uncertainty as the economy reopens.

While the Fed anticipated that the end of the pandemic would temporarily push up inflation this year, Mr. Powell said Tuesday on Capitol Hill that the increases in prices have been larger than central bankers had expected and may prove more persistent. But he underscored his view that shortages-including of used cars, computer chips and workers-will fade over time, bringing inflation closer to the Fed's 2% long-run target.

Read More ->

Derby's Take: New York Fed Boss Isn't Worried About Reverse Repo Surge

A tsunami of cash continues flooding into a once obscure Federal Reserve facility, and the central bank official closest to it isn't concerned in the slightest bit.

Over recent weeks, cash, largely from money-market funds but also from banks and government sponsored entities, has poured into what the Fed calls its reverse repo facility. After years of obscurity and disuse, interest in the facility increased in the spring. Ahead of last week's Federal Open Market Committee meeting, the facility was seeing inflows of half a trillion dollars a day.

Read More ->

The Bonds That Cried Major Default Risk

The villagers in "The Boy Who Cried Wolf," bored of their shepherd boy's constant false alarms, refuse to come to his aid when a wolf finally does appear. There may be a lesson in the fable for investors in Chinese property giant Evergrande and the country's real-estate market more broadly.

Heavily leveraged Evergrande is in the midst of yet another financial squeeze. The company announced Sunday and Monday that it has recently sold almost $1 billion of holdings in two companies-internet services firm HengTen Networks and smaller real-estate developer China Calxon. Fitch Ratings cut Evergrande's credit rating Tuesday from B+ to B, noting the company's seemingly limited access to capital markets and growing dependence on less stable shadow-banking loans.

Read More ->

China Investigates Bulk Commodity Prices and Supplies

China's top economic planner and market regulator have sent teams to investigate recent price and supply trends of bulk commodities, the latest move by Beijing to rein in the sector's sharp rally this year.

The groups, made up of officials from the National Development and Reform Commission and the State Administration for Market Regulation, will visit various cities and provinces to find out more about spot trading in commodities and the recent upstream supply and price changes, the NDRC said Wednesday.

Read More ->

Millions of Americans Refinanced Last Year-but Fewer Black and Latino Homeowners Did

Refinancings were popular in 2020, but not every household caught the wave.

From January to October of last year, only 6% of Black borrowers refinanced their mortgages, versus 12% of white borrowers. The findings appear in a new report by economists at the Federal Reserve Banks of Atlanta, Philadelphia and Boston.

Read More ->

Infrastructure Talks Focus on How to Pay for Bipartisan Package

WASHINGTON-Lawmakers and the White House searched for ways to finance a roughly $1 trillion infrastructure proposal without raising the gas tax or placing fees on electric vehicles, debating how much new revenue the Internal Revenue Service could generate with enhanced enforcement efforts.

The infrastructure proposal, which includes $579 billion in spending above expected federal levels and would total $973 billion over five years, has won the backing of 11 Republican senators and 10 members of the Senate Democratic caucus. A group of 10 of the lawmakers met repeatedly Tuesday with top White House officials as the group aimed to prepare a plan for public release, with talks set to continue.

Read More ->

North Korea Gives the U.S. the Cold Shoulder on Nuclear Talks

SEOUL-In nuclear diplomacy with the U.S., North Korea is playing hard to get, for now.

The Kim Jong Un regime this year has rebuked the Biden administration's outreach for engagement, without detailing what might woo them back to talks beyond vague demands. As diplomacy stalls, Pyongyang is adding to its nuclear arsenal, which President Biden has called the biggest foreign-policy threat facing the U.S.

Read More ->

Illicit Covid-19 Drugs Bound for Mexico Seized by U.S. Authorities

Federal authorities have seized at U.S. airports unauthorized versions of the Covid-19 treatment remdesivir destined for distribution in Mexico, the latest effort by the government to root out criminal activity related to the pandemic.

Counterfeit or generic versions of remdesivir, an antiviral manufactured by Gilead Sciences Inc., are arriving in the U.S. by plane from Bangladesh and India and being smuggled by individuals to Mexico for patients willing to pay top dollar for the drugs, people familiar with the investigation said.

Read More ->

Biden to Say Cities Can Use Covid-19 Aid to Hire More Police Officers

WASHINGTON-President Biden is expected to lay out his crime-prevention strategy Wednesday amid a rise in gun violence in many cities, as Republicans seek to tie the increase in crime to calls for cuts to police departments.

Mr. Biden will emphasize that state and local officials in areas experiencing surges in gun violence can use $350 billion in Covid-19 funding to hire more law-enforcement personnel, even if it raises the total number beyond its pre-pandemic level, officials said.

Read More ->

U.S. Seizes Internet Domains Tied to Iran's Government

WASHINGTON-More than 30 web domains linked to the Iranian regime were seized by U.S. agencies on Tuesday, a U.S. government official said.

The U.S. seized sites operated by government-run PressTV as well as social media channels affiliated with Iran-backed militias in Iraq. The seizures come as the Biden administration is in the midst of negotiations over Tehran's nuclear program and follow the election of a new president who has rebuffed calls from Washington to curb its support for proxies fighting across the region.

Read More ->

Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

- Empire Co. Ltd. (EMP.A.T) 4Q

Economic Indicators (ET):

0830 Apr Retail trade

Stocks to Watch:

No items published

Other News:

Ontario Teachers' Invests in CD Finance's CNY1 Bln Fundraising

CD Finance has raised 1 billion yuan (US$154.3 million) in its latest fundraising round led by Ontario Teachers' Pension Plan Board.

Market Talk:

No items published

Expected Major Events for Wednesday

00:30/JPN: Jun Japan Flash Manufacturing PMI

05:00/JPN: Apr Indexes of Business Conditions - Revision

07:15/FRA: Jun France Flash PMI

07:30/GER: Jun Germany Flash PMI

08:30/UK: Mar Card Spending statistics

08:30/UK: Jun Flash UK PMI

11:00/US: 06/18 MBA Weekly Mortgage Applications Survey

12:30/US: 1Q International Transactions

12:30/CAN: Apr Retail trade

13:45/US: Jun US Flash Manufacturing PMI

13:45/US: Jun US Flash Services PMI

14:00/US: May State Employment and Unemployment

14:00/US: May New Residential Sales

14:30/US: 06/18 EIA Weekly Petroleum Status Report

23:50/JPN: May Services Producer Price Index

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.

Clairvest Group Inc (CVG.T) is expected to report for 4Q.

Empire Co (EMLAF,EMP.A.T) is expected to report $0.66 for 4Q.

Genesis Healthcare Inc (GENN) is expected to report $-0.33 for 1Q.

HB Fuller Co (FUL) is expected to report $0.90 for 2Q.

KB Home (KBH) is expected to report $1.33 for 2Q.

Neptune Wellness Solutions Inc (NEPT,NEPT.T) is expected to report for 4Q.

Patterson Companies (PDCO) is expected to report $0.42 for 4Q.

Raymond James Financial (RJF) is expected to report.

Steelcase Inc (SCS) is expected to report $-0.29 for 1Q.

TransGlobe Energy (TGA,TGL.T) is expected to report.

Winnebago Industries Inc (WGO) is expected to report $1.64 for 3Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

American Woodmark Raised to Buy From Hold by Loop Capital

Ball Corp Raised to Overweight From Neutral by Atlantic Equities

Casey's General Stores Cut to Neutral From Buy by Goldman Sachs

CrowdStrike Holdings Raised to Buy From Hold by Stifel

Delek US Raised to Neutral From Sell by Goldman Sachs

Evergy Cut to Equal-Weight From Overweight by Wells Fargo

FirstCash Cut to Underperform From Outperform by Credit Suisse

Fortune Brands Raised to Buy From Hold by Loop Capital

Lincoln Electric Raised to Outperform From Perform by Oppenheimer

Plexus Raised to Buy From Neutral by Sidoti & Co.

Raven Industries Cut to Hold From Buy by Lake Street

Satsuma Pharmaceuticals Raised to Buy From Neutral by Mizuho

SharpSpring Cut to Hold From Buy by Lake Street

Welbilt Cut to Neutral From Outperform by Baird

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

(END) Dow Jones Newswires

June 23, 2021 06:07 ET (10:07 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.