MARKET WRAPS
Watch For:
U.S. Personal Income for May; U.S. University of Michigan
Sentiment Survey final reading for June.
Opening Call:
Stock futures edged higher Friday, putting the S&P 500 on
track to close out its best week in more than two months amid
renewed confidence in the global economic expansion.
Stocks have bounced back, pushing the S&P 500 up 2.4%
through Thursday, after stumbling when the Federal Reserve signaled
a more hawkish stance on rising inflation last week. Fueling the
gains, investors say, are data signaling a fresh acceleration in
the world economy coupled with the prospect of additional
government spending in the U.S. and Europe.
"We are still in a phase where we're seeing the activity data
still accelerate," said Hani Redha, a fund manager at PineBridge
Investments, pointing to surveys showing eurozone business activity
is growing at the fastest pace in 15 years.
"It is natural that you'll see very mini wobbles [in stocks]
from time to time," Mr. Redha added. "But the fundamental
support-that things are improving and the numbers are getting
better-is going to dominate that."
Adding to investors' optimism about the economy, President Biden
and a group of 10 centrist senators agreed to a roughly $1 trillion
infrastructure plan Thursday. With a total of $973 billion of
investment over five years, the deal will make new investments in
the electrical grid, transit, roads and bridges and other forms of
infrastructure.
Investors will seek to glean new details on the pace of the
economic recovery from data on consumer spending, due to be
published at 8:30 a.m. ET. Economists expect the numbers to show
spending rose in May, after a 0.5% increase in April.
Some investors worry that the speedy pace of inflation will
prompt the Federal Reserve to withdraw some of the stimulus it has
lavished on markets since the spring of 2020. But Fed Chairman
Jerome Powell's testimony to Congress this week that he had a level
of confidence that inflation will subside allayed some of those
concerns.
"That also reassures the market that the Fed will not be overly
hawkish in their tightening policy," said Peter van der Welle, a
strategist at Robeco. At the same time, "the infrastructure deal
also portrays that the fiscal thrust is still very much with us,"
he added.
Forex:
The dollar could rise if U.S. economic data due later in the day
reinforce expectations that inflation will accelerate and the
Federal Reserve will respond by tightening its policies,
Commerzbank said.
Strong data would point to "continued elevated price pressure
and might provide further momentum for dollar appreciation short
term," Commerzbank currency analyst Esther Reichelt said.
The Fed made it clear at its last meeting that it will react to
upside risks for inflation, she said.
The European Central Bank's ultra-loose policy stance means the
euro will suffer the lion's share of any dollar appreciation, ING
said.
"Unlike an increasing number of emerging market countries who
feel the need to respond to the summer inflation spike, it seems
the ECB is more than happy to position itself as not being rushed
into premature tightening," ING analysts said.
That means the euro, along with the Japanese yen and Swiss
franc, will be the preferred funding currencies this summer, they
said.
EUR/USD should continue to consolidate, although surprisingly
strong eurozone confidence indicators this week suggest the
exchange rate could rise to the 1.1980/90 area in coming days, they
said.
Sterling's weakness after the Bank of England's policy decision
Thursday is likely to remain limited, MUFG Bank said.
The "hawkish" shift some market participants were expecting from
the BOE's policy statement failed to materialize but the central
bank is certainly moving in that direction, MUFG analyst Derek
Halpenny said.
"The upgrades to both real GDP growth in the second quarter and
inflation this year could well have implications for inflation over
the medium-term that compels the Monetary Policy Committee to alter
its monetary stance (taper) or guidance at the next meeting on
August 5 when the Monetary Policy Report will be released with
updated forecasts."
Bonds:
In bond markets, the yield on 10-year Treasury notes ticked up
to 1.488% from 1.486% Thursday.
Eurozone government bond yields were trading slightly higher
following better-than-expected economic data from Germany on
Friday. The strong reading is reassuring, said Joerg Zeuner chief
economist at the German asset manager Union Investment.
Commodities:
Oil prices edged higher as investors look ahead to next week's
OPEC+ meeting. Oil producers are set to meet on Thursday next
week.
Expectations are that the cartel will agree to add 500,000
barrels a day of their output, said Helge Andre Martinsen, an
analyst at DNB.
"However, an increase of 0.5 million barrels a day for August is
not enough to flip the oil market balance, and the oil market will
stay in undersupply with oil inventories continuing to draw down,"
he said. Oil prices made modest gains this week amid expectations
of continued tight supplies.
Copper prices rose after President Biden and a group of senators
agreed to a roughly $1 trillion infrastructure plan. Three-month
copper on the LME gains 0.1% to $9,469.50 a metric ton.
The red metal is heavily used in infrastructure projects and
some investors are hopeful that the plan would boost demand for
copper. However, there are also growing concerns that copper's high
price may spur substitution toward cheaper metals such as aluminum,
which can also be used in electrical wiring.
"Arguments are starting to become more widespread on the subject
of substitution with an eye to the popular world of infrastructure
projects, " said Malcolm Freeman, Chief Executive of brokerage
Kingdom Futures.
Gold prices ticked higher ahead of U.S. price data which will be
eyed by investors for clues on the inflation outlook.
The PCE core price index, the Federal Reserve's preferred gauge
of inflation is due at 0830 ET. A stronger reading than expected
could heighten fears that Fed officials will move faster to raise
interest rates. While gold is typically considered an inflation
hedge, higher interest rates would lift bond yield and weigh on
gold.
"Fed officials are presenting a mixed view, but inflation
worries appear to be on the rise; which is gold negative," said
James Steel, chief precious metals analyst at HSBC.
TODAY'S TOP HEADLINES
Amazon, Google Face UK Probe Over Fake Reviews
The U.K.'s antitrust watchdog said Friday that it has launched
an investigation into whether Amazon.com Inc. and Google are doing
enough to crack down on fake reviews, adding a new layer to
regulatory scrutiny of U.S. tech giants.
Read More ->
Didi Sets Valuation Target of $62 Billion to $67 Billion in
IPO
Didi Global Inc., the Beijing-based ride-hailing company, is
targeting a valuation of $62 billion to $67 billion in its IPO,
according to its latest public filing.
The fully diluted valuation, which typically includes restricted
stock units, could eclipse $70 billion, people familiar with the
matter told The Wall Street Journal.
Read More ->
Nike Posts Highest Quarterly Sales in Its 50-Year History
Nike Inc. posted record quarterly sales, topping $12 billion for
the first time in its 50-year history, on pent-up U.S. consumer
demand for sneakers and sportswear this spring.
Revenue in the May ended quarter nearly doubled to $12.34
billion from $6.31 billion a year ago, when sales were depressed by
the spread of Covid-19. Nike's direct sales-those items ordered
through its apps, websites or own stores-climbed 73% to $4.5
billion.
Read More ->
Air Force One Supplier GDC Heads Off Liquidation Threat From
Creditors
GDC Technics LLC reached a settlement with a creditor group that
had been pushing to liquidate the bankrupt Air Force One supplier,
but Boeing Co. remained concerned about grants of legal immunity
being offered to insiders.
The proposed deal, reached ahead of a contested hearing Thursday
over the Fort Worth-based company's bankruptcy financing, includes
a guarantee of at least $11.5 million in payments to unsecured
creditors.
Read More ->
Twilio, Asana to List on Long-Term Stock Exchange as ESG Push
Continues
A Silicon Valley stock exchange that encourages long-term
thinking over short-term gains has landed two marquee tech
companies to be among its first listings, reflecting the growing
popularity of sustainable investing.
Twilio Inc., a $67 billion software company, and Asana Inc., a
roughly $10 billion cloud software company run by Facebook Inc.
co-founder Dustin Moskovitz, are the first two companies to agree
to dual list their shares on the Long-Term Stock Exchange. The CEOs
of both companies, which also are listed on the New York Stock
Exchange, were early investors in LTSE with financial stakes of
less than 1.5%.
Read More ->
Eli Lilly to Seek FDA Approval for Alzheimer's Drug
Eli Lilly & Co. plans to submit its Alzheimer's drug for
market clearance under an expedited review this year, in a sign
that regulators are encouraging development of treatments for the
disease after a recent approval.
Lilly said Thursday that the U.S. Food and Drug Administration
had designated the company's experimental Alzheimer's drug, called
donanemab, for the agency's accelerated approval process.
Read More ->
Biden, Senators Agree to Roughly $1 Trillion Infrastructure
Plan
WASHINGTON-President Biden and a group of 10 centrist senators
agreed to a roughly $1 trillion infrastructure plan Thursday,
securing a long-sought bipartisan deal that lawmakers and the White
House will now attempt to shepherd through Congress alongside a
broader package sought by Democrats.
Mr. Biden and Democratic leaders said that advancing the deal on
transportation, water and broadband infrastructure will hinge on
the passage of more elements of Mr. Biden's $4 trillion economic
agenda. The two-track process sets up weeks of delicate
negotiations to gather support for both the bipartisan plan and a
separate Democratic proposal, a challenging task in the 50-50
Senate and the narrowly Democratic-controlled House.
Read More ->
Consumers Are Back Out Spending, Driving the Recovery
Consumers likely increased spending last month on services that
they shunned earlier in the Covid-19 pandemic, helping fuel the
broader economic recovery.
Economists surveyed by The Wall Street Journal expect Friday's
Commerce Department report to show consumer spending rose 0.4% in
May. They expect incomes fell 2.7% last month from April, as the
boost faded from government stimulus checks sent out earlier in the
year.
Read More ->
Fed Gives Big Banks Clean Bill of Health in Latest Stress
Test
WASHINGTON-The Federal Reserve gave large U.S. banks a clean
bill of health as they emerge from the coronavirus crisis, paving
the way for the lenders to boost their payouts to investors after
June 30.
In a vote of confidence for the banks, including Goldman Sachs
Group Inc. and Wells Fargo & Co., the Fed on Thursday said it
would end temporary limits on dividend payments and share buybacks
after all 23 firms performed well in annual stress tests.
Read More ->
German Consumer Confidence Set to Increase Strongly in July
German consumer sentiment is expected to rise in July as the
Covid-19 pandemic retreats and the economy reopens, according to
data from the market-research group GfK released Friday.
GfK's forward-looking consumer sentiment index is set to
increase to minus 0.3 points in July from minus 6.9 points in June,
the highest level since August 2020. Economists polled by The Wall
Street Journal had expected consumer sentiment to rise to minus
four points.
Read More ->
Fed's Williams Says More Progress Needed Before Rate-Hike
Shift
Federal Reserve Bank of New York President John Williams
reiterated Thursday he doesn't see a case to raise rates any time
soon given that the job market remains far short of the strength
the central bank wants to see.
When it comes to lifting rates, "it is not the time now because
the economy still is far from maximum employment," Mr. Williams
said in a virtual appearance. As for when the Fed may raise rates,
"the answer, which you might not like, is that it depends" on how
the economy performs, he said.
Read More ->
Congress Ends Trump-Era Rule Enabling Payday Lenders to Avoid
Interest Rate Caps
Congress voted Thursday to undo a Trump administration rule that
enabled high-interest consumer lenders to attach themselves to
banks and circumvent state-level interest rate caps.
The Office of the Comptroller of the Currency's ruling in late
October said that any bank or federal savings association that
signs loan documents is to be considered the "true lender," even if
the loan is serviced by or sold to a high-interest entity such as a
payday lender. Prior to that rule, courts had sometimes found those
arrangements to be illegal. Under then-President Donald Trump, the
OCC had cited differing court approaches as a reason it wrote the
rule.
Read More ->
Numbers Ain't What They Used to Be in Turbulent U.S. Economy
There is a rule of thumb in data watching that, if you want to
understand which way things are trending, you need to watch the
revisions. What is happening with capital spending might be a case
in point.
The Commerce Department on Thursday reported that U.S.
manufacturers' new orders for durable goods rose 2.3% in May from
April, lower than the 2.6% gain economists expected. Much of that
increase was due to a jump in aircraft orders, which are often
lumpy.
Read More ->
Environmental Investing Frenzy Stretches Meaning of 'Green'
The first time Gerard Barron tried to mine the sea floor, the
company he backed lost a half-billion dollars of investor money,
got crosswise with a South Pacific government, destroyed sensitive
seabed habitat and ultimately went broke. Now he's trying again,
but with a twist: Mr. Barron is positioning his new seabed mining
venture, The Metals Company, as green, to capitalize on a surge of
environmentally minded investment.
TMC is set to receive nearly $600 million in investor cash in a
deal slated to take the company public in July. If successful, that
would value TMC at $2.9 billion-more than any mining company ever
to go public in the U.S. with no revenue.
Read More ->
Sydney Locks Down as Delta Covid-19 Variant Spreads
SYDNEY-Parts of Australia's largest city will go into a rare
lockdown for at least a week as officials seek to stamp out an
outbreak of the highly infectious Delta variant of the
coronavirus.
People who live or work in four areas in and near downtown
Sydney and the iconic Bondi Beach have been ordered to stay home
from Friday night to stem the spread of the virus first detected in
the city last week.
Read More ->
Vice President Kamala Harris Heads to Border Facing Bipartisan
Pressure
Vice President Kamala Harris's visit to the southern border
Friday caps a week in which she has been at the center of two of
the thorniest issues facing the Biden administration: voting access
and immigration.
Voting legislation, which stalled in the Senate on Tuesday when
no Republicans joined Democrats on a key procedural vote, is a
priority for Democrats, and the surge of migrants at the border has
been a magnet for Republican critics of the administration.
President Biden tapped Ms. Harris to lead diplomatic efforts aimed
at stemming the flow of migrants and to improve access in the U.S.
to voting. She has also been asked to help encourage Covid-19
vaccinations in the Deep South and to travel to promote Mr. Biden's
legislative agenda.
Read More ->
Derek Chauvin Faces Sentencing for Murder of George Floyd
MINNEAPOLIS-Former Minneapolis police officer Derek Chauvin is
expected to be sentenced Friday afternoon for the murder of George
Floyd, closing out a chapter in a case that redefined the
conversation over race and policing in the U.S.
Mr. Chauvin, 45 years old, was convicted in April of all counts:
second-degree murder, third-degree murder and manslaughter in the
killing of Mr. Floyd. The 46-year-old Black man died after the
white officer knelt on his neck and back for more than nine
minutes. Mr. Chauvin was fired from the Minneapolis police
force.
Read More ->
Pelosi to Form Select Committee to Probe Pro-Trump Assault on
U.S. Capitol on Jan. 6
WASHINGTON-House Speaker Nancy Pelosi (D., Calif.) said she will
establish a select committee to investigate Jan. 6 assault on the
U.S. Capitol, after Senate Republicans blocked an earlier effort to
establish a bipartisan independent commission.
The committee will investigate and report on the facts and the
causes of the attack by supporters of former President Donald
Trump, and will make recommendations for the prevention of any
future attacks, Mrs. Pelosi said.
Read More ->
Write to sarka.halas@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Indicators (ET):
Nothing major scheduled
Stocks to Watch:
BlackBerry Posts Lower Rev, Narrower Adjusted Loss; Auto Ops
Remain Strong
BlackBerry Ltd. reported lower first-quarter revenue as well as
a narrower adjusted loss and said its auto business has been strong
despite global chip shortages.
The company said the number of vehicles with QNX software
embedded has increased to 195 million. BlackBerry said it continues
to see strong pipeline growth for new unified endpoint security
products.
Revenue was $174 million for the quarter ended May 31, down from
$206 million a year earlier. Net loss was $62 million, or 11 cents
a share, compared with a loss of $636 million, or $1.14 a share, a
year earlier, which reflect a goodwill impairment charge.
Adjusted loss was 5 cents a share. Analysts polled by FactSet
had expected an adjusted loss of 6 cents a share.
Shares rose 9 cents after hours to $12.77.
Expected Major Events for Friday
06:00/GER: Jul GfK consumer climate survey
08:00/ITA: Jun Consumer Confidence Survey
08:00/ITA: Jun Business Confidence Survey
08:30/UK: May Capital issuance
09:00/ITA: May Foreign Trade non-EU
10:00/UK: Jun CBI Distributive Trades Survey
11:00/UK: 2Q Bank of England Quarterly Bulletin
12:30/US: May Personal Income & Outlays
14:00/US: Jun University of Michigan Survey of Consumers -
final
14:00/US: 1Q GDP by State
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
Abraxas Petroleum (AXAS) is expected to report for 4Q.
Air T Inc (AIRT) is expected to report for 4Q.
Apogee Enterprises Inc (APOG) is expected to report $0.35 for
1Q.
Camber Energy Inc (CEI) is expected to report for 4Q.
Camber Energy Inc (CEI) is expected to report for 1Q.
CarMax Inc (KMX) is expected to report $1.61 for 1Q.
Emerson Radio (MSN) is expected to report for 4Q.
Flanigan's Enterprises Inc (BDL) is expected to report for
2Q.
Hanwei Energy (HE.T,HNWEF) is expected to report for 4Q.
Medley Management Inc (MDLX,MDLY) is expected to report for
1Q.
MexcoEnergy (MXC) is expected to report for 4Q.
Paychex Inc (PAYX) is expected to report $0.67 for 4Q.
Second Sight Medical Products Inc (EYES) is expected to report
for 1Q.
Sequential Brands Group Inc (SQBG) is expected to report for
1Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Acadia Realty Trust Raised to Buy From Hold by Truist
Securities
Aptiv Raised to Buy From Neutral by Guggenheim
Armstrong World Raised to Buy From Hold by Zelman
Dollar Tree Cut to Neutral From Overweight by Piper Sandler
FMC Corporation Cut to Hold From Buy by Vertical Research
Intersect ENT Raised to Outperform From Market Perform by SVB
Leerink
Invitation Homes Cut to Hold From Buy by Zelman
Lear Raised to Buy From Neutral by Goldman Sachs
MGM Resorts Raised to Buy From Hold by Deutsche Bank
Raven Industries Cut to Market Perform From Market Outperform by
CJS Securities
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
June 25, 2021 06:13 ET (10:13 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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