MARKET WRAPS

Stocks:

European stocks lacked momentum on Thursday as investors looked to next week's central bank meetings for policy decisions.

The Federal Reserve's language in May led to the impression we'd probably see a pause in June, CMC Markets said.

"This still seems to be the favoured outcome; however, this week's rate hikes have muddied the waters somewhat."

Meantime, European Central Bank officials are expected to raise interest rates by another 25 bps next week, "even if the Fed does stay on hold," CMC added.

Read ECB Likely to Deliver Two More 25Bp Interest-Rate Rises

The eurozone slipped into a recession at the start of the year as high energy and food prices hit household spending. Read more here .

Track the analyst, market reactions to the data here .

Stocks to Watch

Hopes of a strong peak season for logistics companies are fading with no sign of a rebound in freight demand across the air and sea segments so far, Citi said.

Citing recent meetings with companies including Deutsche Post DHL Freight Forwarding, DSV, InPost, Kuehne + Nagel, Hapag-Lloyd and A.P. Moller-Maersk, Citi said there has been very limited rebound in demand heading into the peak season, though the industry still expects a recovery in the second half.

"The general trends are that volumes in sea has seen trends similar to 1Q and air has seen more pressure."

U.S. Markets:

Stock futures ticked down as investors reconsidered the outlook for next week's Fed meeting, following the Bank of Canada's surprise interest-rate hike.

Treasury bonds declined further before stabilizing. The yield on the benchmark 10-year Treasury note touched 3.817% before easing down.

The market's next important signal will be U.S. inflation data on Tuesday. Before that, weekly jobless claims are due.

Stocks to Watch

GameStop said its board terminated the contract of CEO Matt Furlong, and named activist investor Ryan Cohen as executive chairman. It also reported a loss in its fiscal first quarter of $50.5 million, or 17 cents a share. The stock fell almost 19% in premarket trading.

Shares of Lucid Group rose 2.2% after Reuters reported the electric-vehicle maker was preparing to enter China, the world's largest auto market.

Follow WSJ markets coverage here

Forex:

The euro stayed higher against the dollar, showing little reaction even after first-quarter eurozone economic growth data was revised lower.

Markets remain comfortable in pricing in two further ECB interest rate rises, ING said before the data.

"Expect EUR/USD to remain becalmed well within a 1.0650-1.0750 range."

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The dollar could hold onto its recent gains on speculation the Fed may follow the Bank of Canada with a rate rise next week, ING said, but added that traders should stay cautious ahead of Tuesday's key inflation data.

ING said the DXY dollar index is likely to linger around the 104 level until then.

Degroof Petercam Asset Management said that although the dollar remains the leading currency for trade, its supremacy is gradually being eroded, as various initiatives by BRICS could lead to the creation of a currency backed by raw materials.

Giving examples, it said in early 2023, China and Brazil agreed to replace the dollar in the settlement of certain trade transactions, and India has proposed to various countries facing a shortage of dollar liquidity that they opt for payment in rupees.

Bonds:

Front-end German bond yields are very close to last week's highs and the 10-year Bund yield is also approaching the 2.50% level swiftly, likely luring buyers, Mizuho said.

"We look for buyers to emerge at those levels, especially given that this week's supply is mostly out of the way," Mizuho said, but added that this Thursday being a holiday in several European countries, liquidity may be scarcer as a result.

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Morgan Stanley said it sees limited upside risk for 10-year core and semicore eurozone government bond yields, while after their recent richening, noncore government bonds, especially Italian BTPs, could be exposed to profit-taking.

Read Italy's BTP Valore Issue Might Put Downward Pressure on Annual BTP Supply

Energy:

Oil futures edged higher, settling into a range following Saudi Arabia's planned cuts, with prices being driven largely by investor sentiment, which is focused on economic worries, rather than supply and demand fundamentals.

Metals:

Base and precious metals were mixed, with ANZ Research saying economic headwinds were continuing to build, which is likely to keep downward pressure on commodity markets in the short term.

"The recent weakness has led us to lowering some of our short-term targets. However, any shift in sentiment across the broader macro environment could spark a rally across the industrial commodities."

Read Gold's Near-Term Upside Could Be Capped

DOW JONES NEWSPLUS

EMEA HEADLINES

Novartis's Sandoz Sets Out Growth Plan Following Proposed Spinoff

*Sandoz: Product Pipeline Expected to Add $3B in Potential Net Sales Over Next 5 Years

Novartis's off-patent medicines division Sandoz set out its growth plans as a standalone company following the proposed spinoff, saying it is well positioned to continue delivering mid-single digit sales growth.

Autoliv to Cut Up to 8,000 Jobs and Close Several European Sites

Autoliv on Thursday announced plans to cut up to 8,000 jobs globally as it accelerates its global cost reductions and simplifies its logistics and geographic footprint, including the closure of several sites in Europe.

The Swedish maker of airbags and safety belts said the job cuts represent around 11% of its workforce, with around 2,000 indirect positions and around 6,000 direct positions expected to be cut globally.

Ukraine's Zelensky Visits Flood-Hit Kherson as Battle Rages Nearby

KHERSON, Ukraine-Ukrainian President Volodymyr Zelensky on Thursday visited this city, which is in the path of floodwaters unleashed by the destruction of a major dam in Russian-occupied Ukraine earlier this week that has piled a new crisis on a country reeling from more than a year of full-scale Russian military assault.

Flanked by military guards, Zelensky could be seen visiting the flood-stricken section of the city before speeding off. Rescue workers in boats moved through waterlogged streets even as the sounds of gunfire rang out, a sign of the continuing battle with Russian forces nearby.

GLOBAL NEWS

Japan's Economy Grew Faster Than Initially Estimated in First Quarter

TOKYO-Japan's economy expanded at a faster pace than initially estimated in the January-March quarter thanks to stronger spending by companies, revised government data showed Thursday.

The world's third-largest economy after the U.S. and China grew 2.7% on an annualized basis in the first quarter, compared with the 1.6% expansion recorded in the preliminary estimate released in May.

It Is Time to Admit It: Bank Regulation Doesn't Quite Work

For U.S. officials, what happened to Silicon Valley Bank seems to have an easy solution: Merge regional lenders together and regulate them as strictly as megabanks. The kink in the plan is that Credit Suisse also failed spectacularly.

The Swiss government this month backed a parliamentary inquiry-the fifth in the country's history-to examine the bank's sale to its main rival UBS, scheduled to close as soon as next Monday. The merger was hurriedly brokered by officials during the third weekend of March, on the premise that a massive deposit flight could otherwise have toppled Credit Suisse the following week.

Forget the Naysayers. Why the Stock Market Can Keep Rising.

The stock market has climbed a wall of worry to start the year and is nearing a bull market. Now the fun part begins.

Entering 2023, doubters argued that stocks were expected to take a fall as the "bear-market rally" off the October lows faltered. The Federal Reserve had been rapidly lifting interest rates, raising the cost of capital for everything from start-ups to banks. The economy was slowing to the point that a recession had become a question of when, not if. Corporate profits had stagnated, and stocks outside a handful of large technology names had floundered.

Republican Insurgents Force Speaker Kevin McCarthy to Cancel Votes

WASHINGTON-House Speaker Kevin McCarthy (R., Calif.) canceled the rest of the votes planned for this week after failing to resolve a standoff with Republican insurgents who charge he violated a January agreement with them that cleared the path for him to win his job.

The dissenting lawmakers made clear they would vote against a procedural step needed to bring votes to the floor, effectively paralyzing the chamber and ultimately forcing McCarthy to throw in the towel and try to regroup rather than try again on Thursday.

Trump Legal Team Told That Former President Is Target of Criminal Probe in Documents Case

Federal prosecutors told Donald Trump's legal team that he is a target of their investigation into his handling of classified documents at his Mar-a-Lago resort, people familiar with the matter said Wednesday, in the clearest indication yet that the former president could face criminal charges.

A federal grand jury in Miami, meanwhile, heard testimony from a former Trump spokesman, signaling that special counsel Jack Smith intends to bring any possible criminal charges in Florida.

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

(END) Dow Jones Newswires

June 08, 2023 06:14 ET (10:14 GMT)

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