MARKET WRAPS
Stocks:
European shares were in the red on Friday, with investors
cautious in the run up to next week's key central bank
meetings.
Thursday's bigger-than-expected rise in U.S. initial jobless
claims had helped market sentiment as it could lessen the chances
the Federal Reserve will raise rates next week, but the outcome
remains uncertain and traders remain wary.
The European Central Bank is also widely expected to lift rates
at its next meeting.
"Rate hikes this week in Australia and Canada have unnerved
investors, and so caution could well prevail over the first half of
next week," IG said.
Stocks to Watch
Jefferies said Societe Generale's shares have recently
underperformed, trading 3% lower than what they were a year prior,
attributing this to declining French net interest income and the
bank being short of its Basel IV target for 2025.
That said, these issues are well-understood by the market and
investors can look forward to the bank's buyback launch expected in
June, the potential for 2025 target upgrades during SocGen's
September investor day and efforts by management to plug the Basel
IV capital shortfall, Jefferies said.
---
Telecom Italia is likely to get new, slightly improved offers
from the two bidders for its fixed-network assets known as Netco
before a deadline expires later on Friday, Equita Sim said.
Both KKR and the consortium formed by Italian state lender CDP
and Macquarie seem likely to submit bids to the TI based on recent
press reports, Equita said.
U.S. Markets: Markets:
Stock futures edged lower after the S&P 500 entered a new
bull market on Thursday.
Big tech stocks, which have propelled the market higher, were
mixed on Friday. Tesla and Netflix were poised for more gains,
while Apple and Amazon wavered in premarket trading.
Friday's economic data and earnings calendars are empty, leaving
investors in wait-and-see mode ahead of next week's inflation data
and Fed decision.
Treasury yields edged higher. The yield on the 10-year note
edged up to 3.751%, from 3.714% a day earlier.
Stocks on the Move
DocuSign, the electronic-signature company, was up 7.1% in
premarket trading after fiscal first-quarter revenue and billings
beat the company's own guidance, and it raised its outlook for the
fiscal year ending in January.
General Motors gained 3.4% in premarket trading after the
automaker said its electric vehicles will be able to access Tesla's
supercharging network in 2024. As for Tesla, the stock was up 4.4%
in premarket trading.
Follow WSJ markets coverage here .
Forex:
The dollar remained under pressure after it fell sharply
following the U.S. initial jobless claims, but UniCredit Research
said the currency could steady from here as traders stay cautious
ahead of key events next week.
"The light economic agenda today might lead to further position
adjustments but is unlikely to induce more dollar weakness. The
risk, if anything, is that the DXY might return closer to 104."
Bonds:
Further interest-rate rises by the ECB this year are unlikely to
trigger another leg up in long-term eurozone government bond
yields, Capital Economics said, which forecasts the 10-year Bund
yield to retreat to 2.25% from around 2.5%.
Capital's downbeat growth forecasts feed into its view that safe
assets will fare better than risky ones over the remainder of
2023.
" As such, we think that 'core' euro-zone government bond yields
will end the year around their current levels, or slightly lower,
even if the ECB continues to raise its policy rates ," Capital
said.
In recent weeks, the rates market has moved predictably and
stayed within ranges, with the 10-year German Bund yield stuck
between 2.25% and 2.50% and Jefferies said it has taken advantage
by trading this range.
Its bias remains to use any selloff to establish long positions
in 10-year Bunds, buying the bonds as yields reach 2.50%.
"In our portfolio, we have been playing the range of 2.25% to
2.50% for Bunds and that has worked well."
Energy:
Oil futures extended their retreat, with losses prompted by
reports that Iran and the U.S. had reached a temporary deal on
Tehran's nuclear program and increasing its oil exports.
However, prices pared Thursday's hefty losses after U.S.
officials refuted the reports.
Still, Brent in on course for a 0.7% weekly drop as concerns
about global demand have overpowered a Saudi plan to slash oil
output, following an OPEC+ meeting.
Metals:
Aluminum prices extended their recent gains as a drought in
China threatens to undermine production of the metal.
Rainfall in China's Yunnan region has fallen to multidecade
lows, undermining hydroelectric power output, which is crucial for
powering the region's vast and power-hungry aluminum smelters, ANZ
said.
Other base metals also posted modest gains on the LME.
DOW JONES NEWSPLUS
EMEA HEADLINES
Turkey Names Former First Republic Executive as Head of Central
Bank
ISTANBUL-Turkey's President Recep Tayyip Erdogan appointed a
former First Republic Bank executive to lead the central bank, a
likely shift away from the unorthodox economic policies that have
sown economic instability and driven away foreign investors.
The new central-bank governor is Hafize Gaye Erkan, who until
late 2021 was the co-CEO of First Republic Bank, which collapsed
and was sold to JPMorgan Chase last month. She previously worked
for Goldman Sachs and served on the board of Tiffany & Co.
UBS inks pact with Swiss government as Credit Suisse deal may
close next week
UBS said Friday that it's signed a loss protection agreement
with the Swiss government covering up to 9 billion francs ($10
billion) of losses once the takeover of Credit Suisse is
completed.
The finalized deal sets the stage for the merger of the Swiss
banks to be completed as early as June 12.
AstraZeneca Reaches Agreement With Quell Therapeutics for Treg
Cell Therapies
AstraZeneca said Friday that it has reached an agreement to
develop, manufacture and commercialize engineered T-regulatory, or
Treg, cell therapies for autoimmune diseases with Quell
Therapeutics.
Tregs are specialized T-cells-a type of white blood cells-that
act to suppress immune response and maintain homeostasis and
self-tolerance.
Dassault Systemes Targets Significant Mid-Term Growth; Names
Pascal Daloz CEO
Dassault Systemes plans to reach double-digits revenue growth
and double its earnings per share in the mid term, it said on
Friday ahead of the capital markets day.
The French software company's aim is to grow revenue and reach
non-IFRS EPS of between 2.20 euros and 2.40 euros ($2.36-$2.58) in
2028. Non-IFRS EPS was EUR1.13 in 2022.
GLOBAL NEWS
China's Inflation Problem? It Has None
SINGAPORE-As Western central banks continue to jack up interest
rates in an effort to douse stubbornly high inflation, China faces
a growing risk of the opposite problem-deflation.
Prices charged by Chinese factories tumbled in May at their
steepest annual pace in seven years, while consumer prices barely
budged, fresh signs of the challenges faced by the world's
second-largest economy both at home and abroad.
China's Producer Prices Declined Further in May
China's factory-gate price index tumbled to its lowest reading
in more than seven years, while consumer prices edged up slightly
in May, thanks to higher food prices, official data showed
Friday.
The producer-price index declined 4.6% from a year earlier in
May, compared with the 3.6% decline in April and marking the
weakest reading since February 2016, when PPI fell 4.9% from a year
earlier, according to data released by the National Bureau of
Statistics.
Trump Indicted in Classified Documents Case
WASHINGTON-Donald Trump was indicted Thursday by a federal grand
jury in the investigation into his handling of classified documents
at his Mar-a-Lago resort in Florida, marking the first time in
history that the federal government has brought charges against a
former president.
Trump was charged with seven counts, a person familiar with the
matter said, including violations of the Espionage Act, which bars
the misuse of classified information, as well as obstruction and
false statements. A lawyer for Trump, James Trusty, confirmed those
counts on CNN.
Cuba Spy Station Brings China Rivalry to America's Doorstep
China's plan for an eavesdropping station in Cuba serves as a
marker for Beijing's global power ambitions, planting its spiraling
rivalry with the U.S. on America's doorstep.
The listening post, which will be 100 miles off Florida, would
potentially give the Chinese military capabilities to monitor
communications across a wide stretch of the southern U.S.
Write to paul.larkins@dowjones.com
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(END) Dow Jones Newswires
June 09, 2023 05:31 ET (09:31 GMT)
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