MARKET WRAPS
Watch For:
Eurozone M3, Business/Consumer Surveys; Germany Provisional CPI;
UK Capital Issuance; updates from Traton, Deutsche Boerse,
MFE-MediaForEurope, Galp Energia, H&M, Harbour Energy, Meggitt,
Provident Financial, Sberbank, VEON, Orsted
Opening Call:
Renewed doubts over the resilience of the global economy, faced
with tightening monetary policy, will dampen the mood in Europe on
Wednesday. In Asia, stocks were lower across the board; Treasury
yields, the dollar and oil were lower and gold was flat.
Equities:
European stocks faces opening losses on Wednesday after Wall
Street fell for a second consecutive day as downbeat economic data
sowed fears about the outlook for corporate earnings.
"There's some nervousness that companies will miss their numbers
or deliver negative guidance," said Steve Sosnick, chief strategist
at Interactive Brokers.
"Earnings expectations haven't really been lowered in the face
of economic news that seems to dictate that we should [lower
expectations]. And the market is going to have to reconcile this
over the next month or so," he added.
John Lynch, chief investment officer for Comerica Wealth
Management, warned that poor consumer confidence readings risked
becoming self-fulfilling, which could in turn threaten an economic
contraction in the U.S.
"The persistent weakness in confidence surveys suggests a
recessionary environment can become self-fulfilling," said
Lynch.
On Tuesday, Federal Reserve Bank of New York President John
Williams said the central bank will be weighing another large rate
rise when it meets next month, while noting that he also believes
the economy can escape falling into recession.
"We've got to get interest rates higher and we need to do that
expeditiously," Williams said. "In terms of our next meeting. I
think, you know, 50 [basis points] or 75 [basis points] is clearly
going to be the debate" among policy makers, although the actual
size of the rate increase will be driven by the data, he said.
Read more from Williams here
Stocks to Watch:
Grubhub CEO said parent company Just Eat hopes to find a
strategic partner to invest in the U.S. online ordering company,
though an outright sale isn't off the table. Adam DeWitt said no
sale was imminent and that Just Eat was exploring options to
strengthen Grubhub as its U.S. division encounters challenges.
Read more here
Forex:
The dollar lost ground against major peers in Asia despite the
risk-off environment.
The buck had strengthened on Tuesday, firming early in the day
and extending gains following the disappointing consumer confidence
data, reinforcing fears of a recession.
---
Sterling's recent performance shows the market's indecisiveness,
said Saxo Bank.
"GBP/USD has posted a remarkable string of six days with almost
no daily change in the closing price level, even as intraday
volatility hasn't been extremely quiet over the last week."
That comes after GBP/USD collapsed below 1.2000, a massive
long-term chart level, earlier in June before recovering. The pause
in the price action helped unwind downside momentum but increased
uncertainty, Saxo Bank said. EUR/GBP was in a similar state, having
reversed lower earlier this month but unable to sustain that
move.
Bonds:
Treasury yields retreated early Wednesday having lost steam
during New York trading but still managing to end the day higher,
while the spread between the two-year and 10-year yields have
widened a little over the past three days.
U.S. GDP data due later Wednesday and Thursday's PCE inflation
print will be in focus for bond traders.
Energy:
Oil futures turned negative in Asia, reversing initial gains, as
demand concerns continued due to fears of a recession.
However, prices may be supported in the near term, helped by
reports that excess spare capacity from Saudi Arabia and UAE has
not been as high as previously thought, said SPI Asset
Management.
News that China has reduced its quarantine times for inbound
travellers may also boost sentiment.
Other News:
The American Petroleum Institute reported inventories of crude
oil in the U.S. fell by a hefty 3.8 million barrels in the latest
week, according to a source citing the data, while gasoline
supplies rose by 2.9 million barrels.
The results, bullish for crude and bearish for product, were
released ahead of official inventory data from the EIA. Average
forecasts in a WSJ survey indicate the EIA report will show crude
inventories fell by 800,000 barrels from the previous week and that
gasoline supplies also decreased by 800,000 barrels.
---
Seaborne coal shipments are estimated to have climbed 12%
on-year in the second quarter of 2022, to 344.4 million metric
tons, according to S&P.
It attributed the increase in part to higher Russian coal
shipments to places including China, India and northwestern Europe.
In recent weeks, China's imports have been down amid increasing
domestic output and softened power demand due to lockdowns.
"The market will be keeping a very watchful eye on Q3 demand
from China as a rise in demand here could see international coal
prices rise to unimaginable levels," said S&P.
Metals:
Gold was little changed as investors continue to weigh the
probability of tightening monetary policy against the outlook for
global economic growth, said ANZ.
Bullion prices could find support from haven demand as
geopolitical tensions threaten to heat up. Investors were also
weighing reports that the U.S., U.K., Japan and Canada plan to
announce a new ban on Russia gold imports, ANZ added.
---
Copper extended gains, buoyed by China's easing on Tuesday of
Covid-19 quarantine requirements for international travelers coming
into the country.
TD Securities said industrial metals have been gaining on this
news, but given the brokerage's view that base metals have entered
into a bear-market trading regime, this could be a short-covering
move after the latest CFTC report highlighted aggressive short
positions.
---
Iron-ore futures were higher too, aided by China's quarantine
move.
The drop in the seven--day average of new Covid-19 cases in
China suggests that additional unwinding of Covid-related
restrictions are likely and supports the case that its economic
slowdown is bottoming out, said CBA.
TODAY'S TOP HEADLINES
Fed's Williams Sees Another Large Rate Rise at July Meeting as
Possible
Federal Reserve Bank of New York President John Williams said
Tuesday that the U.S. central bank will be weighing another large
rate rise when it meets next month, while noting that he also
believes the economy can escape falling into recession.
"We've got to get interest rates higher and we need to do that
expeditiously," Mr. Williams said. "In terms of our next meeting. I
think, you know, 50 [basis points] or 75 [basis points] is clearly
going to be the debate" among policy makers, although the actual
size of the rate increase will be driven by the data, he said.
G-7 Bid to Cap Russian Oil Price Faces Hurdle of Global
Enforcement
PARIS-The Group of Seven major economies wants to impose a price
cap on Russian oil exports. The challenge is enforcing it on buyers
worldwide.
The G-7 leaders said Tuesday after their summit they were
exploring a ban on the provision of maritime services to tankers
carrying Russian oil, unless the oil were sold below a particular
price. Backers say the proposal would achieve two goals: cutting
Russian oil sales that are fattening Moscow's foreign-exchange
coffers and lowering global oil prices that have surged since the
war in Ukraine.
War, Weather Endanger Global Food Supplies, Farm Leaders Say
CHICAGO-War and weather are imperiling global food supplies,
according to U.S. agriculture officials and executives, as rising
food prices drive shortages and protests around the world.
The pressures are playing out this year as conflict in Eastern
Europe disrupts exports from Ukraine, one of the world's top crop
producers, and drought and poor weather afflict major crop-growing
regions.
Grubhub CEO Says Sale Isn't Imminent, as Owner Seeks a
Partner
CHICAGO-Grubhub Chief Executive Adam DeWitt said company parent
Just Eat Takeaway.com NV hopes to find a strategic partner to
invest in the U.S. online ordering company, though an outright sale
isn't off the table.
In some of his first public remarks about the company since Just
Eat said in April it would consider selling Grubhub, Mr. DeWitt
said no sale was imminent and that Just Eat was exploring options
to strengthen Grubhub as its U.S. division encounters
challenges.
U.K. June Retail Price Inflation Highest Since 2008
U.K. retail price inflation increased on year in June,
accelerating from the prior month and marking the highest rate of
inflation since September 2008, according to the latest report by
Nielsen IQ and the British Retail Consortium.
Prices at U.K. stores rose 3.1% on-year for June 1 to June 7, up
from 2.8% in May, the report found. This greatly exceeds the six
month and 12 month average price increases of 2.3% and 1.0%
respectively.
Turkey Backs NATO Membership for Sweden, Finland
MADRID-The North Atlantic Treaty Organization is on a course to
admit Finland and Sweden following an agreement with Turkey, a move
that would add vast territory and new military abilities in the
wake of Russia's invasion of Ukraine.
The two Nordic countries, which had long shunned joining the
alliance, abruptly changed their stance following Moscow's attack
on its neighbor on Feb. 24.
Oil Tanker Is Stopped by U.S. in Transit From Russian Port to
New Orleans
U.S. authorities have stopped a ship traveling from Russia to
Louisiana with a cargo of fuel products, say people familiar with
the matter.
The Daytona tanker is owned by Greek shipowner TMS Tankers Ltd.
and was chartered by Vitol, a commodity trading house based in
Switzerland. It sailed from Russia's Taman peninsula in the Black
Sea in early June carrying fuel oil and vacuum gasoil, the data
showed, and was planning to arrive in New Orleans on Sunday.
Write to paul.larkins@dowjones.com
Expected Major Events for Wednesday
04:30/NED: Jun Producer confidence survey
06:00/DEN: Jun Business tendency survey
06:45/FRA: May Housing starts
07:00/SWE: Jun Monthly Business Tendency Survey
07:00/SWE: Jun Consumer Tendency Survey
07:00/SPN: May Retail Sales
07:00/SPN: Jun Flash Estimate CPI
07:00/SVK: Jun Business tendency survey
07:00/SVK: Jun Economic sentiment indicator
08:00/EU: May Monetary developments in the euro area (M3)
08:00/ICE: May PPI
08:00/ICE: Jun CPI
08:00/GER: Jun Bavaria CPI
08:00/GER: Jun Brandenburg CPI
08:00/GER: Jun Hesse CPI
08:00/GER: Jun Baden-Wuerttemberg CPI
08:30/UK: May Capital issuance
08:30/GER: Jun North Rhine Westphalia CPI
09:00/CYP: Apr Industrial Production Index
09:00/EU: Jun Business & Consumer Surveys - Business Climate
Indicator & Economic Sentiment Indicator
09:00/GER: Jun Saxony CPI
09:30/BEL: Jun CPI
12:00/GER: Jun Provisional CPI
23:01/UK: May UK monthly automotive manufacturing figures
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(END) Dow Jones Newswires
June 29, 2022 00:38 ET (04:38 GMT)
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