European stocks traded mixed on Tuesday as optimism following a
deal on the U.S. debt ceiling gave way to ongoing concerns about
further Federal Reserve interest-rate increases.
"Market expectations around a June Fed hike continue to rise,"
IG said. "This week's U.S. jobs data, culminating as ever in the
payrolls report, could be key to the Fed's next move."
Also affecting sentiment was concerns over the economic recovery
in China, as the country is facing deep, structural problems in its
economy. Read more here .
Stocks to Watch
Siltronic's future looks bright despite a slowdown expected to
hit wafer demand this year, Jefferies said.
Negative news around the sector is priced in as wafer
manufactures expect a recovery towards the end of this year, it
said, adding that Siltronic's new Singapore facility will support
higher profitability from 2024.
"Initial signs of a possible bottoming of the cycle, capacity
expansion at semi manufacturers ahead of wafers, growing silicon
content in semis, and the production start at Siltronic's new
Singapore facility make a great case for the next 12 months."
Jefferies raised its rating to buy from hold and the target
price to EUR95 from EUR75.
This week's inflation data in Europe will play a major role in
how European rates trade into the European Central Bank's June
meeting, ING said.
"A pick-up in Fed hike expectations for June or July has also
opened some upside for EUR rates but the domestic swap curve
already discounts a path for ECB policy rates that is consistent
with its communication."
This comes against a backdrop of soggy hard economic data and a
softening of sentiment indicators, "which should also prevent
European markets from getting too upbeat," ING added.
Read Spain's Inflation Rate Falls Much Faster Than Eurozone
Stock futures ticked up after a tentative deal was struck to
raise the debt ceiling.
The next step is for the legislation to be passed by Congress,
which could run into procedural hurdles and opposition from
Stocks on the Move
Ford stock rose 3% after it was upgraded to buy from hold at
Jefferies. Read more here .
HP shares rose 1%. The computer maker is slated to report fiscal
second-quarter earnings after the bell on Tuesday.
Nvidia shares rose 3% ahead of the open. It recently bolstered
its earnings estimates on artificial-intelligence demand and
announced a flurry of new products over the weekend. AI excitement
also bolstered shares of companies including Palantir Technologies,
Advanced Micro Devices and
On the data front are the consumer confidence numbers for
Follow WSJ markets coverage here
The dollar rose to a 10-week high against a basket of currencies
as agreement on the debt ceiling allows markets to focus on
Friday's U.S. jobs data and prospects of the Fed raising rates
further, MUFG said.
"Assuming that U.S. politicians don't surprisingly reject the
deal, market attention should switch back to the health of the U.S.
labor market in the week ahead."
Another strong jobs report would reinforce expectations for a
rate increase in July and strengthen the dollar in the near term,
U.K. money markets are pricing in 100 basis points of
interest-rate rises from the Bank of England by November and this
should support sterling in the near-term, ING said.
"Our team's view is that such an amount of tightening is highly
unlikely and that the usually reticent BOE may try and verbally
push back against it," ING added.
Upcoming U.K. labor market and inflation data will be key in
determining whether the market reins in its aggressive rate
expectations but until then EUR/GBP could fall further while
GBP/USD will better resist a stronger dollar, it said.
Read Turkish Lira Hits Record Low, Could Fall Further After
Erdogan Wins Election
Spanish government bonds could benefit from more fiscal prudence
after snap elections in July, Citi said.
Following regional elections, polls for the national vote on
July 23 suggest a PP-Vox government, but it remains unclear as to
whether the opposition center-right PP will benefit from its
surprisingly strong showing in Sunday's regional elections or lose
centrist votes given its need for a coalition with far-right Vox to
form a government, Citi said.
"Overall, however, the shift of government from center-left
supported by far-left to center-right supported by far-right might
be a small positive for Bonos [Spanish bonds] due to implications
of more fiscal prudence."
Oil prices dipped in early trading on concerns that Joe Biden's
debt-ceiling deal could struggle to win congressional support,
while focus was also on the upcoming OPEC meeting.
OPEC "will want more evidence of the impact of its lower output
quotas before making further changes" despite recent hints from
Saudi Arabia indicating they are considering another output cut,
Base metals and gold prices are falling with the macroeconomic
environment sending mixed signals at the start of the week.
"U.S. bond markets are pricing another 25 basis point hike by
the end of July, a hawkish shift that's good for the U.S. dollar
but bad for risk assets and commodity prices," Peak Trading
Peak added that markets will be watching how debt ceiling talks
progress as well as U.S. job numbers this week, and their effect on
Copper prices have fallen sharply through May amid wavering
demand from China, however a price bounce could be on the horizon,
Morgan Stanley said, noting that prices have slipped 11% in the
last four weeks and 15% from its year-to-date high.#
However, there are some "green shoots," MS said. Chinese
property completions are up 18% YTD and 5% higher than 2019 levels,
while grid spend is up 10% YTD and electric-vehicle sales are up
"On top, although refined copper imports are down 11% YTD,
copper ore and concentrate imports are up 6%, refined production is
up 14%, and semis output is up 12%. If we add production to net
imports, we imply China's 'apparent consumption' ex inventories to
be up 9%."
DOW JONES NEWSPLUS
Eurozone Economic Sentiment Fell More Than Expected in May
Confidence among businesses and consumers in the eurozone sank
in May by more than expected, indicating that the economic revival
after 2022's energy-price shock has started to fade.
The eurozone's economic sentiment indicator-an aggregate measure
of business and consumer confidence-fell to 96.5 in May from a
downwardly revised 99.0 in April, data from the European Commission
UK Shop-Price Inflation Loses Steam in May on Lower Food Prices,
Shop-price annual inflation in the U.K. slightly rose in May as
lower energy and commodity costs started to ease some of the
staples prices, the latest report by NielsenIQ and the British
Retail Consortium said Tuesday.
Prices at U.K. stores in the period May 1 to May 7 were 9.0%
higher on year, slightly up from an 8.8% increase in April, and
above the 3-month average rate of 8.9%. Despite losing pace, the
price inflation reached a new record high, the report said.
Daimler Truck, Toyota Motor Sign Agreement With Intent to Create
New Tokyo-Listed Company
Daimler Truck and Toyota Motor have entered into a legally
non-binding memorandum of understanding Tuesday with the intent to
combine their respective group companies, Mitsubishi Fuso Truck and
Bus Corporation and Hino Motors.
Mitsubishi Fuso Truck and Bus Corporation and Hino Motors would
be grouped together under a holding company whose shares are to be
listed on the Prime Market of the Tokyo stock exchange, Daimler
WPP, Nvidia Team Up to Build AI-Enabled Content Engine
U.K. advertising-holding company WPP is teaming up with U.S.
chip giant Nvidia to develop a content engine that uses generative
artificial intelligence for digital advertising, the companies said
WPP and Nvidia said that, by integrating 3D tools with
generative AI, the engine will allow creative teams to produce
commercial content such as images or videos faster. The tool is
based on Nvidia's Omniverse Cloud platform, the companies said.
Turkish lira descent has further to run as dollar hits record,
Morgan Stanley says
The dollar has been rising versus the Turkish lira since it
became apparent that Turkey was heading for an election runoff that
President Recep Tayyip Erdogan would be likely to win, and analysts
at Morgan Stanley say there's much further room to run now that the
69-year-old has triumphed.
The dollar USDTRY traded as high as 20.3586 lira on Tuesday, a
new record. The greenback has soared 9% this year and has climbed
25% from its lows of last June.
Erdogan's Next Focus: Turkey's Place on the World Stage
ISTANBUL-After seeing off his biggest election challenge,
Turkish President Recep Tayyip Erdogan is turning his attention to
fixing Turkey's place on the map as an aspiring global power.
Erdogan has repeatedly raised memories of Turkey's Ottoman past
in recent years, including during the campaign for Sunday's
presidential vote. As one of the world's most prominent Islamist
leaders, he has competed with Saudi Arabia and Iran for sway over
the worldwide Muslim community. He has also worked to extend
Turkey's political influence across the Middle East and into
Central Asia, built up its weapons industry and played a key role
in the crisis surrounding Russia's invasion of Ukraine and the wars
in Syria, Iraq and Libya.
Russian Cruise Missile That Struck Poland Exposes NATO's Air
WARSAW-A cruise missile launched during a Russian barrage of
Ukraine crossed into Poland last December then slammed into a patch
of forest about 10 miles from a NATO training center, exposing
challenges to defending the alliance's airspace, according to
The details of the missile remained unknown to the public until
April, when a horseback rider found the debris in the forest
outside the city of Bydgoszcz and local authorities were alerted.
Bydgoszcz is home to the North Atlantic Treaty Organization's Joint
Force Training Center, which conducts tactical training for
Russians Relearn Black-Market Tricks to Get Their Money Out
Russians plowed money into black-market dollars and filled bank
accounts abroad in recent months, a response to persistent economic
anxiety over the war in Ukraine and worries that the situation
might only worsen in the months and years ahead.
Money left Russia in the months after the invasion of Ukraine,
even as the West cut off much of Moscow's access to dollars and
euros. But rather than returning to prewar levels, the outflows
have kept up this year, according to central bank data, fueled by
on-the-ground worries about Russia's economic troubles and the
departure of Russian men avoiding conscription.
Biden and McCarthy's Debt-Ceiling Deal Faces Crucial First Test
WASHINGTON-Lawmakers returning to Washington Tuesday will face
intense pressure from leaders on Capitol Hill and the White House
to support the debt-ceiling bill and overcome opposition on both
the left and right.
For now, President Biden and House Speaker Kevin McCarthy appear
on track to gain enough bipartisan support to suspend the debt
limit, but the measure could still run into procedural obstacles,
complicating the race to avoid an unprecedented default.
China's Fading Recovery Reveals Deeper Economic Struggles
China's era of rapid growth is over. Its recovery from
zero-Covid is stalling. And now the country is facing deep,
structural problems in its economy.
The outlook was better just a few months ago, after Beijing
lifted its draconian zero-Covid controls, setting off a flurry of
spending as people ate out and splurged on travel.
Company Insiders Made Billions Before SPAC Bust
The SPAC boom cost investors billions. Insiders in the companies
that went public were on the other side of the trade.
Executives and early investors in companies that went public via
SPACs sold shares worth $22 billion through well-timed trades,
profiting before share prices collapsed.
China Rebuffs Pentagon Chief, Blunting Push for
WASHINGTON-China has rebuffed a U.S. request for a meeting
between their defense chiefs on the sidelines of an annual security
forum in Singapore this weekend, the Pentagon said Monday, showing
the limits of a tentative rapprochement between the two rival
The decision by China formally to inform the Pentagon shuts the
door for now on a meeting between Defense Secretary Lloyd Austin
and Li Shangfu, China's new defense minister, which the U.S. had
proposed on the sidelines of the annual Shangri-La Dialogue
China Launches Three Astronauts, Including First Civilian, Into
SINGAPORE-China sent its first civilian astronaut into orbit
Tuesday as part of a new crew for its space station, showcasing the
nation's expanding capabilities in space at a time when mounting
military and technological competition with the U.S. is stoking
The rocket carrying the Shenzhou-16 spacecraft and its three
crew lifted off from a launch site in northern China's Gobi Desert
in the morning, beginning a trip of more than six hours to the
Tiangong Space Station. The mission is the first since China
finished building and fitting out the permanently manned orbital
base, and as it prepares to venture deeper into space, sending
astronauts to the moon and a probe to Mars.
DeSantis, Trump and Other 2024 GOP Campaigns Take Notice of Moms
NORTH CHARLESTON, S.C.-In recent weeks, Tara Wood has introduced
Florida Gov. Ron DeSantis at a gathering of conservative activists,
brought people to South Carolina Sen. Tim Scott's campaign launch
and is talking to the Trump campaign about meeting with the former
Wood is president of the Charleston County, S.C., chapter of
Moms for Liberty, a nationwide organization that has become an
influential force in the GOP presidential primary. The group, which
didn't exist during the 2020 race, has become the loudest voice
advocating for greater parental involvement in schools. Members are
helping shape a new education platform for the Republican Party in
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(END) Dow Jones Newswires
May 30, 2023 06:07 ET (10:07 GMT)
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