European equities started the trading week lacking direction, as major indexes across the region bounced around flat but remained broadly lower, amid a weakness and commodities and following declines in Asia.

A move down in Europe followed a slump in Asian trading, led by Japan. "Asian markets slumped heavily as investors continued to react to last week's Federal Reserve meeting which has curdled sentiment by raising the prospect of earlier than expected rate rises," said Russ Mould, an analyst at AJ Bell.

Last week's news from the U.S. Federal Reserve has taken the wind out of the reflation trade, analysts noted, piling onto problems for commodities, after China announced plans last week to tap national metals reserves to rein in a rally in the sector. Iron ore futures for the month of June were down near 1%, while copper futures fell more than 1%.

"Commodities have been pressured by the strong dollar. Given they are denominated in the U.S. currency they become more expensive to buy in other currencies when it rises," Mould added.

Marshall Gittler, an analyst at BDSwiss, noted that "expectations of higher interest rates and lower inflation - plus China's moves to rein in speculation - have sent commodity prices sharply lower."

Shares in London-listed mining giants Rio Tinto, Glencore, Antofagasta, BHP and Fresnillo were lower. Rio Tinto stock was further weighed on by a downgrade from Swiss bank UBS, which changed its rating on the stock to sell from neutral, noting risks from a more hawkish Fed and China taking actions to deflate commodity prices.

The standout stock in Europe was Morrisons - one of the U.K.'s largest supermarket groups and e-commerce giant Amazon's grocery delivery partner in the country. Shares in Morrisons jumped near 32%, as analysts expect the company to attract more takeover bids, after rejecting an GBP8.7 billion ($12 billion) offer from U.S. private-equity firm Clayton, Dubilier & Rice over the weekend.

Shares in Vivendi, the French media giant, rose near 1%, after blank-check group Pershing Square Tontine Holdings - founded by billionaire American investor Bill Ackman - agreed to buy 10% of Universal Music Group on Sunday. The deal, for around $4 billion, gives Universal Music an enterprise value of EUR35 billion ($41.6 billion). Pershing Square stock rose more than 2% in the U.S. premarket.

Lloyds Banking stock fell near 1%, after a report over the weekend that the group was set to buy its first property under a new plan to diversify its revenues by becoming a private landlord. The bank is close to securing a block of flats in Peterborough, England and could begin renting them out next month, in a move that would make it the first major U.K. retail bank to move into private rentals, the Mail on Sunday reported.

U.S. Markets:

Stock futures rose, pointing to a rebound following a tumultuous week that saw the Dow drop by the most in more than seven months.

"There are no very strong convictions in the market for the time being," said Nadège Dufossé, head of asset allocation strategy at asset manager Candriam. "The market is really focused on the evolution of rates and central bank comments."

Stocks are likely to remain at roughly current levels, albeit with increased choppiness, if market sentiment doesn't shift in some way, she added.

Higher economic growth and inflation in the coming months is likely to support stocks because Americans will increase spending on goods and services when pandemic restrictions ease, said Fahad Kamal, chief investment officer at Kleinwort Hambros. Technology stocks and long-dated government bonds are likely to outperform if growth and inflation slow after 2023, he added.

"For most investors, looking across the asset landscape, there still remains no alternative to equities," Mr. Kamal said. "Hiring is happening and normality is returning, and all of that is really positive for cyclicality. That is never going to happen in a straight line. As last week showed, there is huge volatility still in equities."


The dollar is likely to rise further, especially against low-yielding currencies such as the euro and the Japanese yen, as expectations grow that the Fed will start raising interest rates earlier than previously thought, said ING.

Last week, the Fed unexpectedly forecast rate increases during 2023, while on Friday, St. Louis Fed President James Bullard said he expects interest rates to start rising in 2022.

ING said the market is currently pricing the first U.S. rate rise around November 2022.

These expectations could lift the DXY dollar index--which is "heavily weighted towards European low-yielders"--towards the late-March high of 93.44, from a current level of 92.1110. EUR/USD could fall towards 1.1700, from 1.1892 currently, ING said.

Bitcoin fell 7% from its 5 p.m. ET level on Friday to $32,991.09 Monday. Ether, the second-largest cryptocurrency by market cap, shed more than 8% of its value and joke cryptocurrency dogecoin fell more than 11% to about 25 U.S. cents. The digital assets in recent weeks have come under pressure as China has intensified a clampdown on bitcoin mining.

The euro is likely to fall towards $1.18 on the prospect of a move toward monetary policy tightening in the U.S. while the eurozone retains ultra-accommodative policy, UniCredit said.

On Friday, Federal Reserve Bank of St. Louis President James Bullard said he expects interest rates to start rising in 2022, earlier than the central bank's revised forecast at Wednesday's meeting.

UniCredit also notes comments by Italian Prime Minister Mario Draghi calling for economic stimulus in European countries to bring growth back to pre-pandemic levels.

"The prospect of the Fed accelerating tapering while the eurozone is still considering additional stimulus does not bode well for the common currency," the Italian bank said.


In bond markets, the yield on the 10-year Treasury note ticked down to 1.423%, from 1.449% Friday. The 10-year yield has dropped for five consecutive weeks, its longest stretch of declines since August 2019.

"It is completely linked to the decline in inflation expectations," Ms. Dufossé said. "The market is not pricing overheating anymore in the U.S. economy. Investors think the Fed will be able to contain any overheating in inflation."

The so-called yield curve flattened, with shorter-dated yields rising to reflect higher rate expectations, while longer-dated yields fell because higher interest rates in the near term would likely mean slower growth and lower interest rates further into the future. The biggest moves have been in the difference between 2-year yields and 30-year yields since last Wednesday.

Central banks are likely going to try to brace markets for an eventual removal of monetary accommodation and the U.S. Fed is leading the way on that front by signalling two rate increases in 2023, said Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management.

The first step on what will be a long road to a rate hike will likely need to be a tapering and ceasing of asset purchases, he said, expecting tapering possibly starting late this year. "With enough lead-time, the market can take a taper in stride," he said.


Oil prices edged higher on hopes for strong summer demand and after a hardliner won the Iranian elections. The victory of cleric Ebrahim Raisi in Iran's elections could delay a nuclear deal, said analysts at ANZ.

"The possibility of Iranian oil hitting the market in the short term...looks unlikely," they wrote in a note.

Prices for both varieties have risen over 40% so far this year on strong demand expectations. "The rebound in demand in the northern hemisphere summer is so strong that the market is becoming increasingly concerned about further sharp drawdowns on inventories," said ANZ.

Copper prices continued their selloff as investors fear tighter monetary policy is on the way. Three-month copper on the LME was down 0.8% at $9,073.50 a metric ton.

The metal has now dropped over 11% so far this month after a hawkish turn from the Fed. The Fed's James Bullard said late last week that the central bank could raise rates as early as next year. Those comments have helped intensify the selloff for copper, said Anna Stablum at brokerage Marex.

Investors said comments from Fed officials are now likely to be of key focus until the central bank's officials meet at the next Jackson Hole Symposium in late August.

Gold prices stabilized after ending the week sharply lower as the Fed said it would raise rates sooner than expected.

The precious metal has found support from falling bond yields which have pared back on the gains they made last week after the Fed's meeting.

Some investors have also used the low gold price as a buying opportunity, said Carsten Fritsch, commodities analyst at Commerzbank, pointing to inflows into gold ETFs on Friday.

The SPDR Gold Shares ETF saw inflows of over $632 million on Friday, the biggest one-day gain since January, according to data from FactSet.



Deutsche Bank Jumps Back Into Payments With Fiserv Deal

Deutsche Bank AG wants to get back into the suddenly valuable business of digital payments, nearly a decade after getting out of it.

Germany's largest lender is setting up a joint venture with U.S. payments giant Fiserv Inc. to offer customers payments-processing services. The joint venture will allow Deutsche Bank's business clients to accept payments from customers, both in person and digitally, through Fiserv's platform called Clover, which reads credit cards, debit cards and mobile wallets, and records orders and inventory.


Vivendi Agrees to Sell 10% of Universal to William Ackman

Vivendi SE on Sunday reached an agreement for a 10% investment in Universal Music Group by William Ackman's Pershing Square Tontine Holdings, valuing the world's largest music company at about $40 billion.

In an email to UMG employees, CEO Lucian Grainge called the investment a "strong validation." The deal-previously reported on by The Wall Street Journal-follows a 20% stake investment by Chinese internet giant Tencent and comes days before Vivendi shareholders will vote on the potential listing of 60% of UMG shares on the Euronext Amsterdam stock exchange.


Wm. Morrison Supermarkets Rejects $7.65 Bln Clayton Dubilier & Rice Offer Proposal

Wm. Morrison Supermarkets PLC said Saturday that it has rejected a 5.54 billion-pound ($7.65 billion) possible cash offer by Clayton Dubilier & Rice LLC as it "significantly undervalued" the company and its future prospects.

The U.K.'s fourth largest grocer by market share said it had received a 230 pence a share proposal from the U.S. private equity company on June 14 which it rejected on June 17.


Telenor, Axiata Sign Deal for Previously Announced Merger of Malaysian Businesses

Norwegian telecom provider Telenor ASA and Malaysian operator Axiata Group Bhd. said Monday they have successfully concluded due diligence and signed an agreement on the proposed merger of their Malaysian mobile operations, Celcom Axiata Bhd. and Digi.

The companies in April said they were in advanced talks on a proposed merger.


Terrorist Attacks, Immigration Debates Push French Voters Rightward, Boosting Le Pen

L'ISLE-SUR-LA-SORGUE, France-Wedged between river tributaries in southeastern France, L'Isle-sur-la-Sorgue is known for its cobblestone streets and its sun-dappled outdoor market.

But ahead of local elections this month, the debate in this small town, and in others across France, has centered on the fallout from the beheading of a schoolteacher near Paris last fall by a Chechen refugee as well as the slaying of churchgoers in Nice weeks later by a Tunisian migrant.


Iran's New Hard-Line President Poised for Pivotal Role in Nuclear Talks

When Iranian diplomats resume talks with Western officials to revive a battered nuclear deal, one name will stand out on the list of individuals Tehran wants removed from the U.S. sanctions list: Ebrahim Raisi, Iran's president-elect.

The 60-year-old hard-line judge, who won Friday's presidential election in Iran, was sanctioned two years ago by the Trump administration for his close ties to Iranian Supreme Leader Ali Khamenei. As Iran's president-elect, Mr. Raisi has emerged in a pivotal role that could determine the fate of the 2015 multination accord.


U.K. Home Prices Continue to Rise But Pace Is Slowing

U.K. house prices are continuing to rise to new highs though at a slower pace than recent months, according to new data from property portal Rightmove PLC.

The average price of property coming to the market between May 9 and June 11 rose by 0.8%, or GBP2,509 ($3,494), a more modest climb than the preceding month's 1.8% but still pushing the national average to a record high of GBP336,073 for the third consecutive month. The portal measured 125,582 prices across the U.K. over the period.


U.S. Military to Withdraw Hundreds of Troops, Aircraft, Antimissile Batteries From Middle East

WASHINGTON-The Biden administration is sharply reducing the number of U.S. antimissile systems in the Middle East in a major realignment of its military footprint there as it focuses the armed services on challenges from China and Russia, administration officials said.

The Pentagon is pulling approximately eight Patriot antimissile batteries from countries including Iraq, Kuwait, Jordan and Saudi Arabia, according to officials. Another antimissile system known as a Terminal High Altitude Area Defense, or Thaad system, is being withdrawn from Saudi Arabia, and jet fighter squadrons assigned to the region are being reduced, those officials said.



Chinese Junk Bonds Flash Warning Signs

Yields on Chinese junk bonds have jumped to levels last hit during the tail end of last year's market turbulence, signaling growing investor concern about defaults.

Last week, the yield on an ICE BofA index of Chinese junk bonds in dollars topped 10% for the first time since May 2020. It closed Friday at 9.93%. In contrast, the equivalent index for global sub-investment grade debt ended the week at 4.57%. That was only 0.04 percentage point off a trough hit three days earlier, which was the lowest yield in a data set that goes back to 1997. Bond yields move inversely to prices.


Climate Fight Brews as SEC Moves Toward Mandate for Risk Disclosure

WASHINGTON-The Securities and Exchange Commission is preparing to require public companies to disclose more information about how they respond to threats linked to climate change-and businesses are gearing up for a fight.

The SEC's new chairman, Biden administration appointee Gary Gensler, has said climate-related disclosure is a top priority, and President Biden plans to meet Monday with top financial regulators to discuss the issue. The SEC has already sought industry input, much of which arrived last week, for a rule proposal that could be issued by October.


Breaking Up Japan Inc.'s Love Affair With Itself

Japan's corporate-governance reform has been a long, often painful process. But there has been some recent progress on one perennial complaint: massive cross-holdings that empower management and tend to weigh on returns.

Nonfinancial companies on the Tokyo Stock Exchange's first section booked 610 billion yen ($5.3 billion) of gains from sales of securities for the six months ending in March, a 92% year-over-year rise, according to Goldman Sachs. And 137 companies reduced such cross-shareholdings in the fiscal year ending in March, a 59% increase from a year earlier, noted the bank.


Turbocharged U.S. Economy Attracts Foreign Investors

The extraordinary recovery of the U.S. economy is likely to make the country the world's top destination for overseas investment this year and next, according to new United Nations projections, with foreign businesses drawn by the prospect of a rapid and sustained rebound in consumer spending and the Biden administration's multitrillion-dollar infrastructure plans.

According to U.N. figures published Monday, overseas investments by businesses around the world fell by a third in 2020 from the previous year. The U.S. recorded a 40% fall in investment but narrowly held on to its long-held position as the top destination ahead of China. The U.N. in January estimated that the U.S. had lost the top slot.


China Tweaks Deposit Rate Rules to Guide Funding Costs Down

China has tweaked the mechanism to determine the upper limits on banks' deposit rates, leading to a reduction of longer-term funding rates, as competition for stable sources of deposits has intensified.

The Self-Disciplinary Mechanism for the Pricing of Market-Oriented Interest Rates, backed by China's central bank, said Monday that it has changed how to determine the ceilings on deposit rates by adding certain basis points to the government-set benchmark rate.


Economy Week Ahead: U.S. Existing-Home Sales, German Business Confidence


U.S. existing-home sales fell in April from the prior month as record-high prices deterred potential buyers. But April sales remained 51.7% higher than the same month a year before. Economists expect another decline in May.


Bipartisan Infrastructure Bill Could Lose Gas-Tax Rise, Senator Says

WASHINGTON-A proposed infrastructure spending plan may be hammered out without a measure raising the gasoline tax, a key Republican lawmaker said Sunday, suggesting the removal of an obstacle to a nearly $1 trillion infrastructure plan pushed by a bipartisan group of lawmakers.

Sen. Rob Portman (R., Ohio), one of the lead Republicans in the group, said a higher gasoline tax may not be in the final package, citing opposition from the Biden administration.


Tight Labor Market Returns the Upper Hand to American Workers

Low-wage workers found something unexpected in the economy's recovery from the pandemic: leverage.

Ballooning job openings in fields requiring minimal education-including in restaurants, transportation, warehousing and manufacturing-combined with a shrinking labor force are giving low-wage workers perks previously reserved for white-collar employees. That often means bonuses, bigger raises and competing offers.


Facebook, Alphabet Keep Rising; Apple, Netflix Fade

Big tech stocks are going their own ways in 2021.

It is a far cry from last year, when the so-called FAANG stocks took a commanding role in a market driven by the coronavirus pandemic.


The Natural-Gas Glut Has Evaporated, Driving Prices Higher

Natural-gas prices are starting the summer air-conditioning season nearly twice as high as they were a year ago.

Demand for the fuel is picking up as the world's economies reopen and as Americans dial down their thermostats for what is expected to be a hot summer. Meanwhile, U.S. producers have stuck to the skimpy drilling plans they sketched out when prices were lower, eliminating the glut that was keeping them depressed.


Ethiopia's Nobel Prize-Winning Leader Faces Election as War Rages in Tigray

Ethiopia's election was meant to be the crowning moment for Nobel Peace Prize-winning Prime Minister Abiy Ahmed, a popular recognition of his efforts to break open one of Africa's most entrenched one-party states and liberalize its tightly controlled economy.

Instead, the country of 110 million people headed to the polls Monday in turmoil, fighting a bloody civil war in the northern province of Tigray and escalating ethnic uprisings elsewhere that are reverberating across the strategic Horn of Africa region.


Tokyo Olympics to Allow Spectators at Summer Games

TOKYO-The Summer Olympics in Tokyo will include up to 10,000 Japanese spectators at each event, organizers said, despite advice by leading doctors that the Games would be safer without crowds.

Monday's decision clears up the final major uncertainty about the Games ahead of the opening ceremony on July 23. Officials said in March that foreign spectators wouldn't be permitted to travel to Japan to attend the Olympics.


Write to

Write to us at

We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to

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


(END) Dow Jones Newswires

June 21, 2021 06:15 ET (10:15 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.