ISM Report on Business Manufacturing PMI for June; Canada
Financial Markets Closed for Canada Day
Stock futures declined at the start of the second half of the
year, with investors bracing for more volatility.
Investors remain focused on persistent inflation that has forced
central banks to reverse years of easy-money policies and
accelerate interest-rate increases. That change in position has
bolstered fears of slowing growth that could lead to a recession.
Central bank officials globally have signaled that they are more
concerned about taming inflation than an economic slowdown.
"We can see the foundations are being set for a recession," said
Seema Shah, chief strategist at Principal Global Investors. She
expects to see a recession at the start of next year if the labor
market, which she said is still strong, weakens.
The war in Ukraine and uncertainty over the pace of future oil
production make it difficult to assess the path for inflation and
the prospect of recession, she said. Elevated energy prices have
been a key component of higher inflation.
"Fears rattling financial markets show little sign of subsiding,
with investors spooked about signs of looming recessions, while
inflation stays stubbornly high," said Susannah Streeter, an
analyst at broker Hargreaves Lansdown.
"There are concerns that...the Federal Reserve and other central
banks will have to step on the accelerator of interest rate hikes
to bring red hot prices under control."
Ahead, the Institute for Supply Management's report on U.S.
factories is expected to show that manufacturing activity
decelerated in June, when figures are released at 10 a.m. ET.
Overseas, the pan-continental Stoxx Europe 600 fell 0.5%, led by
losses in the technology sector. In Asia, major indexes closed with
Stocks to Watch:
Shares of Kohl's fell more than 17% in premarket trading after
CNBC reported the company terminated talks with Franchise Group,
owner of The Vitamin Shoppe. CNBC's report cited two people
familiar with the matter.
Barron's has reached out to Kohl's and Franchise for comment on
the CNBC report.
The U.S. economy is expected to slow this year and next,
narrowly avoiding a recession, economists at Credit Suisse said in
its global economics quarterly report, projecting the economy will
grow 2.1% in 2022 and 1.2% in 2023.
"A recession is now a clear possibility, but in our view, there
are still buffers that should prevent a worsening growth outlook
from spiraling into a broader downturn, at least through next
Healthy finances for both businesses and households and a strong
labor market are key factors behind the strength of the economy,
Credit Suisse said.
Pantheon Macroeconomics said the U.S. economy is set for a
second straight dip in quarterly real GDP in the second quarter,
ticking the box for a technical recession.
However, not every two consecutive falls in GDP signal a
recession, and other economic indicators such as employment
creation point to a strong economy in the first half of the year.
Pantheon expects U.S. GDP to fall by 0.5% in the second quarter
after the 1.6% decline registered in the first quarter.
"Markets and the media will be delighted to call this a
recession, but the National Bureau of Economic Research, the
semi-official Arbiter of Recessions, very probably will not."
The dollar, recently 0.3% higher against a basket of currencies,
will continue to outperform as widespread risk aversion drives
investors toward safe havens, said MUFG Bank. It said the dollar's
strength has intensified as fears over weaker global growth
"It is difficult to envisage any turn to more favorable market
The upcoming earnings season could show worse profits and
guidance as companies may no longer see recently robust margins as
sustainable, said MUFG. Rising natural gas prices due to the war in
Ukraine could also worsen investor sentiment.
Oil futures were lower and remained on course for their third
consecutive weekly loss, as recession fears continued to weigh on
Concerns are rising that central bank tightening and soaring
inflation will weigh on global growth and push the U.S. and other
major economies into recessions, reducing demand for oil.
"The inter-week collapse in oil price reflects growing
recessionary concerns," said SPI Asset Management. Oil prices have
risen too quickly and mounting risk of a recession is putting a cap
on prices, SPI said.
Read Barrons.com: Putin Steps Up Natural Gas Restrictions for
Read: Putin Orders Sakhalin Energy to be Transferred to New
Copper and gold prices were weaker in Europe, with safe-havens
such as the dollar and bonds boosted, as markets remained risk
Copper prices were at their lowest level since February 2021, as
recession fears continued to hit demand for the red metal.
"Recession concerns have gained the upper hand and weighed on
metals prices," said Commerzbank.
"The LME base metals index has plunged by 25% in the past three
months and finds itself at its lowest level since April of last
year. This was also the most pronounced quarterly loss in nearly 14
Silver prices remained down over 13% from the start of the year
and at their lowest level since July 2020 and UBS expects the metal
to test pre-pandemic lows amid "rising U.S. rates, a stronger
dollar and increasing U.S. recession risks."
UBS said: "We think fundamental conditions are also falling into
place for silver prices to reach pre-pandemic levels. In short, we
expect prices to test $19 an ounce."
UBS advised against adding silver exposure and "to hedge their
long silver positions over the next six months."
Fitch said iron ore prices may moderate in the second half as
steel inventories have been building up.
"The longer it takes for construction and manufacturing sectors
in China to reopen, the more likely it is that steel margins will
come under pressure and some capacity is curtailed, putting
pressure on iron ore prices."
TODAY'S TOP HEADLINES
SpaceX Wins Permission to Connect Planes, Boats and Other
Vehicles to Starlink Internet Service
Federal authorities gave SpaceX permission to link a range of
vehicles to its satellite-internet service, a win for the company
as it seeks to broaden its customer base.
The Federal Communications Commission on Thursday allowed the
Elon Musk-led company to begin operating Starlink, as its internet
unit is called, on everything from airplanes and boats to RVs,
according to an order from the FCC. The authorization covers both
consumer and business vehicles.
Elon Musk Takes Unusually Long Twitter Break
Elon Musk is on his longest stretch without posting on Twitter
in nearly five years, a nine-day hiatus that comes in the midst of
tumultuous efforts to complete his planned $44 billion deal to buy
The billionaire chief executive of Tesla Inc. last posted on
June 21, marking Thursday as the most extended silence since
October 2017. Normally a serial tweeter, he hasn't gone more than
six days without tweeting since January 2018, according to a Wall
Street Journal analysis of tweet data. Since then he has taken a
few four-day breaks, most recently this past January, the analysis
Atlantic City Casino Workers Reach Labor Pacts With Caesars,
Atlantic City, N.J., casino union workers reached tentative
agreements with MGM Resorts International and Caesars Entertainment
Inc. to avoid a Fourth of July weekend strike, according to the
Unite Here Local 54 union organizers, who have been seeking pay
raises, said the agreements would avoid strikes at MGM Resorts'
Borgata casino and Caesars Entertainment's Caesars, Harrah's and
Tropicana properties. The union had voted to authorize a possible
strike Friday without a deal. The casinos employ about 4,500
unionized workers, according to Local 54.
Bankrupt Texas Co-Op Brazos Nears Deal to Resolve $1.9 Billion
Brazos Electric Power Cooperative Inc. said it reached a
tentative agreement to resolve the $1.9 billion power bill that
drove it into chapter 11 after electricity prices skyrocketed
during a winter storm that blanketed Texas last year.
The oldest and largest power cooperative in the state has an
agreement in principle that would resolve disputes around the bills
it received from the Texas grid operator after 2021's Winter Storm
Uri, Brazos lawyer Louis Strubeck said during a court hearing
Former Apple Lawyer Pleads Guilty to Insider Trading
WASHINGTON-A former top corporate lawyer for Apple Inc. pleaded
guilty Thursday to insider trading, admitting that he used access
to the company's undisclosed earnings results to reap hundreds of
thousands of dollars in illicit gains, according to
Gene Daniel Levoff worked as Apple's corporate secretary, a role
that involved managing the company's compliance efforts to avoid
employee insider trading. Mr. Levoff also served as co-chairman of
Apple's disclosure committee, which reviewed and discussed
quarterly and annual earnings reports that hadn't been issued yet,
according to the U.S. attorney's office for New Jersey, which
prosecuted the case.
EU Targets Foreign Subsidies, Aiming at China but Worrying U.S.
BRUSSELS-European Union lawmakers struck a political agreement
on new rules for companies that reap financial benefits from
governments outside the bloc, pushing forward a proposal that
sparked concern from some U.S. business groups.
The regulation, under a deal reached late Thursday, primarily
targets companies from China and elsewhere with government backing.
It would allow the European Commission, the EU's executive body, to
block such businesses from making certain acquisitions or winning
large public contracts if they previously benefited from foreign
subsidies that regulators deem to be distortive.
China Manufacturing Output Rebounds as Covid Restrictions
A private gauge measuring China's factory activity rebounded to
its highest level in a year, pointing in the same direction as the
official gauge to reflect an economic recovery from the impact
The Caixin China purchasing managers index rose to 51.7 in June,
up from 48.1 in May, ending a three-month streak of contraction,
according to data released Friday by Caixin Media Co. and S&P
Global. The 50 mark separates expansion from contraction.
Japan's Large Manufacturers Sentiment Deteriorates, Tankan
TOKYO-Sentiment among Japan's large manufacturers deteriorated
in the three months to June, reflecting concerns over lockdown in
Shanghai and prolonged supply shortages.
The main index for sentiment among large manufacturers was +9,
compared with +14 in the March survey, according to the Bank of
Japan's quarterly tankan corporate survey released Friday. The
reading marked the second straight quarter of lower sentiment and
was below a projection for +12 from a poll of economists by data
Most Countries Lack Crypto Information-Sharing Laws, Watchdog
Most countries lack "travel rule" laws that could help prevent
illicit use of cryptocurrency by criminals and terrorists, a global
anti-money-laundering watchdog said Thursday.
China's Xi Jinping Says Hong Kong's Loyalty to Beijing Will
Ensure Prosperous Future
HONG KONG-Marking a quarter-century since Beijing regained
control over this former British colony, Chinese leader Xi Jinping
urged Hong Kong to show more patriotic fervor and rally around his
vision of a strong and unified China as he prepares to extend his
In a Friday speech wrapping up a two-day visit to Hong Kong, Mr.
Xi declared that this Asian financial center is again poised to
prosper after Beijing imposed broad political changes to sweep
aside the social unrest that periodically plagued the city since
its handover to China in 1997. The key guarantors of Hong Kong's
future, he said, is a shared love for the Chinese motherland and
loyalty to Communist Party rule.
U.S. to Support Ukraine for 'As Long as It Takes,' Biden
At the end of six days of international summitry, President
Biden pledged to support Ukraine for "as long as it takes," as
Russia's war drags on and Western countries pour billions of
dollars in arms and humanitarian aid into the conflict.
Speaking Thursday at the conclusion of the North Atlantic Treaty
Organization's gathering in Madrid, Mr. Biden pledged the war
wouldn't end with a Ukrainian defeat.
Arbitrator Awards $52 Million to Former D.E. Shaw Partner
A former partner at hedge-fund giant D.E. Shaw Group was awarded
$52 million by an industry arbitration panel, which determined that
the firm and four of its top executives defamed him by suggesting
his departure from the hedge fund was related to sexual
In 2018, Daniel Michalow filed a complaint with the Financial
Industry Regulatory Authority seeking $600 million in lost wages
and other damages, as well as a "corrective statement" from D.E.
Shaw. Mr. Michalow didn't receive the statement from the firm, but
the award is a record for a Finra case in which a member of the
financial services industry filed a complaint against his
'Cryptoqueen' Is Now on FBI's 10 Most Wanted List
The woman alleged to be at the heart of one of the world's
biggest cryptocurrency frauds is now on the Federal Bureau of
Investigation's 10 Most Wanted Fugitives list, according to the
Ruja Ignatova is accused of operating a world-wide pyramid
scheme that took in more than $4 billion from 2014 through 2016
through the purported cryptocurrency OneCoin, according to law
Write to email@example.com TODAY IN CANADA
Canada Day: Financial markets are closed.
Expected Major Events for Friday
00:30/JPN: Jun Japan Manufacturing PMI
05:00/JPN: Jun Auto sales
06:00/RUS: Jun Russian Manufacturing PMI
07:45/ITA: Jun Italy Manufacturing PMI
07:50/FRA: Jun France Manufacturing PMI
07:55/GER: Jun Germany Manufacturing PMI
08:30/UK: May Monetary & Financial Statistics
08:30/UK: May Bank of England effective interest rates
08:30/UK: May Money and Credit - Lending to Individuals, Lending
to Businesses, Broad Money and Credit
08:30/UK: 4Q Postcode Lending statistics
08:30/UK: Jun S&P Global / CIPS UK Manufacturing PMI
09:00/ITA: Jun Provisional CPI
09:00/ITA: Jun Cities CPI
13:45/US: Jun US Manufacturing PMI
14:00/US: Jun ISM Report On Business Manufacturing PMI
14:00/US: May Construction Spending - Construction Put in
15:00/US: Jun Global Manufacturing PMI
20:00/US: Jun Domestic Auto Industry Sales
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Friday
Statera Biopharma Inc (STAB) is expected to report for 1Q.
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ANALYST RATINGS ACTIONS
Acadia Realty Trust Cut to Hold From Buy by Jefferies
Advanced Micro Devices Raised to Outperform From Market Perform
by Northland Capital Markets
Ameren Cut to Neutral From Buy by UBS
Angion Biomedica Cut to Hold From Buy by Stifel
Angion Biomedica Cut to Perform From Outperform by
Axos Financial Cut to Neutral From Outperform by Wedbush
Bunge Raised to Buy From Neutral by B of A Securities
Crown Castle Raised to Buy From Hold by Jefferies
Digital Realty Raised to Buy From Hold by Jefferies
Duke Energy Cut to Neutral From Buy by UBS
Equinix Raised to Buy From Hold by Jefferies
Evergy Cut to Neutral From Buy by UBS
Huntington Bancshares Cut to Neutral From Outperform by
KeyCorp Cut to Neutral From Outperform by Wedbush
Kite Realty Group Trust Cut to Hold From Buy by Jefferies
MSC Industrial Cut to Market Perform From Outperform by William
Omega Healthcare Cut to Hold From Buy by Jefferies
RPT Realty Cut to Hold From Buy by Jefferies
Sabra Healthcare REIT Cut to Hold From Buy by Jefferies
ShotSpotter Raised to Outperform From Market Perform by William
Simon Property Cut to Hold From Buy by Jefferies
SVB Financial Cut to Neutral From Outperform by Wedbush
Ventas Raised to Buy From Hold by Jefferies
Webster Cut to Neutral From Outperform by Wedbush
Western Alliance Bancorp Cut to Neutral From Outperform by
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
July 01, 2022 05:24 ET (09:24 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.