European stocks made gains again on Friday as investors cheered
the U.S. debt-ceiling deal.
Focus now shifts to the U.S. non-farm payroll report.
"Consensus is looking for moderating non-farm payroll growth
(190,000 from 253,000), but we see some upside risks after most
leading employment indicators and yesterday's ADP report surprised
to the upside, " Danske Bank said.
Stocks on the Move
Shares in Adidas and Puma gained Friday after U.S. sports-gear
maker Lululemon increased its earnings guidance for the year on the
back of a strong fiscal 1Q, pointing to surging demand in
Lululemon said it also hopes to reach some $12.5 billion in
revenue by 2026, from half that in 2021.
The sunny outlook--a "solid print in a sea of volatile results
across the retail industry," Jefferies said --is also good news for
Germany's Adidas and Puma, which will hope to regain rapid growth
in the key East Asian market after recent travails including a
consumer boycott and pandemic turbulence.
Shares in Adidas gained 3.4%; those in Puma rose 4.2%. Lululemon
itself saw its shares gain 13% in after-hours trading following
Other Stocks to Watch
British American Tobacco is expected to report a business update
on Tuesday ahead of its first-half results.
The cigarette maker faces a range of longstanding issues that
may weigh on sentiment, including regulatory pushback against
smoking as well as menthol and flavored alternatives, its ability
to create new income streams with next generation products and a
$635 million fine by the U.S. for violating North Korean sanctions,
AJ Bell said.
"All of these issues will be under scrutiny as [New Chief
Executive] Marroco oversees the second-quarter update, which will
be benchmarked against the full-year guidance for 2023 given by
[Former CEO] Bowles alongside the 2022 full-year results back in
Read Marks & Spencer Likely to Report a Robust Start of FY
Read Inditex Investors Will Have an Eye on Current Performance
at 1Q Results
Stock futures higher after the Senate voted to raise the debt
limit and with the jobs report looming.
Other gauges this week have suggested the job market remains
strong. Many investors believe labor-market tightness will pressure
wages and force the Fed to resume policy tightening later in the
Stocks to Watch
Dell's revenue plunged in the first quarter by the largest
percentage on record and executives said they expect a similar drop
in the current period. Shares fell nearly 3% in off-hours
MongoDB reported better-than-expected first-quarter results and
said it added the most net new customers in over two years. Shares
rose 25% ahead of the opening bell.
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The euro should find support as there is limited scope for lower
front-end eurozone yields given that the European Central Bank
looks set to raise interest rates further, MUFG Bank said.
Although data showed eurozone inflation eased in May, ECB
President Christine Lagarde said on Thursday there wasn't clear
evidence that underlying inflation had peaked, while ECB meeting
minutes reinforced "the prospect of at least two more rate hikes,"
Services inflation could "well drift higher over the summer on
tourism-related inflationary pressures."
The dollar continues to fall after Fed officials hinted at a
pause in raising rates in June, and non-farm payrolls data at 1230
GMT could help determine whether losses continue, ING said.
"Today's U.S. NFP [non-farm payrolls] data will have a major say
in determining whether the Fed hikes in June or not," ING said,
adding that only above-consensus data could dampen prospects of a
"Unless the May NFP surprises on the upside we would say today's
DXY bias lies towards the 103.20 area."
The 10-year German Bund yield could struggle to fall
meaningfully below 2.25% even as U.S. data could support a bond
market rally, Commerzbank said.
A slowdown in U.S. nonfarm payrolls-with the data due at 1230
GMT-could ease market expectations of Fed interest-rate rises
further, the bank said.
"Thus [it] does not stand in the way of the positive market
backdrop that prevailed throughout the week," it added. "Yet, the
air for 10y Bund yields seems to be getting thinner below 2.25%, as
they are approaching the lower end of the recent trading
The 10-year U.S. Treasury-German Bund yield spread could narrow,
in line with the usual behavior around the time the Fed delivers
its last interest-rate rise, Societe Generale said.
"Euro area core inflation is not yet in free fall, and the
European Central Bank's stance is less restrictive than the Fed's,"
it said. "This argues in favour of a narrower 10y UST-Bund
Read Spanish Bond Spreads Unlikely to Widen for Now Amid
Oil prices jumped for a second day after the U.S. Senate passed
a bill averting a default.
Focus now turns firmly to this weekend's OPEC+ meeting at which
analysts broadly expect the group to keep production quotas
Oil's outlook in June is likely to hinge on supply trends,
especially the upcoming decision from the OPEC+ meeting later this
week, Hengtai Futures said.
It added that demand-side fundamentals are showing mixed
signals, with U.S. data showing sharply lower inventories buoying
sentiment, but a soft China macro recovery is weighing on trading
Therefore, supply-side factors may be essential in driving
prices. "If officials don't offer clear price support actions at
the upcoming OPEC+ meetings, investors are unlikely to turn more
bullish," Hengtai said.
Base metals prices were pushing higher, while gold was flat,
with investors looking to the U.S. jobs report as the next big
Aluminum prices will likely remain in range-bound trading this
month, Hengtai Futures said.
It notes that Chinese supply of the base metal is likely on the
rise, with several main producing regions expected to ramp up
output as hydropower capacity becomes more abundant in the summer
More hydropower also means lower production costs of the metal,
which could further weigh on prices, Hengtai said, advising
investors to stay on the sidelines and monitor the supply trend in
the near term.
DOW JONES NEWSPLUS
French Industrial Production Rose More Than Expected in
French industrial production rebounded more than expected in
April, suggesting that some pressures on output could be easing as
supply bottlenecks loosen, despite the squeeze on spending caused
by high inflation and rising interest rates.
Industrial output-comprising output in manufacturing, energy and
construction-rose 0.8% on month in April, after falling by 1.1% in
March, data from the country's statistics office Insee showed
Rio Tinto to Spend $395 Million on Australia Desalination
Rio Tinto, the world's second-biggest miner by market value,
said it plans to invest $395 million in a seawater desalination
plant in the Pilbara region of Western Australia, where it runs
massive iron-ore mining operations.
The plant, which will be built within Rio Tinto's existing
iron-ore port operations at Parker Point, will support future water
supply for the company's coastal operations and communities in the
region, Rio Tinto said.
OPEC+ Cuts Could be More Painful
A change in behavior by U.S. oil producers could make a
production cut by OPEC and its allies this weekend more effective
in boosting oil prices.
OPEC+, which is made up of OPEC and its Russia-led allies, will
meet in coming days to decide their production plan for the balance
of the year. And the group won't need to worry as much that cutting
its quotas will prompt U.S. shale producers jack up their own
production to grab market share, says Rystad Energy's Jorge León,
an economist who once worked for OPEC.
Germany Is Cooling. 3 Stocks to Put Your Money In.
Europe's stock market rally had to end sooner or later. Germany
slipping into recession makes that seem like sooner. But there are
still great companies to buy on the Continent.
European equities went on a tear last fall when fears for the
region started to look overblown. A warm winter, plus deft policy
responses, avoided calamities expected when Russia cut off most
natural gas exports. China scrapped its zero-Covid regime,
expanding a key market for European, particularly German,
manufacturers. The iShares MSCI Eurozone exchange-traded fund
(ticker: EZU) has soared by 40% over the past eight months. The
good news looks priced in by now. "The market has recovered to more
reasonable levels," says Andrew Clifton, an equities portfolio
specialist at T. Rowe Price.
U.S. Is Willing to Begin Nuclear Arms Dialogue With Russia
The Biden administration is prepared to begin talks without
preconditions with Moscow on steps to limit nuclear arms after the
New Start treaty expires in 2026, national security adviser Jake
Sullivan plans to say in a speech Friday.
But the limits on U.S. nuclear forces that the administration
might accept at that point will be influenced not only by the size
of Russia's nuclear arsenal but also by the pace of China's nuclear
buildup, according to senior administration officials familiar with
Ukraine Says It Stopped Russia's Latest Missile and Drone
Attacks on Kyiv
Russia continued its aerial campaign against the Ukrainian
capital of Kyiv, launching cruise missiles and drones against the
city Thursday night, according to Ukraine's armed forces.
The Ukrainian air force said its air defenses intercepted all 15
of the Russian cruise missiles and all 21 of the Iranian-made
Jobs Report Expected to Show Unemployment Still Historically
Friday's jobs report will show whether the labor market remained
resilient in May in the midst of rising interest rates and elevated
Economists surveyed by The Wall Street Journal estimate that
U.S. employers added 190,000 jobs in May. That would be a modest
slowdown from April's gain of 253,000 and the 29th straight monthly
increase. They expect that the unemployment rate ticked up to 3.5%
in May from 3.4% in April, which matched the lowest reading since
Senate Approves Deal Raising Debt Ceiling, Averting U.S.
WASHINGTON-The Senate passed wide-ranging legislation Thursday
that suspends the $31.4 trillion debt ceiling while cutting federal
spending, backing a bipartisan deal struck by President Biden and
House Speaker Kevin McCarthy to avert an unprecedented U.S.
The 63-36 vote reflected support from both Democrats and
Republicans, with backers saying the need to raise the nation's
borrowing limit outweighed concern about provisions related to
military and domestic spending and energy policy, among other
As China Risks Grow, Manufacturers Seek Plan B-and C and D
SINGAPORE-For much of the past decade, Western companies have
sought an alternative to China to manufacture goods-a shift
executives call "China plus one." Increasingly, the strategy looks
more like China plus many.
Apple, with a sprawling production base in China, is rapidly
expanding in Vietnam and India, an emerging smartphone-making hub.
Crocs, which shifted production of a large share of its colorful
shoes from China to Vietnam, recently stepped up sourcing from
Indonesia and is also setting up in India.
When Markets Melt Down, These Traders Cash In
As investors fretted about the possibility that the White House
and Republican lawmakers would fail to raise the debt ceiling, one
$20 billion firm wasn't concerned about the potential stock-market
That's because Miami-based Universa Investments reaps huge
rewards in market crashes. It made billions in 2008 when the market
collapsed during the global financial crisis, as well as in the
2020 crash sparked by the Covid-19 pandemic.
Cybersecurity Risks and Privacy Rules Add Pressure on Boards
Companies shouldn't wait for new rules around cybersecurity,
privacy and emerging technologies to be finalized before preparing
for them, lawyers say, particularly as senior executives with the
right experience can be hard to come by.
Proposed cybersecurity rules from the Securities and Exchange
Commission would require public companies to disclose which board
members have security knowledge or experience, along with details
about the board's approach to cyber oversight. The SEC published
draft rules in March 2022 and is expected to finalize them in the
Debt-Limit Bill Cancels Almost $30 Billion in Pandemic Relief
WASHINGTON-A deal between President Biden and congressional
Republicans to lift the debt ceiling claws back billions of dollars
in unspent pandemic relief funding but leaves money in place for
front-line Covid-19 investments such as next-generation vaccines
Almost $30 billion in unspent funding approved during the
pandemic will be rescinded under the legislation, which passed the
Senate Thursday and is headed to Biden's desk, but most of that is
unrelated to Covid-19. Instead, it will be taken from a host of
agencies that have been looking at spending the money on such
programs as highway infrastructure, disaster loans, and rural
broadband expansion, according to people familiar with the
Debt-Ceiling Deal Makes It Kevin McCarthy 3, Detractors 0
WASHINGTON-For House Speaker Kevin McCarthy, pursuing a
bipartisan deal to avoid defaulting on the nation's debt meant
putting his own job at risk. Now he is taking a victory lap, even
as threats to his leadership endure in corners of his party.
On Wednesday, the California Republican successfully shepherded
a must-pass bill through the House to suspend the $31.4 trillion
debt ceiling into early 2025 in exchange for reining in federal
spending. The bill, crafted in breakneck talks with the White
House, then headed to the Senate, where lawmakers quickly passed it
Thursday, to make a June 5 deadline and avoid an unprecedented U.S.
Biden Falls During Air Force Academy Graduation Ceremony
WASHINGTON-President Biden fell down while on stage at the U.S.
Air Force Academy on Thursday after handing out diplomas to the
military academy's graduates. The president was helped up by a
group of officials, and the White House said he was fine.
Biden, who is the oldest president in American history at age
80, delivered the commencement address at the Colorado Springs,
Colo., academy and then stood near the front of the stage for about
two hours, saluting the new graduates and shaking their hands.
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(END) Dow Jones Newswires
June 02, 2023 06:01 ET (10:01 GMT)
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