European stocks lacked momentum on Thursday as investors looked
to next week's central bank meetings for policy decisions.
The Federal Reserve's language in May led to the impression we'd
probably see a pause in June, CMC Markets said.
"This still seems to be the favoured outcome; however, this
week's rate hikes have muddied the waters somewhat."
Meantime, European Central Bank officials are expected to raise
interest rates by another 25 bps next week, "even if the Fed does
stay on hold," CMC added.
Read ECB Likely to Deliver Two More 25Bp Interest-Rate Rises
The eurozone slipped into a recession at the start of the year
as high energy and food prices hit household spending. Read more
Track the analyst, market reactions to the data here .
Stocks to Watch
Hopes of a strong peak season for logistics companies are fading
with no sign of a rebound in freight demand across the air and sea
segments so far, Citi said.
Citing recent meetings with companies including Deutsche Post
DHL Freight Forwarding, DSV, InPost, Kuehne + Nagel, Hapag-Lloyd
and A.P. Moller-Maersk, Citi said there has been very limited
rebound in demand heading into the peak season, though the industry
still expects a recovery in the second half.
"The general trends are that volumes in sea has seen trends
similar to 1Q and air has seen more pressure."
Stock futures ticked down as investors reconsidered the outlook
for next week's Fed meeting, following the Bank of Canada's
surprise interest-rate hike.
Treasury bonds declined further before stabilizing. The yield on
the benchmark 10-year Treasury note touched 3.817% before easing
The market's next important signal will be U.S. inflation data
on Tuesday. Before that, weekly jobless claims are due.
Stocks to Watch
GameStop said its board terminated the contract of CEO Matt
Furlong, and named activist investor Ryan Cohen as executive
chairman. It also reported a loss in its fiscal first quarter of
$50.5 million, or 17 cents a share. The stock fell almost 19% in
Shares of Lucid Group rose 2.2% after Reuters reported the
electric-vehicle maker was preparing to enter China, the world's
largest auto market.
Follow WSJ markets coverage here
The euro stayed higher against the dollar, showing little
reaction even after first-quarter eurozone economic growth data was
Markets remain comfortable in pricing in two further ECB
interest rate rises, ING said before the data.
"Expect EUR/USD to remain becalmed well within a 1.0650-1.0750
The dollar could hold onto its recent gains on speculation the
Fed may follow the Bank of Canada with a rate rise next week, ING
said, but added that traders should stay cautious ahead of
Tuesday's key inflation data.
ING said the DXY dollar index is likely to linger around the 104
level until then.
Degroof Petercam Asset Management said that although the dollar
remains the leading currency for trade, its supremacy is gradually
being eroded, as various initiatives by BRICS could lead to the
creation of a currency backed by raw materials.
Giving examples, it said in early 2023, China and Brazil agreed
to replace the dollar in the settlement of certain trade
transactions, and India has proposed to various countries facing a
shortage of dollar liquidity that they opt for payment in
Front-end German bond yields are very close to last week's highs
and the 10-year Bund yield is also approaching the 2.50% level
swiftly, likely luring buyers, Mizuho said.
"We look for buyers to emerge at those levels, especially given
that this week's supply is mostly out of the way," Mizuho said, but
added that this Thursday being a holiday in several European
countries, liquidity may be scarcer as a result.
Morgan Stanley said it sees limited upside risk for 10-year core
and semicore eurozone government bond yields, while after their
recent richening, noncore government bonds, especially Italian
BTPs, could be exposed to profit-taking.
Read Italy's BTP Valore Issue Might Put Downward Pressure on
Annual BTP Supply
Oil futures edged higher, settling into a range following Saudi
Arabia's planned cuts, with prices being driven largely by investor
sentiment, which is focused on economic worries, rather than supply
and demand fundamentals.
Base and precious metals were mixed, with ANZ Research saying
economic headwinds were continuing to build, which is likely to
keep downward pressure on commodity markets in the short term.
"The recent weakness has led us to lowering some of our
short-term targets. However, any shift in sentiment across the
broader macro environment could spark a rally across the industrial
Read Gold's Near-Term Upside Could Be Capped
DOW JONES NEWSPLUS
Novartis's Sandoz Sets Out Growth Plan Following Proposed
*Sandoz: Product Pipeline Expected to Add $3B in Potential Net
Sales Over Next 5 Years
Novartis's off-patent medicines division Sandoz set out its
growth plans as a standalone company following the proposed
spinoff, saying it is well positioned to continue delivering
mid-single digit sales growth.
Autoliv to Cut Up to 8,000 Jobs and Close Several European
Autoliv on Thursday announced plans to cut up to 8,000 jobs
globally as it accelerates its global cost reductions and
simplifies its logistics and geographic footprint, including the
closure of several sites in Europe.
The Swedish maker of airbags and safety belts said the job cuts
represent around 11% of its workforce, with around 2,000 indirect
positions and around 6,000 direct positions expected to be cut
Ukraine's Zelensky Visits Flood-Hit Kherson as Battle Rages
KHERSON, Ukraine-Ukrainian President Volodymyr Zelensky on
Thursday visited this city, which is in the path of floodwaters
unleashed by the destruction of a major dam in Russian-occupied
Ukraine earlier this week that has piled a new crisis on a country
reeling from more than a year of full-scale Russian military
Flanked by military guards, Zelensky could be seen visiting the
flood-stricken section of the city before speeding off. Rescue
workers in boats moved through waterlogged streets even as the
sounds of gunfire rang out, a sign of the continuing battle with
Russian forces nearby.
Japan's Economy Grew Faster Than Initially Estimated in First
TOKYO-Japan's economy expanded at a faster pace than initially
estimated in the January-March quarter thanks to stronger spending
by companies, revised government data showed Thursday.
The world's third-largest economy after the U.S. and China grew
2.7% on an annualized basis in the first quarter, compared with the
1.6% expansion recorded in the preliminary estimate released in
It Is Time to Admit It: Bank Regulation Doesn't Quite Work
For U.S. officials, what happened to Silicon Valley Bank seems
to have an easy solution: Merge regional lenders together and
regulate them as strictly as megabanks. The kink in the plan is
that Credit Suisse also failed spectacularly.
The Swiss government this month backed a parliamentary
inquiry-the fifth in the country's history-to examine the bank's
sale to its main rival UBS, scheduled to close as soon as next
Monday. The merger was hurriedly brokered by officials during the
third weekend of March, on the premise that a massive deposit
flight could otherwise have toppled Credit Suisse the following
Forget the Naysayers. Why the Stock Market Can Keep Rising.
The stock market has climbed a wall of worry to start the year
and is nearing a bull market. Now the fun part begins.
Entering 2023, doubters argued that stocks were expected to take
a fall as the "bear-market rally" off the October lows faltered.
The Federal Reserve had been rapidly lifting interest rates,
raising the cost of capital for everything from start-ups to banks.
The economy was slowing to the point that a recession had become a
question of when, not if. Corporate profits had stagnated, and
stocks outside a handful of large technology names had
Republican Insurgents Force Speaker Kevin McCarthy to Cancel
WASHINGTON-House Speaker Kevin McCarthy (R., Calif.) canceled
the rest of the votes planned for this week after failing to
resolve a standoff with Republican insurgents who charge he
violated a January agreement with them that cleared the path for
him to win his job.
The dissenting lawmakers made clear they would vote against a
procedural step needed to bring votes to the floor, effectively
paralyzing the chamber and ultimately forcing McCarthy to throw in
the towel and try to regroup rather than try again on Thursday.
Trump Legal Team Told That Former President Is Target of
Criminal Probe in Documents Case
Federal prosecutors told Donald Trump's legal team that he is a
target of their investigation into his handling of classified
documents at his Mar-a-Lago resort, people familiar with the matter
said Wednesday, in the clearest indication yet that the former
president could face criminal charges.
A federal grand jury in Miami, meanwhile, heard testimony from a
former Trump spokesman, signaling that special counsel Jack Smith
intends to bring any possible criminal charges in Florida.
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(END) Dow Jones Newswires
June 08, 2023 06:14 ET (10:14 GMT)
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