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Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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3.94 | 0.05% | 8,424.20 | 8,451.64 | 8,417.95 | 8,420.26 | 0 | 16:35:30 |
MARKET WRAPS
Watch For:
Eurozone Unemployment; Germany Foreign Trade Price Indices, Retail Trade, Unemployment; France Consumer Spending, PPI, Provisional CPI; UK GDP, Balance of Payments; Italy PPI, Unemployment; OPEC and non-OPEC Ministerial Meeting; NATO Summit concludes; updates from Ubisoft, 3i, Avast, Bunzl, X5 Retail, Evraz
Opening Call:
Europe faces another negative open as investors continue to weigh remarks from central bankers as they look to battle high inflation by tightening policy. In Asia, stocks were mixed, with encouraging Chinese data spurring gains in Shanghai, while the Nikkei tumbled on disappointing industrial output figures. Elsewhere, the dollar lost ground, while Treasury yields, oil and gold advanced.
Equities:
European stocks are likely to extend losses on Thursday as investors continue to focus on remarks from central bankers, while fretting that soaring inflation is damaging the global economy.
Wall Street ended little changed on Wednesday, with earlier gains mostly fading, as investors monitored corporate earnings and remarks from Jerome Powell.
"It remains to be seen, but it feels like the market is expecting profit margins to be squeezed, and profit to be revised lower," said Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.
He pointed to the S&P 500 sinking about 25% below its January peak last week, before it staged a slight rebound, as a sign that investor might be "somewhat discounting that earnings are already being ratcheted down, " even before Wall Street analysts have yet to substantially lower their earnings estimates.
"Maybe the equity market has already done some of that," Janasiewicz said.
In Asia, shares in China rose after official gauges of factory and services activity rebounded to expansion in June after showing activity contraction for three months in a row, as Beijing eased Covid-19 restrictions and moved to support economic growth.
Read more here.
Economic Insight:
S&P expects the U.S. to avoid a recession this year, but "the weight of extremely high prices is damaging purchasing power and, as aggressive Fed policy increases borrowing costs, it's hard to see the economy walking out of 2023 unscathed."
S&P maintains its forecast of 2.4% growth this year, but now calls for a 1.6% expansion in 2023, down from 2% in May, with unemployment at 4.3% by the end of 2023.
"The Fed will keep monetary policy tight until inflation decelerates and nears its target in the second quarter of 2024."
Read: First Wall Street Bank to Call a U.S. Recession Now Sees Chance that Inflation Fails to Decelerate
Forex:
The dollar edged down in Asia but the USD Index remained above 105 following the buck's solid gains on Wednesday.
Recession fears appear to have strengthened, said CMC Markets, after the final reading of U.S. GDP was revised lower while the GDP deflator climbed further, pointing to a sharp slowdown in economic growth.
OANDA thinks there's pressure on the European Central Bank to be a bit more aggressive following data showing record-high inflation in Spain.
"Wall Street will likely lean towards anticipating more rate hikes from the ECB, that will drive a weaker dollar, and weakening growth outlooks which should prompt the safe-haven buying of gold."
Read: What the Dollar's Historic Surge Means for Markets
Bonds:
Treasury yields rose in Asia after they posted their biggest declines in a week on Wednesday following the U.S. GDP revision, ending three straight sessions of gains.
In a note released after the GDP report, JPMorgan said "it is reasonable to consider the risk that the U.S. and/or global economy slips into recession this year."
It said "rising concern about persistent inflation shocks has combined with news of a more aggressive Fed and sliding sentiment to materially shift our views on second-half 2022 growth."
Just a week ago, JPMorgan's global markets outlook indicated the firm's economics department saw no recession materializing this year.
Other News:
ESG investors in fixed-income markets want better, more standardized disclosures and target tracking, Bank of America economists said in a report analysing data from a survey.
"Investors are increasingly forming their own views based on underlying ESG data--if that data is unavailable or difficult to interpret, it may begin to work against an issuer. Regulations and equity markets do tend to drive ESG forward...Companies don't want to become uninvestable, which can drive ESG disclosures when regulation is lacking."
Energy:
Oil futures turned higher in Asia as tight inventories and low supply helped support prices.
Total stocks at the U.S.'s Cushing oil hub fell by 1.35 million barrels over the last two weeks, taking inventory levels to 21.26 million barrels, the lowest level held at the WTI delivery hub since October 2014, said ING.
Also, there seems to be little progress in the Iranian nuclear talks, raising expectations that Iranian oil supply won't be forthcoming in the near term.
Oil settled lower on Wednesday, easing back after three consecutive session gains, even as a more than three million-barrel drop in U.S. crude supplies over the past two weeks fed concerns over tight global inventories.
Metals:
Gold prices nudged higher on the gloomy U.S. economic data but ANZ said the strong dollar could cap bullion's gains.
OANDA said for now, "gold is still stuck in a wide trading range, but a collapse below $1,800 seems less likely as the dollar peak might be in place."
Gold finished slightly lower on Wednesday while silver futures lost 0.6% to end at their lowest settlement since July 2020.
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Aluminum was little changed, with limited gains.
There are reports that at least two Japanese buyers have agreed to pay premiums of $148 a metric ton for aluminum in the third quarter, a drop of 14% from the second quarter, said ING. This decline reflects weakening demand in the automotive sector and indicates ample aluminum stocks.
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Iron ore futures were lower over fresh concerns about China's Covid-19 lockdowns.
Beijing's efforts to quell outbreaks have led to fairly tough restrictions, which haven't been supportive of iron-ore demand, said ING. There are also growing concerns over the macroeconomic outlook.
Iron ore's prospects mostly are going to depend on how China approaches any further outbreaks through the year, as well as on the scale of stimulus the government carries out, said ING.
TODAY'S TOP HEADLINES
China's Manufacturing, Services Activity Returned to Expansion in June
China's official gauges of factory and services activity rebounded to expansion in June after showing activity contraction for three months in a row, as Beijing eased Covid-19 restrictions and moved to support economic growth.
The official manufacturing purchasing managers index rose to 50.2 in June, up from 49.6 in May, the National Bureau of Statistics said Thursday. However, the reading was lower than the 50.5 median forecast by economists polled by The Wall Street Journal.
U.S. GDP's Early 2022 Dip Was Bigger Than Previously Thought
The U.S. economy entered the second quarter on shakier footing than previously thought.
Consumer spending, the economy's main engine, was much softer in the first quarter than previously reported, according to Commerce Department gross domestic product revisions released Wednesday. Spending grew at a revised annual rate of 1.8% in the first quarter, down from a previous estimate of 3.1%.
Russia's Surprising Economic Headache: A Strong Ruble
After its first default on international debt in a century amid a grinding war with Ukraine, one might expect Russia's currency to be suffering. But Russia has the opposite problem.
The Russian ruble has soared to a roughly seven-year high against the U.S. dollar-an astounding turnaround for a currency that earlier this year was in free fall after Russia invaded Ukraine. The ruble on Wednesday had risen 42% against the dollar this year, making it the best performer against the greenback, according to a Dow Jones Market Data analysis of 56 currencies.
Iran, U.S. Nuclear-Deal Talks End Without Progress
U.S. to Ramp Up Military Presence in Europe to Counter Russia
MADRID-The U.S. will make its biggest military expansion in Europe since the Cold War, including its first permanent troop presence in Poland, as NATO prepares for two more members to join the alliance in response to Russia's invasion of Ukraine.
The announcement, which follows a NATO pledge this week to increase its high-readiness forces sevenfold, comes despite Washington's efforts to shift U.S. attention toward China and offers further evidence of how Russia's war is upending international security.
U.K. Car Manufacturing Rose in May for First Time in 11 Months
U.K. car manufacturing rose in May for the first time since last June, an industry body said Thursday.
The Society of Motor Manufacturers and Traders said a total of 62,284 cars drove off the production lines in May, compared with 54,962 in May 2021. However this was well below May 2019's prepandemic figure of 116,035.
Of those cars manufactured last month, 11,134 were for the home market compared with 7,984 in May 2021.
Deal on Bigger NATO Likely Helps Turkey's Erdogan Shore Up Support at Home
This week's deal in which Turkey agreed to allow Sweden and Finland into the North Atlantic Treaty Organization in return for foreign-policy concessions hands Turkish President Recep Tayyip Erdogan a victory he can use to boost his political standing at home.
The agreement grants, on paper, all of Mr. Erdogan's demands, ending a dispute that threatened to drag on for months and interfere with NATO leaders' plans for historic expansion designed to counter Russia's threat to European security after its invasion of Ukraine.
Write to paul.larkins@dowjones.com
Expected Major Events for Thursday
04:30/NED: May PPI
04:30/NED: May Retail turnover
06:00/GER: May Foreign trade price indices
06:00/UK: 1Q Balance of Payments
06:00/DEN: 1Q Revised GDP
06:00/DEN: May Unemployment
06:00/UK: Jun Nationwide House Price Index
06:00/UK: 1Q UK quarterly national accounts
06:00/GER: May Retail Trade
06:30/SWI: May Retail Sales
06:45/FRA: May Household consumption expenditure in manufactured goods
06:45/FRA: May PPI
06:45/FRA: Jun Provisional CPI
07:00/HUN: May PPI
07:00/SWI: Jun KOF economic barometer
07:00/TUR: May Foreign Trade
07:30/SWE: Swedish repo rate announcement
07:55/GER: Jun Labour market statistics (incl unemployment)
08:00/BUL: May PPI
08:00/ITA: May Unemployment
08:30/UK: 1Q Business investment revised results
09:00/ITA: May PPI
09:00/CRO: May Industrial Production Volume Index
09:00/CYP: May PPI
09:00/GRE: May PPI
09:00/GRE: Apr Turnover Index in Retail Trade
09:00/LUX: May PPI
09:00/CRO: May Retail trade
09:00/EU: May Unemployment
10:00/POR: May Retail trade
12:00/POL: 1Q Quarterly Balance of Payments
13:00/BEL: 1Q Balance of Payments
16:59/LUX: 1Q Balance of Payments
16:59/SPN: May Budget deficit
16:59/SPN: Apr Monthly Balance of Payments
16:59/BEL: May PPI
23:01/UK: May Zoopla House Price Index
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
June 30, 2022 00:36 ET (04:36 GMT)
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