Business Leaders

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
HomeAll NewsMost read newsBusiness Leaders Biography
Birthday : 06/28/1971
Place of birth : Pretoria - South Africa
Linked companies : Tesla, Inc.
Biography : Elon Reeve Musk is an entrepreneur and businessperson who founded 8 companies, among them: Tesla, In

North American Morning Briefing: Stocks to Extend Retreat as Investors Struggle with Recession Fears

07/01/2022 | 05:25am EDT

MARKET WRAPS

Watch For:

ISM Report on Business Manufacturing PMI for June; Canada Financial Markets Closed for Canada Day

Opening Call:

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 broad losses.

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.

Economic Insight:

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 year."

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."

Forex:

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 mount.

"It is difficult to envisage any turn to more favorable market conditions."

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.

Energy:

Oil futures were lower and remained on course for their third consecutive weekly loss, as recession fears continued to weigh on demand.

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 Europe

Read: Putin Orders Sakhalin Energy to be Transferred to New Russian Company

Metals:

Copper and gold prices were weaker in Europe, with safe-havens such as the dollar and bonds boosted, as markets remained risk off.

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 years."

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."

Other News:

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 platform.

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 shows.


Atlantic City Casino Workers Reach Labor Pacts With Caesars, MGM

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 union.

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 Power Bill

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 Thursday.


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 prosecutors.

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. Companies

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.


(MORE TO FOLLOW) Dow Jones Newswires

07-01-22 0524ET

Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. 2.14% 172.1 Delayed Quote.-3.08%
BRITISH POUND / US DOLLAR (GBP/USD) -0.24% 1.20941 Delayed Quote.-10.34%
CAESARS ENTERTAINMENT, INC. 4.14% 51.37 Delayed Quote.-45.08%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -1.00% 0.77445 Delayed Quote.-1.09%
COMMERZBANK AG -0.11% 7.136 Delayed Quote.6.77%
CREDIT SUISSE GROUP AG -0.91% 5.43 Delayed Quote.-38.21%
EURO / US DOLLAR (EUR/USD) -0.50% 1.02018 Delayed Quote.-9.82%
GOLD -0.93% 1783.04 Delayed Quote.-1.49%
HARGREAVES LANSDOWN PLC 0.10% 980.4 Delayed Quote.-27.72%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.18% 0.012582 Delayed Quote.-6.47%
KOHL'S CORPORATION 1.72% 33.18 Delayed Quote.-32.82%
LONDON BRENT OIL -4.58% 93.03 Delayed Quote.25.61%
MGM RESORTS INTERNATIONAL 1.98% 35.6 Delayed Quote.-20.68%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -1.10% 0.63767 Delayed Quote.-5.60%
S&P GSCI NATURAL GAS INDEX -2.76% 398.0242 Real-time Quote.134.42%
SILVER -2.40% 20.28 Delayed Quote.-10.75%
STOXX EUROPE 600(EUR)(TR) 0.07% 1014.59 Delayed Quote.-7.71%
TESLA, INC. 4.68% 900.09 Delayed Quote.-14.83%
WTI -4.76% 87.186 Delayed Quote.21.92%