MARKET WRAPS
Watch For:
No major economic or corporate trading updates expected
Opening Call:
European stock futures fell early Friday. Asian stock benchmarks declined; the dollar and Treasury yields rose; oil futures gained; while gold fell.
Equities:
Stock futures point to a lower open in European markets on Friday. The Trump-Xi summit's second and final day will test whether the talks can yield a concrete deal.
While the first day of the talks struck a stabilizing tone, concrete breakthroughs were limited, said Christopher Wong at OCBC Group Research.
Issues around tariffs, technology restrictions, rare-earth controls and Taiwan are likely to remain on the negotiation track rather than be resolved in one meeting, Wong added.
Forex:
Selling pressure on the euro remains in place following recent data pointing to persistent inflationary pressures on the U.S. economy, said Forex.com's Julian Pineda.
"This event may point to a more aggressive Federal Reserve over the coming months, which, to some extent, has helped the US dollar regain strength in the short term," he added.
Bonds:
The bond market isn't waiting around for Kevin Warsh to get settled into his role at the helm of the Federal Reserve. Yields across the roughly $30 trillion Treasury market already were repricing higher, raising interest rates, tightening financial conditions and increasing borrowing costs for the economy.
"Warsh wanted the option to cut on day one," said Vincent Ahn, a portfolio manager at Wisdom Fixed Income Management. But the bond market just took that option off the table for him, he said.
Energy:
Oil gained early Friday. Flows through the Strait of Hormuz remain very low and there are limited signs of progress on a U.S.-Iran deal, said Goldman Sachs.
The U.S. gasoline market has become very tight, driven by surging net exports demand, resilient domestic demand and price incentives to shift production to distillates, GS added.
Metals:
Strategic buying by central banks, a trend toward de-dollarization and the long-term persistence of fiscal deficits should continue to support demand for gold as a medium- and long-term allocation, said Zhongtai Futures.
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Elevated copper prices are deterring purchases in China, with fabricators seeing orders for copper rod weakening this month, ANZ said. Still, the bank sees Chinese copper demand staying broadly resilient this year, with consumption from the clean energy technology sectors offsetting weakness in the property and construction sectors, ANZ said.
TODAY'S TOP HEADLINES
Frenzied IPO Highlights Wall Street's AI Fervor
The market's AI party keeps rolling.
AI chip maker Cerebras Systems priced its initial public offering far above expectations on Thursday, and the shares rose nearly 70% from there on their first day of trading on the Nasdaq. Many investors clamoring to get a piece of the IPO received fewer shares than they wanted or nothing at all, forcing them to buy stock in the open market.
Fed's Barr: Shrinking The Balance Sheet Is The Wrong Objective
NEW YORK - Federal Reserve Gov. Michael Barr said shrinking the balance sheet is the wrong objective for the central bank, and many of the proposals to meet that objective would threaten financial stability.
Speaking at an event in Midtown Manhattan, Barr delivered the comments after Kevin Warsh's confirmation as Fed chair. Warsh has argued for shrinking the Fed's balance sheet to reduce the central bank's large presence in financial markets. Barr said some of the proposals to shrink the balance sheet would actually increase the Fed's role in markets.
The World Is Burning Through Its Oil Safety Net
An underappreciated surplus of crude oil, sloshing around storage tanks and aboard ships, cushioned the global economy when the Persian Gulf closed 2 1/2 months ago.
That excess supply is now dwindling at a record pace, with oil executives and analysts predicting that a harsh reckoning is set to upend the relative calm in energy markets. Acute shortages of key fuels and soaring prices could emerge within weeks if the Strait of Hormuz remains shut.
Pressure Mounts on U.K.'s Starmer as Key Minister Quits
British Prime Minister Keir Starmer on Thursday faced growing pressure to step down as one of his most senior cabinet ministers quit, a move that boosts the odds the Labour Party leader will face a formal challenge for office that would plunge Britain into a prolonged period of political uncertainty.
Health Minister Wes Streeting, seen as one of the leading contenders to replace the prime minister, said change was needed at the top. "It is now clear that you will not lead the Labour Party into the next general election," Streeting wrote to Starmer in his resignation letter, adding "where we need vision, we have a vacuum. Where we need direction, we have drift."
LVMH to Sell Marc Jacobs Fashion Brand to WHP, G-III Apparel
LVMH Moët Hennessy Louis Vuitton agreed to sell the fashion brand Marc Jacobs to WHP Global and G-III Apparel Group in a $850 million deal.
The two buyers agreed to pay $425 million each to buy the brand and split ownership 50/50, according to a Thursday filing.
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Expected Major Events for Friday
06:00/NOR: Apr External trade in goods
08:00/CZE: Mar Monthly Balance of Payments
08:00/POL: Apr CPI
08:00/POL: Mar Merchandise trade
08:00/ITA: Apr CPI
09:00/CRO: Apr CPI
10:00/IRL: Mar Goods Exports and Imports
12:00/POL: Mar Balance of Payments
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
05-15-26 0020ET
