MARKET WRAPS

Stocks:

European stocks traded slightly higher as investors awaited Wednesday's two main catalysts: the U.S. consumer price index data and the latest Federal Reserve interest-rate decision.

"Markets are bracing for the Fed to leave rates unchanged but focus on whether policymakers stick to projecting three rate cuts for 2024 or scale back that outlook given sticky inflation," IG said.

"Today is a big day in terms of economic data and Fed announcement-it could determine the global market mood for the rest of the month, and a good part of summer," Swissquote Bank said.

Stocks to Watch

Galp 's decision to sell half its stake in a block located in the recent major oil discovery offshore Namibia will likely garner significant interest from a string of integrated oil majors, Citi said.

U.S. Markets:

Stock futures were rising slightly and bond yields saw meagre moves as investors eschewed big bets before the CPI report and the Fed decision.

Stocks to Watch

Oracle announced new artificial-intelligence deals with Google, Microsoft and OpenAI on Tuesday, overshadowing weaker-than-expected quarterly results. Shares rose 9%.

Paramount Global was down 2.3% after Shari Redstone ended discussions to sell her controlling stake to Skydance Media and merge the two companies.

Forex:

The euro has taken a significant hit in the aftermath of the European parliamentary elections and is expected to drop further towards support at $1.07, Swissquote Bank said.

The euro "remains heavily offered" against the dollar and "is preparing to test the $1.07 support to the downside."

The euro could face turbulence against the dollar later in the day, though, when U.S. inflation data are released and the Fed makes its policy announcement.

The dollar could fall if inflation data undershoot expectations and Powell signals interest-rate cuts are on their way, ING said.

The data could show core inflation fell to 0.2% month-on-month in May versus expectations it held at 0.3%, it said.

And the Fed could remove its statement about a lack of progress towards its inflation target. "Powell typically delivers a dovish press conference and the dollar has ended lower on the day over the last four consecutive FOMC meetings."

Bonds:

Inverted yield curves--where longer-dated bond yields trade below their shorter-dated counterparts--isn't a new norm and they should normalize, Pimco said.

"The long end of the yield curve will normalize from the fiscal side, while front-end yields will fall as interest rate cuts will be delivered."

In Europe, risks to the fiscal outlook are increasing, Pimco added. It also said that global yield curves will steepen as central banks cut rates.

Energy:

Oil prices rose on reports of falling U.S. crude oil inventories and on higher global demand views.

Commercial crude stocks are expected to have fallen by 1.2 million barrels last week, according to a Wall Street Journal survey.

The EIA raised its 2024 forecast for global oil consumption growth by around 200,000 barrels a day to 1.1 million barrels a day, while OPEC kept its bullish demand-growth estimates unchanged.

Metals:

Gold futures edged higher, remaining largely rangebound ahead of the U.S. CPI data and the Fed's rate decision.

DHF Capital SA said gold could rebound if core inflation data is weaker than expected, supporting an earlier interest-rate cut.

The metal could also find safe haven support from political events in Europe, with French President Emmanuel Macron's decision to call snap elections increasing political uncertainty in France, the eurozone's second-largest economy, DHF Capital added.

Commonwealth Bank of Australia said it isn't too surprising to see iron-ore prices fall back into the $100--$110-a-metric-ton range. It reckons such prices align with trends in Chinese steel demand and output, which have been fairly flat.


EMEA HEADLINES

The World Will Be Swimming In Excess Oil by End of Decade, IEA Says

Global oil markets are headed towards a major glut this decade, a global energy watchdog forecast, citing surging supplies and slowing demand growth for crude thanks to lower-emissions energy sources.

The International Energy Agency, whose members include the world's biggest oil consumers, predicted in its closely watched medium-term oil market report that so-called spare capacity-the amount of pumping capacity left unused because of adequate supply-could surge in coming years to levels only seen during the pandemic.


U.K. Economy Slows, Underlining Government's Challenges as Elections Loom

The U.K.'s economic recovery sputtered to a halt at the start of the second quarter, underlining the scale of the task facing the next government in lifting the country out of a long period of stagnation.

Gross domestic product was flat in April compared with a month earlier, official data showed Wednesday. This was in line economists' expectations, according to a survey by The Wall Street Journal ahead of the data's release.


Umicore Slashes Guidance After Slower EV Demand Hits Battery-Materials Business

Umicore lowered its 2024 guidance after a sharp slowdown in demand for electric vehicles hit its battery-materials segment.

The Belgium materials technology company said Wednesday that it now expects 2024 adjusted earnings before interest, taxes, depreciation, and amortization for its battery business to be around break-even, down from prior guidance of EUR135 million. This includes a one-off gain of around 50 million euros ($53.7 million) related to the reversal of a provision for original equipment manufacturer recalls.


Legal & General Launches GBP200 Mln Share Buyback, Sets Out New Targets

Legal & General announced a 200 million pound ($254.8 million) share buyback for the current year as part of its new mid-term strategy which includes the merging of its investment divisions.

The provider of life insurance, pensions, retirement and investment services plans to increase its returns to shareholders and expects its dividend per share to grow 5% in 2024 and increase by 2% each year out to 2027 along with further, similar buybacks, it said Wednesday.


GLOBAL NEWS

China Inflation Stays Low Amid Tepid Consumer Spending

China's consumer prices rose mildly last month while its factory-gate prices continued to fall, suggesting persistently tepid demand as Beijing continues to try to lift lackluster consumption.

The country's consumer-price index rose for a fourth consecutive month in May, edging up 0.3% from a year earlier, the National Bureau of Statistics said Wednesday. That matched the 0.3% expected by economists in a Wall Street Journal poll and was unchanged from April's increase.


Bitcoin Drops Amid ETF Outflows. Trump Wants Crypto to Be 'Made in the U.S.A.'

Bitcoin and other cryptocurrencies were falling early Wednesday as exchange-traded funds tied to the cryptocurrency faced outflows. However, former U.S. President Donald Trump is looking to get the support of the crypto industry.

Bitcoin was down 0.5% over the past 24 hours to $67,286. Bitcoin hit a record high near $74,000 in mid-March amid a surge of interest from new spot exchange-traded funds but its price has dropped since then.


Rep. Nancy Mace Defeats GOP Challenger Backed by McCarthy Allies

Rep. Nancy Mace fended off a Republican primary challenger in a closely watched South Carolina race Tuesday, following a tumultuous year in which she joined other GOP rebels to oust former Speaker Kevin McCarthy.

With nearly two-thirds of the vote tallied, Mace led challenger Catherine Templeton 57% to 30%, with a third candidate, William Young, at 13%. The Associated Press projected Mace would secure the majority needed to avoid a runoff. The conservative makeup of the district means Mace is likely to win in the fall and hold on to her seat for a third term.


Calls Grow for Netanyahu to Make Crucial Choices on Cease-Fire and Postwar Gaza

TEL AVIV-Israeli Prime Minister Benjamin Netanyahu has repeatedly articulated what he doesn't want in Gaza: no Hamas, no Palestinian Authority and no permanent cease-fire until the hostages are all home.

Now, the Israeli leader faces increasing pressure to say what he does want. The decision will likely shape his political career and the future of the war in Gaza.


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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

06-12-24 0600ET