MARKET WRAPS
Watch For:
Weekly Jobless Claims; Wholesale Inventories for April
Today's Headlines/Must Reads
- Forget the Naysayers. Why the Market Can Keep Climbing
- Inflation Drags Eurozone Economy Into Recession
- It Is Time to Admit It: Bank Regulation Doesn't Quite Work
- SEC's Gensler Had Crypto in His Sights for Years
Follow WSJ markets coverage here .
Opening Call:
Stock futures were mixed on Thursday, with highly-rated tech stocks pressured by renewed concerns the Federal Reserve may keep borrowing costs higher for longer.
After a period when concerns about inflation and central bank policy were placed on the back burner--and investors reveled in AI exuberance--the rates narrative has moved back sharply into focus and was still impacting trading on Thursday.
"American investors have been delivered a reminder that further tightening is still on central bankers' minds," Hargreaves Lansdown said.
Markets still show investors pricing in a 68% probability the Fed will leave interest rates unchanged at a range of 5% to 5.25% on June 14.
However, the chances of an additional 25 basis point rate increase in July has risen to 53%, up from just 10% a month ago. And whereas a few months ago the Fed was expected to have begun cutting rates from current levels by the autumn, the market is now pricing in no such reduction until next year.
Global stock markets were mixed. Hong Kong's Hang Seng inched up 0.25% and Japan's Nikkei 225 retreated 0.9%. The Stoxx Europe 600 was flat.
Stocks to Watch
GameStop said its board terminated the contract of CEO Matt Furlong, and named activist investor Ryan Cohen as executive chairman. GameStop also reported a loss in its fiscal first quarter of $50.5 million, or 17 cents a share. The stock fell almost 19% in premarket trading.
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.
Rent the Runway declined more than 10% in premarket trading after issuing a forecast for fiscal-year sales that missed Wall Street expectations. The company also announced the departure of its long-time CFO, Scarlett O'Sullivan.
Semtech rose 27% after it posted a surprise profit on an adjusted basis in its fiscal first quarter.
Smartsheet fell 18% in premarket trading as its outlook for fiscal second-quarter earnings and revenue disappointed, and billings of $215.5 million in the first quarter missed expectations.
Forex:
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 rupees.
Read Upcoming UK Labor Market Data Could Weaken Sterling
Energy:
Oil futures edged higher in Europe, 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.
Metals:
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 commodities."
Gold Outlook
Gold's near-term upside could be capped, owing to factors such as a recent rise in Treasury yields amid resolution of the U.S. debt-ceiling crisis, Citi Research said.
It has turned "tactically neutral" on the precious metal in the near term and has lowered its forecast for up to three months to $1,915 from $2,100.
However, the macroeconomic environment is biased positively for gold investment over 12 months, particularly as gold is already starting from a historically high base, Citi said, and thinks prices could reach $2,200 into end-2023 or the first half of 2024.
TODAY'S TOP HEADLINES
Google Gets Stricter About Employees' Time in Office
Google will consider office attendance records in performance reviews and send reminders to employees with frequent absences, becoming the latest company to urge a return to in-person collaboration following an embrace of remote work during the pandemic.
The search giant, a unit of Alphabet, will also consider new requests to work remotely full time as exceptions only, Chief People Officer Fiona Cicconi wrote in a companywide email announcing the changes on Wednesday. Most employees already follow Google's hybrid work policy, which requires roughly three days of work in the office a week, she wrote in the email, which was reviewed by The Wall Street Journal.
Recycling and Regulation Are Hot Issues in Likely Update to U.S. Sustainable Marketing Guides
A highly anticipated refresh of the U.S. Federal Trade Commission's environmental marketing guides has prompted debate among some of America's biggest consumer goods companies over potential new regulations and tighter rules over what can be labeled recyclable.
The FTC's so-called Green Guides-referenced in courts and by the agency in enforcement-aim to help businesses avoid accusations of "greenwashing, " which is when companies mislead consumers about their environmental marketing claims. The FTC last updated its guides in 2012 after a review that it launched in late 2007. For the current review, the agency extended the public comment period by 60 days after industry groups requested an extension.
Japan's Economy Grew Faster Than Initially Estimated in First Quarter
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 May.
'War for Talent' at Mines Could Drive Up Cost of Energy Transition
Wall Street is betting a labor shortage across the U.S. mining industry will drive up prices for the array of metals needed for the transition away from fossil fuels.
The crunch spans engineers who design job sites, miners who extract raw metals and the truck drivers who haul them away for processing. It is another headache for producers already struggling to supply the materials needed for electric vehicles, solar panels and wind farms.
India's RBI Holds Policy Rate Steady as Inflation Moderates
All 15 economists surveyed by The Wall Street Journal expected the Indian central bank to stand pat
India's central bank maintained its policy rate on Thursday as domestic inflation has moderated.
Republican Insurgents Force Speaker Kevin McCarthy to Cancel Votes
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.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
Alithya Group 4Q
Enghouse Systems 2Q
Saputo 4Q
Transat
Economic Calendar:
Nothing scheduled
Stocks to Watch:
Tourmaline Oil Declares Dividend of C$0.26
Expected Major Events for Thursday
04:30/JPN: May Corporate Insolvencies
05:00/JPN: May Economy Watchers Survey
05:30/FRA: 1Q Job creation
10:00/FRA: Apr OECD Harmonised Unemployment Rates
12:30/US: 06/03 Unemployment Insurance Weekly Claims Report - Initial Claims
12:30/US: U.S. Weekly Export Sales
13:00/RUS: Weekly International Reserves
14:00/US: Apr Monthly Wholesale Trade
14:30/US: 06/02 EIA Weekly Natural Gas Storage Report
20:30/US: Foreign Central Bank Holdings
20:30/US: Federal Discount Window Borrowings
23:50/JPN: May Money Stock, Broadly-defined Liquidity
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Thursday
ASA Gold & Precious Metals Ltd (ASA) is expected to report for 1Q.
American Software (AMSWA) is expected to report $0.08 for 4Q.
Anixa Biosciences Inc (ANIX) is expected to report for 2Q.
Argan Inc (AGX) is expected to report $0.36 for 1Q.
AstroNova Inc (ALOT) is expected to report for 1Q.
Braze Inc (BRZE) is expected to report for 1Q.
Comtech Telecommunications Corp (CMTL) is expected to report $-0.11 for 3Q.
Concrete Pumping Holdings Inc (BBCP) is expected to report $0.09 for 2Q.
DATATRAK International Inc (DTRK) is expected to report for 1Q.
Designer Brands Inc (DBI) is expected to report for 1Q.
DocuSign Inc (DOCU) is expected to report $-0.13 for 1Q.
Duckhorn Portfolio Inc (NAPA) is expected to report for 3Q.
Enzo Biochem (ENZ) is expected to report for 3Q.
Ferrellgas Partners LP (FGPR) is expected to report for 3Q.
FuelCell Energy Inc (FCEL) is expected to report for 2Q.
Graham Corp (GHM) is expected to report $-0.08 for 4Q.
Hooker Furnishings Corp (HOFT) is expected to report $0.11 for 1Q.
(MORE TO FOLLOW) Dow Jones Newswires
06-08-23 0617ET
