MARKET WRAPS
Watch For:
ISM Report on Business Manufacturing PMI for June; Construction Spending for May; Canadian markets closed for Canada Day holiday
Today's Top Headlines/Must Reads:
- U.S., China Start Talking Again, With Global Economic Order at Stake
- China Factory Activity Gauge Fell Slightly in June
- Investors Spurn Dividend-Paying Stocks as AI Booms
- Labor Market Headfake? Key Report Could Be Overestimating Job Growth
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Opening Call:
Stock futures were mixed with minimal moves in a shortened session Monday, as investors eyed fresh catalysts.
"As we kick off July, Independence Day tomorrow will ensure a stop start week but it remains a big one with payrolls and the global PMIs and ISMs through the week," Deutsche Bank said.
Nasdaq futures were outperforming slightly as Tesla shares gained more than 6% in premarket trading after it announced higher than expected sales. Read more here .
Other EV makers also jumped premarket. Rivian Automotive added 2.5%. U.S.-traded shares of Chinese electric-vehicle maker NIO rose 6.1%.
Meanwhile, in its mid-year outlook note, Fundstrat raised its year-end S&P 500 target from 4750 to 4825, citing expectations that inflation can fall faster, allowing for a dovish Fed pivot, and that the economy is "sliding into expansion" that will help earnings rise.
Overseas, Asian indexes posted strong gains, boosted by optimism over Janet Yellen's coming trip to China. The Shanghai Composite rose 1.3%, while Hong Kong's Hang Seng gained 2.1%. Japan's Nikkei 225 rose 1.7%. European stocks made modest gains.
More Pre-Market Movers
Agilent Technologies was one of the sharpest fallers in early premarket trading, slipping more than 4%. The company has expressed interest in acquiring British biotech supplier Abcam, Bloomberg reported Friday.
Apple dipped after becoming the world's first corporation with a market value of more than $3 trillion on Friday.
ADRs in AstraZeneca fell more than 5% after the company's results from a late-stage cancer drug study fell short of investors' expectations.
ADRs in https://urldefense.com/v3/__http://JD.com__;!!F0Stn7g!AYnsZdYsKx1RxhHvuTwBra8wxJ2ZRiiAEPUMf38eOLIuns95_7hFUGWzlZ0g9QU67EKqjbjBEHNIWrLHR86zsZFdGIxLjuWgC2gRnxrGTt0$ , PDD Holdings rose by around 3% premarket
AI-focused chip makers were rising, with Palantir Technologies up 1.4%, Advanced Micro Devices climbing 1.2% and Nvidia 1.1% higher.
Sabre jumped close to 8%. The company announced plans to display the carbon footprint of flights through its partnership with Google last week, as well as integrating its guest-engagement software with Meta's WhatsApp.
Post-Close Movers
Astrotech on Friday said its board of directors unanimously rejected an unsolicited and "opportunistic" takeover proposal from BML Investment Partners. Shares fell 8.2%.
Forex:
The dollar recovered some of Friday's losses following the inflation data, and MUFG said investors will need "much weaker" monthly jobs data on Friday and inflation data on July 12 to push the currency lower on a more sustained basis.
Only this could convince the market that the Fed will again keep interest rates unchanged later this month.
"One weaker reading on its own is unlikely to prevent the Fed from delivering one final rate hike this month."
"Further weaker U.S. inflation data will be required to trigger a more sustained reversal lower (in the dollar and U.S. yields)."
Read U.S. Inflation May Average Around 4% in 2023, Julius Baer Says
Natixis said the dollar has been lifted recently by "a series of good macro indicators" and suggestions from Jerome Powell that interest rates could rise further.
This will leave the dollar's movements from here dependent on future macroeconomic indicators, such as ISM business manufacturing, jobs and wages, it said.
Natixis expects EUR/USD to stay in a range between 1.08 and 1.10 for now.
Energy:
Crude oil prices eased lower in Europe as worries over demand continued to dominate the market.
ING said that despite moving into the third quarter, the market still has the same concern as the last six months: an uncertain demand outlook.
ING pointed to speculators cutting their net long position last week in ICE Brent by 30,586 lots to 159,800 lots and WTI longs by 35,257 lots to 71,543 lots.
"This is the smallest net long speculators have held in WTI since March when we saw prices trading briefly below $65 a barrel."
Metals:
Base metals edged higher, as worries over supply provided some support to prices, while gold dipped with expectations of rate hikes providing pressure in the near term, ANZ said.
"Weakening industrial activity in China is a headwind, but we think this has been largely priced in and any upside surprise could see metals prices rebounding," ANZ said, adding that inventories for copper and aluminum have been drawn down, which should protect against downside risks for prices.
TODAY'S TOP HEADLINES
United Vows Changes to Avoid More Disruptions, Including Fewer Newark Flights
United Airlines plans to make changes, including flying less at its Newark hub, to avoid a repeat of the nearly weeklong stretch of disruption that snarled travel ahead of the busy Fourth of July holiday, Chief Executive Scott Kirby told employees Saturday.
Rolling storms curtailed departures and led to gridlock at Newark that rippled across United's network this past week, leaving crews and planes out of place and resulting in thousands of flight cancellations.
Big Banks Stay Cautious as Stress Doesn't End With a Test
Banks endured the stress tests pretty well. But they seem to be anticipating some bigger headaches to come.
The results of the Federal Reserve's annual health checkup of the country's biggest banks, announced earlier this week, were a bit anticlimactic, especially coming against the backdrop of a recent banking crisis: Nobody failed. But passing and failing are sort of beside the point. The results of the test were just prelude to the announcements, made late Friday, by banks of their expected new minimum capital requirements-and, in turn, how much they plan to pay out to shareholders in the form of dividends and buybacks.
Crypto Miners Seek a New Life in AI Boom After an Implosion in Mining
The boom in demand for high-end chips powering the rise of artificial intelligence has given new life to some of the survivors of the last tech-hype cycle: cryptocurrency miners.
During the crypto upsurge, Satoshi Spain sold and leased out hundreds of souped-up computers-known as mining rigs-equipped with powerful graphics chips. Then, as many of them sat idle starting last year because of the decline of mining currencies, the Spanish company began helping its customers retool the machines for AI.
Leveraged-Loan Logjam Eases After Banks Unload Tens of Billions of Debt
Banks have sold off tens of billions of leveraged-buyout debt that was gumming up their lending operations, raising hopes that a critical business on Wall Street is returning to normal.
Typically, banks provide relatively high-risk loans to help finance private-equity buyouts and then unload the debt to investors. When interest rates shot up last year, investors grew skittish about buying billions of dollars of debt backing deals like Elon Musk's $44 billion purchase of Twitter. Banks wound up parking about $80 billion of the debt on their balance sheets instead of selling at a steep loss, crimping their ability to make new loans and eating into their profits.
Recent Deals Fail to Spark Lackluster IPO Market
Shaky receptions to a trio of initial public offerings last week show that the new-issue market is still in recovery mode.
Thrift-store operator Savers Value Village priced its IPO above expectations, and its stock rose 27% on its first day of trading Thursday. Two other offerings didn't go as well, with reinsurer Fidelis Insurance Holdings and Kodiak Gas Services both pricing their offerings below their targeted ranges and experiencing drops on their first day of trading.
Market Bets on Cheaper Oil, Undermining Saudi Hopes for a Price Rebound
The oil market has sent a warning to Saudi Arabia and everyone else betting that prices are poised for a rebound: Don't count on it.
The petroleum-rich kingdom throttled back output starting this weekend, part of a high-stakes gamble unveiled last month to crimp supply. Saudi officials think that demand will outstrip production later this year, teeing up a rally that will restore a gusher of profits to oil producers. Analysts at the International Energy Agency and Wall Street banks agree that demand could return in the second half of 2023.
A Mysteriously Financed Group That Could Upend a Biden-Trump Rematch
WASHINGTON-A centrist group is laying the groundwork to run an alternative candidate if the 2024 presidential race becomes a Donald Trump-Joe Biden rematch.
It is called No Labels, but many political strategists have their own label for it: spoiler.
Jack Smith Probe of 2020 Election Challenges Focuses on Trump Lawyers
WASHINGTON-Special counsel Jack Smith's team in recent weeks has taken a growing interest in the role of lawyers and other figures involved in legal efforts aimed at reversing Donald Trump's loss in the 2020 election, people familiar with the matter said.
Prosecutors from Smith's team have issued subpoenas and asked questions centered on several key figures in those postelection efforts, including Sidney Powell, a pro-Trump lawyer who spread baseless claims of widespread voter fraud. The subpoenas have also requested communications with Emily Newman, a lawyer who worked with Powell, and Mike Roman, a Republican operative who headed Election Day operations for the Trump campaign and dispatched lawyers to swing states before November 2020.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Indicators (ET):
(MORE TO FOLLOW) Dow Jones Newswires
07-03-23 0616ET
