MARKET WRAPS
Watch For:
Factory Orders for May; FOMC meeting minutes and economic forecast
Today's Headlines/Must Reads
- Markets Ignore the Looming Debt Peril
- The Fed and Investors Could All Be Wrong on Rates
- China's Export Curb on Chip-Making Metals Prompt Countries to Explore Supply-Chain Diversification
- https://urldefense.com/v3/__http://Binance.US__;!!F0Stn7g!H42V9RzAZaWUS0JW4msb50ltvCOPfsQxny-JvVK_2UolkZQ40N9C5lghZ-FkHxh9TxODAbHpRhFxJZLd8k93B7AyKQtQPAckC7ZSZBxVpdk$ Crypto Market Share Plummets
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Opening Call:
Traders returning from their Independence Day break will be met with a risk-off tone across markets after soft data from China sparked fresh concerns about the prospects for global growth.
A survey of the world's second biggest economy showed service sector activity was slower than expected in June, adding to fears that China's rebound from the Covid lockdown continues to stall. Read more.
Some assets typically in thrall to perceptions of China demand were under pressure, such as copper, while Sino-sensitive indices such as Germany's DAX were leading declines in Europe.
Other global indexes also declined moderately. The Stoxx Europe 600 retreated 0.4% while Hong Kong's Hang Seng Index lost 1.6% and the Shanghai Composite Index fell 0.7%.
"There are fresh concerns about the global economy powering down as data from China's service sector underlines how tepid the post-pandemic recovery has become, just as trade tensions between Beijing and Washington ramp up," Hargreaves Lansdown said.
The negative shift in sentiment may leave stock markets vulnerable, given recent strong gains and bullish positioning.
The S&P 500 went into Independence Day at a 14-month high having gained 16.1% for the year so far with investors saying they are increasingly more optimistic and hedge funds taking bets to levels that are well above average, analysts at JPMorgan noted.
Traders will also have an eye on the minutes of the Federal Reserve's June policy meeting.
"While not much new information is expected from the minutes, the discussion details may shed light on the reasons behind the pause. Market participants will also be keen to identify the factors policymakers will consider when deciding on a potential July rate hike," TickMill Group said.
Premarket Movers
https://urldefense.com/v3/__http://Amazon.com__;!!F0Stn7g!H42V9RzAZaWUS0JW4msb50ltvCOPfsQxny-JvVK_2UolkZQ40N9C5lghZ-FkHxh9TxODAbHpRhFxJZLd8k93B7AyKQtQPAckC7ZSVgINxc4$ was down 0.4% and Microsoft fell 0.6% following a report from The Wall Street Journal that said the U.S. was preparing to restrict Chinese companies' access to U.S. cloud-computing services. Read more.
Shares of Meta Platforms dipped 0.3% with the company poised to launch a microblogging service to rival Twitter.
Netflix gained 1.3% after it was upgraded to neutral from sell by Goldman Sachs, which also boosted the stock's price target to $400 from $230, the Fly reported.
Rivian was up 4% after second-quarter production at the electric-vehicle maker nearly tripled.
Forex:
The dollar is unlikely to see any substantial moves until key data later this week, including the ADP jobs numbers and ISM services figures on Thursday and the monthly nonfarm payrolls on Friday, ING said.
Wednesday's Fed meeting minutes are unlikely to alter current interest-rate expectations, it added.
"Overall, the dot plot projections and the post-meeting Fed communication suggest that markets may not find many hints to recalibrate their tightening expectations lower today," ING said, adding that a trigger for this would need to come from weak U.S. data.
Read Euro Edges Lower as Eurozone PMI Data Are Revised Down, Show Weaker Economy
Energy:
Oil futures were firmer, as weak demand traded off with cuts in supply.
"The recent pattern of OPEC+ oil output cuts that lift oil prices and macro headwinds that weigh on oil prices is worth pointing out," Commonwealth Bank of Australia said.
CBA said cuts in supply from Saudi were likely because the kingdom is targeting $80 a barrel, but yet prices remain range bound.
"The macro headwinds are unlikely to relent as higher interest rates weigh on global growth, particularly advanced economies."
Metals:
Base metals were lower and gold flat, as demand continued to remain subdued, particularly in China.
"Prices remain in the crosshairs of dollar moves, interest-rate hikes and tightening cycles; navigating risk appetite, macro data flow and growth expectations, with micro fundamentals taking a back seat," Standard Chartered said.
It pointed to base metals particularly having a weak first half of the year and expecting macro drivers to keep dominating.
"China's economic trajectory will be key, with the market focused on the recovery in manufacturing and industrial activity that is necessary to boost commodity-intensive sectors."
TODAY'S TOP HEADLINES
Twitter's Challenges Heat Up as Meta Prepares Rival App This Week
Twitter's challenges escalated, as competitors capitalized over the holiday period on user frustration with Elon Musk's decision to limit how many tweets users of his platform can see.
The biggest competitive threat emerged from Meta Platforms, which tipped plans to launch a Twitter rival on Thursday dubbed Threads. The "text-based conversation" app's arrival comes on the heels of upstart social-media companies Bluesky and Spill being inundated with new interest over the weekend as Twitter began the unusual step of limiting the number of posts its users could read.
Amazon Rolls Out Rivian's Electric Vans in Europe. The EV Sector Is Accelerating.
Rivian Automotive was given another boost Tuesday as Amazon said it would soon roll out its first European delivery vans from the U.S. electric vehicle start-up.
Shares in the truck maker have struggled this year, but they soared 17% to $19.56 Monday after the company's production rose more than 200% year over year in the second quarter and sales increased by around 180%. The stock is now 6% up so far in 2023, having climbed 45% in the past five trading sessions.
Pfizer Taps Samsung Biologics in $900 Million Manufacturing Deal
Pharmaceutical giant Pfizer has tapped Samsung Biologics to manufacture products in two deals worth $897 million, the South Korean company said Tuesday.
Pfizer (ticker: PFE) will look to the biotech arm of the Korean conglomerate Samsung in the period to 2029 to produce biosimilar products, ranging from oncology to immunotherapy, in its new plant in South Korea. Biosimilar drugs are a close copy of an existing approved drug.
Meta's Facebook Faces Fresh Threat to Sending Personalized Ads in EU
Meta Platforms' Facebook must get user consent before sending personalized ads in certain circumstances, the European Union's top court ruled, a surprise element in a broader court decision in which it sided with German competition regulators in limiting how the company can use data.
The personalized-ad element of the decision issued Tuesday by the EU's Court of Justice throws a potential wrench in Meta's longstanding legal battle to protect its core business model, which is based on its ability to send users targeted adverts.
SoftBank's Son Envisions AI Eventually Being Used in Every Industry
TOKYO-SoftBank Group Chief Executive Masayoshi Son said Tuesday artificial intelligence would be overwhelmingly smarter than the human brain and could eventually be used in any industry.
Son told an AI symposium held by the University of Tokyo that artificial general intelligence, which refers to humanlike broad reasoning ability, would be like a "crystal ball" that could give a proper answer for any question.
China's Chip Industry Braces for Further Sanctions With Concerns and Defiance
SHANGHAI-Chinese chip makers and suppliers, gathered in Shanghai for an industry event, were in a grim but defiant mood following a report that the U.S. plans to widen export controls targeting the industry.
Among those already blacklisted, Yangtze Memory Technologies urged suppliers to show "integrity" and deliver machinery parts it had already purchased. "We can't get the components, which we have bought legally," said Nanxiang Chen, YMTC's chairman and acting CEO. The company is China's leading maker of flash memory chips. Such chips are essential in all kinds of electronic devices including computers and smartphones.
Pro Take: Fed to Face Competition as It Enters the Instant-Payments Space
Americans like speed: fast food, same-day Amazon door drops and airport express lines. The Federal Reserve operates reliable payment systems for Americans to deposit paychecks and pay bills, but it hasn't offered an instant one-yet.
The U.S. central bank will launch its FedNow instant-payments service later this month after years of development and about a decade of discussion. Its move into super fast payments was a bit slow: A consortium of big banks already has launched a private instant service in the U.S., and a number of countries have such systems in place. And some say the new Fed tool may not help those who need it most.
How China Came to Dominate the World's Largest Nickel Source for Electric Cars
Across the Indonesian archipelago, new industrial plants are going up to process chunks of nickel ore for use in electric-car batteries. Five years ago, there were none.
What changed? Chinese firms had a breakthrough.
Republicans' New Border Plan: Send Military Into Mexico
WASHINGTON-Republicans running for president and in Congress are coalescing around a controversial way to wage war against illegal drugs-sending the U.S. military into Mexico.
(MORE TO FOLLOW) Dow Jones Newswires
07-05-23 0606ET
