MARKET WRAPS
Watch For:
Employment Trends Index for May; Global Services PMI for May
Opening Call:
Stock futures rose as Wall Street looked poised to rebound from another week of losses, the latest triggered by a stronger-than-expected U.S. jobs report.
Stocks fell Friday and ended the week lower after the U.S. added more jobs than expected in May, suggesting the Federal Reserve may have to remain aggressive with its plans for interest-rate hikes. The S&P 500 has declined for eight of the last nine weeks.
"The labor market is tight and job growth is stable. Therefore, the Federal Reserve can continue to tighten financial conditions and remove the historic level of accommodation in the markets," said Jeffrey Roach, chief economist at LPL Financial.
The U.S. central bank is expected to hikes rates by 0.5% at its meetings in June and July. What it will do in September is less of a certainty, but the jobs report on Friday didn't do much to change the opinions of those on Wall Street who believe the Fed still has work to do to cool an overheating economy.
The next data point for investors will be the consumer price index, scheduled for release on Friday.
Forex:
The euro should stay buoyant ahead of a European Central Bank meeting Thursday, which is expected to result in the central bank signaling an imminent interest-rate rise in July, RBC said.
"The upcoming ECB meeting this week with its likely signal for imminent rate hikes is keeping interest in euro," said RBC.
The post-meeting press conference will likely result in a discussion over the pace of rate increases, with some Governing Council members pushing for larger 50-basis-point rises, RBC added.
Energy:
Oil climbed higher as summer demand looks strong while supply remains constrained. The summer U.S. driving season is a typically strong period for oil demand. That, coupled with easing lockdowns in China, is lifting prices, Commonwealth Bank of Australia said.
On the supply side, OPEC+ has agreed to increase its output but the news is being balanced by the EU's plans to ban Russian oil imports, said CBA.
Skepticism that OPEC members will be able to meet the planned output hikes is also keeping prices supported. "It's unlikely that the targeted OPEC+ increase over the next two months will be realised," CBA said.
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China's rising crude imports are masking weak underlying demand for downstream oil products, Fitch Solutions said.
The country's oil imports rose 6.6% on year in April, but this wasn't matched by a concurrent rise in the amount of crude processed in domestic refineries amid Covid-19 lockdowns, Fitch said.
Chinese refineries are expected to quickly raise run rates once they are permitted to, "but with domestic demand expected to be more measured for longer, their main focus will be on boosting exports, to leverage favorable global fuel margins," Fitch added.
Metals:
Base metals rose after a lull in activity following holidays in the U.K. and China at the end of last week.
The Biden administration on Sunday signaled that it could reduce import tariffs on industrial sectors.
"There are other products--household goods, bicycles--it may make sense, " Commerce Secretary Gina Raimondo said when asked if the government would consider reducing levies on China in an interview on CNN.
Marex's Asian metals team said it would be "beneficial to China being the factory of the world," if those levies were lifted.
TODAY'S TOP HEADLINES
Howard Schultz Says Starbucks Is Seeking Fresh Blood in CEO Search
SEATTLE-Starbucks Corp. is considering only external candidates for its next chief executive officer, as interim CEO Howard Schultz said the company needs to add new talent and skills to its senior leadership ranks.
Mr. Schultz-who said he isn't a candidate to hold the position permanently-said Starbucks has recently talked to several promising CEO prospects, and that the company aims to identify a new chief executive by the fall. He said he plans to leave the coffee giant's C-suite by the shareholder meeting in March.
Google Is Liable for Defamatory Videos Targeting Lawmaker, Court Rules
SYDNEY-An Australian court found Alphabet Inc.'s Google liable for defamatory videos posted on its YouTube platform that targeted a senior politician, a reminder that social-media giants could be held responsible in some jurisdictions for what users put online.
A judge in the Federal Court of Australia on Monday ordered Google to pay 715,000 Australian dollars, or about $515,000, to John Barilaro, who was formerly the deputy premier of New South Wales state, which includes Sydney. Despite a request from Mr. Barilaro, Google didn't take down the videos, which used racist names to refer to Mr. Barilaro and were posted by a self-styled comedian, the court said. Some of the videos got hundreds of thousands of views.
Apple Is Set to Return Software to Forefront at Annual Developer Conference
Apple Inc. Chief Executive Tim Cook on Monday will open the iPhone maker's annual weeklong developer conference, an opportunity to highlight the company's software prowess as investors worry about slowing gadget sales, rising inflation and a resurgence of Covid-19.
The event is mostly online, with the keynote address scheduled to begin at 1 p.m. in New York via the company's website. Apple has invited a few people to participate in person at its headquarters in Cupertino, Calif., where they must meet certain conditions around vaccinations and testing.
Carl Icahn Dropping Proxy Fight Over Pig Treatment at Kroger
Carl Icahn is dropping a proxy fight focused on the treatment of pregnant pigs at grocery-chain Kroger Co. after concluding he is likely to lose as he did a similar fight at McDonald's Corp. last month.
"I congratulate the McDonald's team on their victory in this proxy engagement and, after much contemplation, given the company's financial position, I believe the same outcome will result at Kroger," he said in a letter he plans to send to Kroger and McDonald's shareholders that was viewed by The Wall Street Journal.
Elliott Management Sues London Metal Exchange Over Nickel Crisis
Activist hedge-fund manager Elliott Management Corp. sued the London Metal Exchange for more than $456 million, after the exchange earlier this year suspended nickel trading and canceled some trades following wild swings in the metal's price.
The lawsuit is a fresh headache for the LME, whose actions had already drawn criticism from some market participants and prompted a review by British financial regulators.
Investors Get Back Into Corporate Bonds
Investors are going bargain hunting for beaten-down corporate bonds.
That is a reversal from earlier in the year, when investors sold off even the highest-quality debt. The turnaround highlights the tensions pressuring financial markets. In recent weeks, investors have grown more confident about the Federal Reserve's path for raising interest rates to wrangle inflation-and more worried that, as a result, growth has begun to slow.
Dollar's Climb Stalls Amid Mixed Economic Signals
A run of mixed economic data is dragging on the U.S. dollar, stalling a rally that has rippled through the economy and financial markets.
The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, is around 2% off its May peak and fell 1.1% last month. That decline broke a steady march that brought the dollar to multidecade highs. The index rose 0.6% last week, breaking a two-week losing streak.
White House Set to Pause New Tariffs on Solar Imports for Two Years
The White House is preparing to announce on Monday that it won't impose any new tariffs on solar imports for two years, in a move that is aimed at getting stalled solar-power projects on track, according to people familiar with the decision.
The decision would be a win for U.S. solar developers and utilities-which are highly dependent on imported solar panels-and a loss for manufacturers trying to build up a domestic solar supply chain.
Gun Reform Legislation Makes Progress in Senate
WASHINGTON-The Senate Democrat leading a push for new gun legislation said that discussions over red-flag laws and background checks are making progress and that he expected a package of measures to be ready for debate this week.
Sen. Chris Murphy (D., Conn.) said Sunday that he and Republican Sen. John Cornyn of Texas are working together to craft a package that will garner the 60 votes needed for any new legislation to advance and pass the Senate. He said that they are looking at regulations Republican-led Florida adopted in 2018 as a template for nationwide proposals.
Write to hoishan.chan@dowjones.com TODAY IN CANADA
Earnings:
Nothing major scheduled
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Economic Indicators (ET):
Nothing major scheduled
Expected Major Events for Monday
02:00/JPN: May Imported Vehicle Sales
08:00/UK: May UK monthly car registrations figures
14:00/US: May Employment Trends Index
15:00/US: May Global Services PMI
23:01/UK: May BRC-KPMG Retail Sales Monitor
23:30/JPN: Apr Household Spending
23:50/JPN: May Provisional Trade Statistics for 1st 20 days of Month
23:50/JPN: May International Reserves / Foreign Currency
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Monday
Brooklyn ImmunoTherapeutics Inc (BTX) is expected to report for 1Q.
Coupa Software Inc (COUP) is expected to report $-1.33 for 1Q.
Fastenal Co (FAST) is expected to report.
GitLab Inc (GTLB) is expected to report for 1Q.
Healthequity Inc (HQY) is expected to report $-0.25 for 1Q.
Science Applications International Corp (SAIC) is expected to report $1.27 for 1Q.
SouthGobi Resources Ltd (1878.HK,SGQ.T,SGQRF) is expected to report for 1Q.
Urstadt Biddle Properties Inc - Class A (UBA,UBP) is expected to report $0.31 for 2Q.
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ANALYST RATINGS ACTIONS
(MORE TO FOLLOW) Dow Jones Newswires
06-06-22 0542ET
