EIA Weekly Petroleum Status Report; Final 1Q Economic Growth Figures
Stock futures struggled for momentum on Wednesday ahead of a summit of top central bankers where investors will closely watch for signals of the Federal Reserve's pathway on monetary policy.
Markets remain under pressure over whether the Fed will move more aggressively to fight multidecade high inflation by hiking interest rates--a pathway of tighter monetary policy that risks spurring a recession.
This narrative has been top of mind in recent months and will be in the spotlight again Wednesday as central bankers meet at a summit in Portugal. Powell will deliver remarks at 9 a.m. ET, alongside counterparts from the European Central Bank and the Bank of England at the forum in Sintra.
"As ever, markets will be dissecting [Powell's] every word, looking for hints in this case, that the Fed is wavering on its hawkish bias as recessionary fears rise," said OANDA's Jeffrey Halley. "They are likely to be disappointed, but it should be good for some intraday [volatility]."
Overseas, the pan-European Stoxx 600 lost 0.9% and Hong Kong's Hang Seng Index tumbled 2% as Asian bourses followed Wall Street's downbeat performance in the last session.
A final reading for gross domestic product in the first quarter is set to go out at 8:30 a.m. ET, while earnings are due from General Mills and Bed Bath and Beyond.
Stocks to Watch:
Pinterest climbed 4.5% in premarket trading. The company said its chief executive is stepping down and a Google commerce executive is taking over the top job. Carnival fell 6%, accelerating its two-day decline spurred by a series of price target cuts by equity research analysts.
Read Barrons.com: Why Wall Street Expects Robinhood to Be Acquired
Global GDP is expected to grow 1.7% in 2023 as aggressive monetary policy tightening and reduced consumer purchasing power weigh on activity, said Wells Fargo economists.
The probability of a recession is increasing in many major economies, particularly in the U.S., and contagion effects will result in economic contractions across the G10 economies and emerging markets.
"As hawkish as most central banks have been this year, we now believe some central banks could look to unwind tighter monetary policy in the second half of 2023," Wells Fargo said.
A recession in the U.S. and the U.K. should result in the Federal Reserve and the Bank of England lowering interest rates, the economists added.
Wednesday's U.S. headline and core PCE deflator readings, as well as comments by the heads of central banks could lift the dollar, said ING.
"High month-on-month [PCE] readings are expected for headline and core--0.7% and 0.4%--and any upside surprise could see U.S. rates and the dollar nudge higher."
The buck may also benefit from central bank comments given that "the pricing of U.S. rates is still the most subject to upside risks."
The yield on the benchmark 10-year Treasury note edged down to 3.134% from 3.206% on Tuesday, reversing direction after three straight days of rises. European government bonds rallied, with Italy's 10-year yield declining to 3.485% from 3.514% the day before.
"Investors were getting a little concerned that we would have a replay of the sovereign debt crisis. The ECB has reaffirmed that this is not going to be the case, they have a policy tool kit and can address that," said Salman Baig, a multiasset investment manager at Unigestion.
The market is positioning for more information about the ECB's new "anti-fragmentation" tool, aimed at addressing uneven financial conditions across the bloc, ahead of Ms. Lagarde's speech on Wednesday, Baig said.
Oil prices edged higher in Europe, erasing earlier session losses, as concerns build over the ability of OPEC producers to increase supply.
OPEC members, particularly leading producers Saudi Arabia and the U.A.E., are being seen as increasingly unlikely to be able to increase supply to compensate for lost Russian barrels.
"The market's perception that OPEC+ is struggling to meet existing supply commitments, and even more so to expand supply is supporting prices," said CBA.
The cartel's technical committee meets later Wednesday ahead of a full ministerial meeting Thursday.
Metals were lower in early European trading, with copper down 1%, as sentiment was hampered by a lack of optimism about the economy from consumers.
"Inflation worries continue to be propagated around," said Marex. It reckons a rate hike from the ECB is likely and said investors aren't that convinced "a global recession can be avoided altogether."
China's daily crude steel output rate will need to fall from 3.12 million tons in May to an average of just below 2.78 million tons from June to December in order to meet Beijing's goal to lower annual steel production, said Commonwealth Bank of Australia.
While it is unlikely China will need to curb output toward end-2022 with the same vigor experienced toward the end of last year, as it rushed to significantly rein in production, "some steel output discipline is required to meet the NDRC [National Development and Reform Commission] target, especially if China's steel output rates remain elevated for a few more months," CBA said.
Higher diesel and electricity costs on Australia's east coast are pressuring a number of energy-intensive mining operations and could push some companies to accelerate their energy-transition plans, said Macquarie analysts.
Rio Tinto earlier this month called for proposals to develop large-scale wind and solar power in Queensland state, where it runs aluminum assets, the analysts noted. They also highlighted other recent renewable-power supply deals, including one at BHP's Olympic Dam copper operation in southern Australia, which is due to begin next month.
TODAY'S TOP HEADLINES
Tesla Lays Off Some Staff in Closing San Mateo, Calif., Office
Tesla Inc. is closing one of its Silicon Valley offices and laying off about 200 people there as part of the electric vehicle maker's plans to trim its head count amid rising costs, according to people familiar with the matter.
The company told employees Tuesday that it was closing a San Mateo, Calif., office, which had been home to staff who worked to help improve Tesla's advanced driver-assistance system known as Autopilot, the people said. About 200 people, or more than half of the staff in that office, were told they were being let go.
Beyond Meat to Offer Sliced-Steak Product, CEO Ethan Brown Says
CHICAGO-Beyond Meat Inc. is preparing to launch a sliced-steak product, expanding the company's lineup of plant-based meat alternatives as it works to boost languishing sales.
The California-based company plans to launch the steak product this year in retail stores and eventually in restaurants, Chief Executive Ethan Brown said Tuesday at The Wall Street Journal's Global Food Forum. The sliced steak is intended to replicate whole pieces of meat, versus the company's existing products that mimic sausages, tenders, burger patties and meatballs.
FTC Accuses Walmart of Letting Scammers Use Its Money-Transfer Services
The Federal Trade Commission sued Walmart Inc. on Tuesday, alleging the retailer allowed its money-transfer services to facilitate fraud.
The complaint, filed in U.S. District Court for the Northern District of Illinois, alleges that Walmart's money-transfer service was used to facilitate scams such as impersonating the Internal Revenue Service or other government entities that request money, the FTC said. Between 2013 and 2018 over $197 million in payments sent or received at Walmart were the subject of fraud complaints, it said. The agency said Walmart was aware that scammers were using its systems and didn't do enough to stop it.
Delta Lets Travelers Change Flights for Free Over Fourth of July Weekend
Nervous about flying during a busy holiday weekend? Delta Air Lines Inc. has an alternative: don't.
Delta is allowing customers to change flights for free, letting them rebook trips before or after potentially challenging weekend days without paying a higher last-minute fare or a change fee.
Grubhub CEO Says Sale Isn't Imminent, as Owner Seeks a Partner
CHICAGO-Grubhub Chief Executive Adam DeWitt said company parent Just Eat Takeaway.com NV hopes to find a strategic partner to invest in the U.S. online ordering company, though an outright sale isn't off the table.
In some of his first public remarks about the company since Just Eat said in April it would consider selling Grubhub, Mr. DeWitt said no sale was imminent and that Just Eat was exploring options to strengthen Grubhub as its U.S. division encounters challenges.
Disney Board Votes to Renew CEO Bob Chapek's Contract
The board of Walt Disney Co. said it has voted unanimously to renew Chief Executive Bob Chapek's contract for another three years.
The board's chairman, Susan Arnold, said in a statement released Tuesday that while the company was "dealt a tough hand by the pandemic," Mr. Chapek "not only weathered the storm but emerged in a position of strength."
P&G, Target to Cover Employee Travel for Abortions
Procter & Gamble Co. and Target Corp. said they would cover travel expenses for employees who can't access abortions near where they live, joining other companies that have taken the step after the Supreme Court overturned the constitutional right to abortion.
P&G, unlike many of the technology and banking giants that had previously announced similar policies, is based in a Midwestern state with an abortion ban. A federal judge in Ohio issued an order Friday allowing the state's six-week ban to take effect. A few other big employers in Ohio, including grocer Kroger Co., have also said they would provide benefits for workers who need to travel for abortions.
SEC Includes Novel Probe Into Lawyers' Actions in EY Settlement
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June 29, 2022 05:35 ET (09:35 GMT)Copyright (c) 2022 Dow Jones & Company, Inc.