Market Wrap
be careful:
German Ifo business climate index sees no significant improvement in corporate performance
Opening call:
European stocks may be volatile in slower trading on Monday due to public holidays in the U.S. and U.K. In Asia, stock indexes were mixed, the dollar steadied and crude oil and gold rose.
stock:
European stocks may be off to a shaky start as investors focus on U.S. personal consumption expenditures (PCE) inflation data and euro zone inflation rates due later this week.
Trading is expected to be slow due to Memorial Day in the US and a bank holiday in the UK.
Economists surveyed by The Wall Street Journal expect PCE price data, the Fed's preferred inflation gauge, to improve from the first quarter, but “the improvement will be modest,” Bank of America Global Research said.
Eurozone inflation data will be closely watched as a rate cut by the European Central Bank in June is widely expected.
Foreign exchange:
The dollar was stable amid slow trading in Asian markets due to the US Memorial Day holiday.
The dollar is likely to stabilize for much of the week, according to the Commonwealth Bank, as no major economic data is released in the US until the release of PCE data on Friday.
The firm said the dollar could come under slight pressure on the day if the PCE core index falls below 0.3% from the previous month.
Bonds:
U.S. Treasury bonds were not traded due to the Memorial Day holiday.
Treasury yields ended little changed in the shortened trading session on Friday after durable goods orders rose for a third straight month.
Meanwhile, growing inflation concerns worsened consumer sentiment in May, with the University of Michigan's final index plummeting to 69.1 this month from 77.2 in April.
energy:
In Asia, crude oil rose slightly on possible position adjustments.
TD Securities said speculators appeared to have added to net positions in WTI crude again, but weaker trend signals could mean selling is looming.
The firm added that these signals could trigger heavy selling by commodity trading advisors as the energy supply risk premium continues to disappear.
metal:
Gold rose as traders awaited U.S. PCE data due to be released later this week for clues about the trajectory of the Fed's monetary policy.
DailyFX said the near-term outlook for gold appears neutral to slightly bearish, but the outlook may need to be reassessed once the data is released.
He noted that this data is the Fed's preferred inflation indicator.
Gold is closely tied to interest rates, and as interest rates rise, non-interest-bearing gold bars become less attractive.
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Guotai Junan Futures noted that iron ore prices fell, likely due to weakening supply and demand fundamentals weighing on sentiment.
While port inventories are building, Chinese steel mills are being relatively cautious about restarting blast furnace production because molten iron production, which is used to make steel, recently bottomed out.
However, he added that macroeconomic expectations remain strong as demand in areas such as real estate and infrastructure is likely to be supported by ultra-long-term bonds issued by China.
Today's Top News
China's industrial profits rise in April as stimulus measures implemented
China's industrial profits rose in April, reversing a decline from the previous month, as Beijing's economic stimulus measures began to take effect and overseas demand for Chinese products improved.
Profits at China's industrial companies rose 4.0 percent in April from a year earlier, up from a 3.5 percent decline in March, data from the National Bureau of Statistics showed on Monday.
Bank of Japan deputy governor says end of Japan's fight against deflation is in sight
According to Shinichi Uchida, deputy governor of the Bank of Japan, Japan is likely close to fully overcoming decades of deflation.
“While a major challenge remains in keeping inflation expectations at 2 percent, the end of the battle is in sight,” Uchida said in a speech on Monday. “The structure of the labor market appears to have changed after the pandemic, and wages are likely to continue to rise,” he added.
Wall Street economists expect “strong” U.S. inflation data this Friday
Expectations for the future direction of the Federal Reserve's interest rate policy have been on a roller coaster this year, and the next potential drop could come when the Fed's preferred inflation gauge, the Consumer Price Index, is released on Friday.
Based on the hawkish policy comments in the minutes of its May policy meeting released last Wednesday, the Fed is expected to maintain its status quo going into this week.
Turbulence on Qatar Airways flight to Dublin injures 12
Twelve passengers and crew suffered minor injuries when the flight from Doha, Qatar to Dublin encountered severe turbulence.
The accident occurred after the Singapore Airlines plane ascended and descended approximately 400 feet in less than a minute, killing one passenger and injuring more than 100 on board.
Hamas fires rockets at Tel Aviv for first time in months
TEL AVIV – Hamas fighters in Rafah fired eight rockets into the Tel Aviv area on Sunday, the Israeli military said, the first time Israel's densely populated centre has been targeted in four months.
Meanwhile, divisions over the war effort were rekindled in Israel over the weekend after prominent right-wing figures in the country, including Yair Netanyahu, the son of Israeli Prime Minister Benjamin Netanyahu, shared a video of reservists believed to be in Gaza calling for civil disobedience to security forces.
Gaza ceasefire talks may resume as pressure on Israel grows
After the International Court of Justice ordered Israel to scale back its military operations in Rafah, mediators are trying to restart ceasefire talks between Israel and Hamas to end fighting in the Gaza Strip.
Talks to suspend fighting in Gaza and return some of the Israeli hostages being held there could resume as soon as next week, according to an Israeli official hoping to resume talks. Central Intelligence Agency Director William Burns, Mossad Director David Barnea and Qatar's Sheikh Mohammed bin Abdulrahman al-Thani discussed the matter in Paris on Friday, according to an Israeli official who spoke on condition of anonymity because of the sensitivity of the matter.
Tesla Shareholders Advised to Vote Against Elon Musk's Compensation Package
Proxy advisory firm Glass Lewis has recommended that Tesla shareholders vote against Elon Musk's multi-billion dollar compensation package at the company's annual meeting next month.
In a 71-page filing, Glass Lewis told shareholders that Musk's proposed compensation, recently valued at $46 billion, could dilute existing Tesla holdings and would concentrate Musk's ownership, making him the largest shareholder “by a significant margin.”
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Major events expected on Monday
06:00/NOR: South African Labour Force Survey April (including unemployment rate)
06:00/NOR: April Credit Index C2
08:00/Germany: Ifo Business Sentiment Index for May
08:00/POL: April unemployment rate
08:00/ICE: April PPI
13:00/BEL: May Business Confidence Survey
15:59/UKR: April PPI
23:01/UK: Shop Price Index for May
All times are GMT. Powered by Onclusive and Dow Jones.
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This article is a text version of The Wall Street Journal's newsletter published early today.
(End) Dow Jones Newswires
05-27-24 0016ET
