European stocks traded mixed on Friday, as sentiment remained
fragile over concerns that the U.S. debt ceiling deadline is fast
approaching and with a Federal Reserve rate rise next month looking
"While there is some progress, with the two sides in Washington
now down to arguing over the last $70 billion, it is still
debatable whether lawmakers can pull off a deal before June 1," IG
In the U.K., retailers edged higher after data showed U.K.
retail sales rose slightly more than expected in April.
Read UK Retailers Look to Improving Outlook on Switch to Summer
U.S. Markets: Markets:
Stock futures were treading water after the House of
Representatives left for a weekend recess with some progress but no
deal in place to raise the debt ceiling.
Money managers said they took some comfort from signs that
negotiators were narrowing their differences. Still, they feared
that failure to strike a deal could lead to turmoil in financial
markets, many of which revolve around Treasury trading, and
accelerate the onset of a possible recession.
Treasurys prices edged higher, with the yield on 10-year notes
falling to 3.7973, from 3.814% on Thursday.
Stocks on the Move
Chip maker Marvell forecast substantial growth, due in part to
artificial intelligence. Its stock rose nearly 17% in off-hours
Cloud-software company Workday reported better-than-expected
quarterly results and lifted its outlook. The stock gained nearly
9% outside of regular trading hours.
Investors will parse U.S. data on personal consumption
expenditure, including an inflation gauge favored by the Fed.
Follow WSJ markets coverage here .
The euro has been on a downward trend against the dollar since
the European Central Bank's May 4 meeting and is vulnerable to
further falls, SEB said.
Its short-term fair-value model suggests current levels are
fair, but positioning data indicates that broad speculators are
sitting on the longest EUR/USD position since October 2020.
"There is little probability for a correction higher and rather
that downscaling of the long EUR/USD position should be expected to
add another downside factor."
The dollar edged lower in Europe on signs of progress among U.S.
lawmakers on raising the debt ceiling, albeit still without a deal
"The mood music is slightly better on the U.S. debt ceiling -
but next week will be crucial," ING said.
However, with expectations growing the Fed will raise interest
rates again, the dollar could get a boost later as U.S. core PCE
deflator data will likely give more evidence of core inflation not
falling as quickly as the Fed would like, ING said.
Read Dollar Falls Are Limited Due to US Rate-Rise Prospects
Eurozone bond yields are expected to move sideways in volatile
trade near term, SEB said.
"We think that it will be volatile and lack a trend in the
coming weeks with its prospective direction decided by inflation
and growth data, and the general risk sentiment."
Lately, 10-year German Bund yields have reached 2.45%, SEB's
target for the second quarter.
"With prospects of the European Central Bank pricing becoming
even more hawkish, the curve may struggle to enter a long-term
steepening trend just yet," SEB said.
With rating risks off the table and continuing support from
domestic investors prevailing, Societe Generale said it sees value
in Italian government bonds versus German Bunds for carry.
"Wider credit spreads in late 2023 and the next round of ratings
review can put some pressure on BTPs, but we are not there yet," SG
It still sees a rangy BTP-Bund spread and continue overweighting
BTPs for carry.
SG also reiterated its pessimistic view on the 10-year French
OAT-German Bund yield spread with rating downgrade risks
"We remain bearish on the 10y OAT-Bund spread, especially now
with the 2 June downgrade risk on France that could be a wakeup
call for the markets."
S&P, which assigned a negative outlook on France in December
2022, has another scheduled review on June 2.
Read Post-Election Rally in Greek Bonds Is Remarkable,
Oil prices wavered having tumbled on Thursday after comments
from Russia's deputy prime minister scrambled investors'
expectations for OPEC+ plans. Also in focus are the U.S. debt
"The debt ceiling talks debacle that have gone into overtime is
raising concerns of a default. These concerns have misdirected the
oil market focus from the lurking supply shortage that may end up
doing more damage to the economy than a default by the United
States," The Price Futures Group said.
Base metals and gold moved higher as expectations rise that an
agreement on the U.S. debt ceiling is on the horizon.
"The newsflow has been a lot more positive for markets over the
last 24 hours," Deutsche Bank said.
Improvement in sentiment over the debt ceiling, plus positive
economic data from the U.S. such as lower jobless claims last month
is helping to boost the macro mood, Deutsche Bank said.
"However, investors are once again dialing up their expectations
for future rate hikes" as the optimism grows.
China's steel market is the softest it has been for some time,
but is expected to improve later this year, according to
steelmaking coal producer Coronado Global Resources. "At the moment
[it's] very quiet."
World Steel Association data this week showed a 1.5% fall in
China's April crude-steel output on year. "We actually see in the
second half infrastructure investments coming back, even property
investments coming back, car production picking up, so the demand
for steel will pick up and therefore also the demand for met coal
out of China," Coronado said.
Indian coal demand has, on the other hand, been very strong, it
said, adding that "we have no issues selling our coal."
DOW JONES NEWSPLUS
Russian Airstrikes Set Homes Ablaze in Ukraine
Russia launched a broad salvo of missile and drone strikes
across Ukraine ahead of a widely-anticipated Ukrainian offensive,
setting fire to civilian homes and testing the country's air
defenses which have been bolstered by a recent influx of
Western-supplied weapons systems.
The Ukrainian air force said it shot down 17 missiles and 31
drones fired across the country overnight, including at cities in
southern and eastern Ukraine and the capital, Kyiv.
UK Retail Sales Rose 0.5% in April After Rain-Hit March
U.K. retail sales rebounded more than expected on month in
April, recovering from a rain-hit March that affected non-food
sales, with easing energy prices also lifting some of the pressure
on household spending.
Retail-sales volumes ticked up 0.5% on month, compared with a
downwardly revised fall of 1.2% in March, data from the Office for
National Statistics showed Friday.
Record $279 Million Whistleblower Award Went to a Tipster on
The record $279 million whistleblower award issued by the
Securities and Exchange Commission earlier this month stemmed from
a bribery case against telecommunications company Ericsson.
The award from the SEC's cash-for-tips program was related to
the $1.1 billion settlement the Swedish company reached with U.S.
authorities in 2019 over allegations it conspired to make illegal
payments to win business in five countries, in violation of U.S.
antibribery laws, according to people familiar with the matter.
ProSiebenSat.1 Shares Recover From Earlier Losses After 1Q
0905 GMT - ProSiebenSat.1 Media flagging signs of improvement in
advertising bookings in June is encouraging, but more is needed for
its full-year guidance to be achieved, Citi analysts say in a note.
The German media company confirmed its 2023 outlook alongside
first-quarter results, which doesn't surprise given that its
guidance was issued less than a month ago, Citi says. However, the
outlook comes with the caveat that it requires a significant
economic and advertising recovery in the second half, which will
seem too optimistic an assumption for many investors, Citi says.
"The good news, though, is that trends appear to be improving from
June, the [year-earlier comparatives] ease substantially and
consensus expectations are toward the low end of the [full-year]
range," Citi says. (email@example.com)
Lufthansa Buys Minority Stake in ITA Airways
Germany's Deutsche Lufthansa said it had reached an agreement
with the Italian Ministry of Economy and Finance to acquire a 41%
stake in ITA Airways, the Italian carrier formerly known as
Alitalia, building on its exposure to what Lufthansa called the
third-largest airline market in Europe.
The German carrier group said Thursday that it would inject 325
million euros ($349.4 million) into ITA to buy the stake, with the
Italian government pledging a further EUR250 million. The deal,
which is subject to regulatory approvals, enables Lufthansa to
increase its stake in the carrier or even acquire it outright,
making ITA's purchase price dependent on the achievement of jointly
agreed targets for net debt and earnings.
Casino Opens Legal Talks With Creditors; To Sell Stores to
Casino Guichard-Perrachon said Friday that it has agreed to sell
of a number of stores to a competitor, and has opened a
conciliation procedure with its creditors.
The French grocer, which has struggled with heavy debts and
eroding market share in its home country, said the conciliation
procedure will begin under the instruction of the commercial court
in Paris, and with the agreement of its creditors and
Credit Suisse Loses Case Against Georgian Businessman in
A Singapore court has ordered a unit of Credit Suisse Group to
compensate Georgian businessman Bidzina Ivanishvili for its failure
in safeguarding the plaintiff's assets.
"It is noted that the Defendant (Credit Suisse) has admitted
that it was in breach of its duty to the plaintiffs to safeguard
the Trust assets by 31 December 2008," the judgment posted on the
Singapore International Commercial Court's website showed
Did Merkel Pave the Way for the War in Ukraine?
Dressed in an imperial purple blazer, Angela Merkel beamed at a
ceremony in April as she received Germany's highest honor,
recognizing the achievements of her 16-year chancellorship. It was
her first appearance on a live broadcast since leaving office more
than a year ago. She was at peace with herself, she said. She now
had time to indulge her long-standing interest in the Renaissance,
and though politics had the reputation of being a "snake pit," she
added, she could recall joyful moments from her time in power.
For any other leader, receiving the Grand Cross of the Order of
Merit at Berlin's understated Bellevue Palace would have marked the
crowning of a legacy. Only two other people had previously received
the honor: Konrad Adenauer, the first post-World War II chancellor,
and Helmut Kohl, Merkel's own mentor.
Municipal Bond Issuers on Edge as Debt Ceiling Deadline
A Utah city's plan to issue about $15 million in bonds to fund a
new parking structure has officials fixated on the fast-approaching
deadline to raise the U.S. debt ceiling. The fear: A default could
upend the bond market.
"The cost will skyrocket for us, and financing could become
unattainable, " said Mark Shepherd, mayor of Clearfield, about 30
miles north of Salt Lake City.
U.S. Regulator Vows Tough Line on Problem Banks
Large U.S. banks found to have consistently poor risk management
and other failings will face more heavy-handed government
intervention, including demands to shore up capital or exit lines
A policy unveiled Thursday creates a new set of guardrails
targeting complex banks that fail to fix "persistent weaknesses,"
said Michael Hsu, head of one of the nation's top banking
regulators, the Office of the Comptroller of the Currency.
Chip Companies, Wary of Break With China, Seek Looser Limits on
WASHINGTON-Businesses are pressing the federal government to
ease conditions on aid for the semiconductor industry, warning that
proposed limits on a grant program and tax credit will make it
harder for U.S. companies to compete with their Chinese
counterparts and develop new technology.
The companies are trying to shape the implementation of last
year's Chips and Science Act, which authorized tax credits and $53
billion of spending in a concerted government effort to use public
funding to revive the U.S. semiconductor industry.
Pressure Mounts for U.S. Response After China's Micron Ban
Commerce Secretary Gina Raimondo and her Chinese counterpart
held a pivotal meeting on U.S.-China ties as pressure was building
on the Biden administration to respond to Beijing's blacklisting of
the U.S. semiconductor maker Micron Technology.
Any retaliation by the U.S. over Micron carries the risk of
setting back a fragile rapprochement after months of bruising
acrimony. Raimondo's dinnertime meeting Thursday with Chinese
Commerce Minister Wang Wentao was the latest in a series of
high-level talks intended to restart dialogue and the first one to
take place in Washington.
North Dakota Gov. Doug Burgum Poised to Enter GOP Presidential
North Dakota Gov. Doug Burgum is poised to enter the Republican
presidential nomination race and is planning a June 7 event in
Fargo, N.D., to make a major announcement, sources familiar with
his plans told The Wall Street Journal.
The wealthy former software entrepreneur from a heavily
Republican state is expected to join a rapidly expanding GOP field
that added two entrants, Sen. Tim Scott of South Carolina and
Florida Gov. Ron DeSantis, this week.
China Hack Is Latest Challenge for West's Diplomatic Reset With
The U.S. and its closest allies said Chinese hackers are
targeting critical infrastructure using a novel method that is
difficult to detect, sounding an alarm that could be a hurdle to
recent efforts to improve ties between Beijing and the West.
Cybersecurity agencies in the U.S., the U.K., Canada, Australia
and New Zealand-an intelligence-sharing group of countries known as
the Five Eyes-said a Chinese state-sponsored actor is employing a
tactic known as "living off the land," which involves using
built-in network administration tools to gain access to systems.
The activity blends in with normal Windows system activities,
allowing the actor to evade detection.
DeSantis Presidential Campaign Looks to Rebound After Botched
Ron DeSantis is already looking for a reboot.
After a disastrous launch event on Twitter Spaces Wednesday
night, the Florida governor's 2024 presidential campaign got a
quick start Thursday in trying to move on by announcing an
aggressive travel schedule to early primary voting states while the
candidate did interviews with conservative radio hosts and appeared
before a large group of fundraisers in Miami.
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(END) Dow Jones Newswires
May 26, 2023 05:43 ET (09:43 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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