U.S. stocks futures rose on Monday, while the dollar edged lower against its global peers, as investors focused on a week without earnings and economic data firmly focused on the inflation outlook in the world’s largest economy.
Rising crude oil prices, coupled with ongoing supply chain disruptions and rising food prices, continue to put upward pressure on global inflation data, with the G7 average now at a record 9.2%.
In the U.S., however, broader economic growth remains a surprise even in the face of the fastest inflation in 40 years, with last week’s May jobs report showing modest monthly wage growth against a higher-than-expected 390,000 Slow down the growth of the core workforce. ISM data also showed a faster-than-expected pace of manufacturing activity last month.
The data prompted bets that the Fed could act if it raises interest rates big enough to quell inflation but not enough to dampen economic growth.
Data later this week will confirm the pace of price gains in May, with economists forecasting an annual growth rate of 8.3%.
Comments from Commerce Secretary Gina Raimondo over the weekend suggesting that President Joe Biden may lift some of the Trump-era tariffs on Chinese-made imports boosted sentiment, though Growth in the services sector in the world’s second-largest economy is still well below expectations as it suffers from Beijing’s “zero outbreak” lockdown.
However, Chinese stocks were boosted by renewed bets on Beijing’s new stimulus measures, helping the region’s MSCI ex-Japan benchmark index rose 0.77% at the close. Japan’s Nikkei 225 closed up 0.56% at 27,985.89, led by the energy sector.
In Europe, the regional Stoxx 600 gained 0.9%, while Britain’s FTSE 100 gained 0.98%, despite reports of a “vote of no confidence” in the leadership of British Prime Minister Boris Johnson.
In the U.S., the yield on the benchmark 10-year U.S. Treasury note rose to 2.961% in European hours, while the dollar index, which tracks the greenback against a basket of global peers, was down 0.28% at 101.855.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average pointed to a 250-point gain at the open, while futures contracts tied to the S&P 500, down 13.8% this year, are expected to gain 40 points. Nasdaq-linked futures are expected to open up 160 points.
Week Ahead: Inflation in focus for Fed chair
Friday’s May inflation data will underscore a quiet week for earnings and data releases, although that view remains crucial for the market’s direction in the summer months.
With the Federal Reserve scheduled for its June monetary policy meeting on June 12, the May Commerce Department CPI provided policymakers with one last look at inflation dynamics as they consider the impact of successive rate hikes on consumer price dynamics and the broader affect the economy.
Analysts expect a headline reading of 8.3%, essentially unchanged from April, with core prices declining modestly on a monthly and yearly basis.
With CME Group’s FedWatch tool still showing a 94.2% chance of a 50 basis point rate hike next week, which would put the Fed’s target rate between 1.25% and 1.5%, traders then wondered whether inflationary pressures would accelerate – leading to Larger – or more modest – recent rate hikes suggest a possible “pause” in Fed action later this fall.
Musk reverses layoffs, Tesla shares soar
Tesla (TSLA) – Shares in Tesla Inc’s report were active again in premarket trading, up 3.8% after CEO Elon Musk warned earlier about the clean-energy car maker The manufacturer appeared to change course over the weekend after laying off workers.
Musk has told employees that Tesla’s pay positions are expected to decrease by 10% due to increased uncertainty in the global economy and “overstaffing” at some key locations, a scenario he tweeted over the weekend that is more likely Will increase headcount this year by 10%, according to the latest volatile letter from the world’s richest man.
Musk’s earlier warning in the form of a company-wide email came as Tesla could face a dismal quarter as the company closed its Shanghai factory for 22 days as it reopened due to the city’s strict Covid lockdown Production slowed down.
Deliveries could be affected, and the group will also face a significant writedown on its $1.5 billion bitcoin holdings, down 33 percent since the end of March.
Shares of Zoom rose 3.8% in premarket trading, opening at $730.50 a share.
Apple shares rise ahead of developer conference keynote
Apple (AAPL) – Shares of Get Apple Inc. rose in premarket trading ahead of a closely-watched developer conference on its California campus later today.
WWDC is typically the event where Apple makes big announcements related to its software and product launches, as well as changes to its existing iPhone, Apple Watch, Mac Books, and iPad lineups.
An interesting area of this year’s event is the changes to Apple’s new iOS16 operating system, and the “always-on” feature of the new lineup of iPhone 14s expected to launch in the fall.
Investors and consumers will also be watching for any updates to Apple’s investments in augmented reality and artificial intelligence, and possibly even the new next-gen MacBook Air.
This year’s WWDC will once again be held purely virtual, with its keynote at 10:30am PT.
Apple shares rose 1.36% in premarket trading, opening at $147.35 a share.
Boris Johnson faces no-confidence vote after Partygate scandal
British Prime Minister Boris Johnson faces a vote of no confidence today, which could end the controversial leader’s three-year term in Downing Street.
Johnson, who represents Britain’s Conservative Party, was told today that more than 54 MPs had signed a letter calling for his removal, a level that exceeds the threshold needed for a “no confidence” vote for elected party members.
To stay in power, Johnson needs the support of at least 50 percent of Conservative MPs, plus one to set a threshold of 180 votes. If he gets those votes, he cannot be challenged for at least a year, and if he loses, he could be impeached after the leadership race.
Johnson’s spokesman told the media on Monday: “The prime minister welcomes the opportunity to bring his case to MPs and will remind them that nothing is stronger when they are united and focused on the issues that matter to voters. political power.”
Challenges to his leadership have been sparked by a series of scandals dubbed “Partygate” related to his administration’s irregularities at social gatherings at the height of the 2020 pandemic.
Johnson was eventually fined by London’s Metropolitan Police and forced to apologise to parliament for misleading lawmakers by making a statement that he had not broken any rules.