MARKET WRAPS

Watch For:

Flash PMI for EU, U.K., Germany, France; U.K. monthly retail sales figures, Public sector finances; France business sentiment index; no major corporate events expected

Opening Call:

European shares may open in mixed territory on Friday. In Asia, stock benchmarks were mostly lower; Treasury yields ticked up; the dollar consolidated; while oil was mixed and gold gained.

Equities:

European stock futures were tracking mixed early Friday ahead of flash PMIs for the region.

U.S. stocks closed broadly lower on Thursday. Shares of Nvidia gave up early gains on Thursday, pulling the S&P 500 and Nasdaq Composite down from all-time highs.

Investors have been highly attuned to economic data for signs that inflation is easing, which could keep the Fed on track this year to cut interest rates, usually a boon to the stock market.

On tap today are provisional purchasing managers' surveys for June covering the manufacturing and services sectors' activity in Germany, France and the eurozone which will be watched closely for indications of how the economy is faring.

"According to our forecast, the purchasing managers' indices for June in the eurozone are set to show an overall consolidation of the recent improvement in sentiment," analysts at LBBW said.

Forex:

The U.S. dollar consolidated in Asia. The USD could retain some strength versus the euro as the Fed turns to more gradual interest-rate cutting than previously thought, Bank of America economists said and see the EUR/USD ending the year at 1.12.

Considering persistent U.S. inflation and "shallow easing cycle," BofA sees EUR/USD at 1.17 by the end of 2025 versus its previous 1.20 forecast, a long-term equilibrium it now sees been reached only in 2026.

BofA remains "more bearish on the USD than the consensus."

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The Bank of England could cut interest rates in August but this might not be enough to reverse sterling's outperformance so far this year, MUFG Bank said noting that the sterling remains the second best performing G-10 currency after the dollar.

"Gradual BOE rates cuts are unlikely on their own to significantly undermine the pound's attractiveness in the second half of this year." In the near-term, European political risks should be a more important driver of sterling's performance, it added.

Bonds:

Treasury yields maintained their upward trajectory after rising Thursday.

"The data of the past few weeks have been signaling incremental labor market weakness, albeit from a position of extreme strength. It is still too early to tell if this is another step in the process of the labor market coming into better balance, or if it is the early stages of building momentum to the downside," Jefferies' economists said.

"We are inclined to think that it is the former, but we are cautiously watching the next few weeks worth of data to see if a trend is emerging."

Market participants are pricing in a roughly 64% probability the Fed will have cut rates by at least 25 basis points by its September meeting, according to the CME FedWatch tool.

Energy:

Oil futures were mixed after settling at fresh seven-week highs on Thursday on the back of weekly declines in U.S. crude and gasoline inventories, as rising geopolitical tensions lifted concerns about disruptions to global supply chains.

"These rising geopolitical tensions in Europe and the Middle East continue to support crude prices due to risks of disruptions to global supply chains. However, the increase in oil prices remains tempered by cautious remarks from U.S. Federal Reserve officials regarding interest rates and inflation trends," said Eman Al-Ayyaf, chief executive of EA Trading.

Metals:

Gold advanced early Friday. The precious metal had traded in a narrow range given uncertainty over the Fed's timeline for rate cuts, but Thursday's U.S. jobless claims staying near a 10-month high supports the case for a cut, said Joseph Dahrieh, managing principal at broker Tickmill.

The long-term outlook for gold is also bullish, with continuous central bank demand, potential renewed purchases from China's central bank and upcoming political elections in major economies expected to support its appeal as a safe-haven asset, Dahrieh added.

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Iron ore fell in Asia. A wave of iron ore supply is coming, given rising iron ore inventories in China, and prices are likely to remain range-bound this year, Macquarie strategists said. Chinese domestic iron ore production is up this year, they noted.

Iron-ore production cuts among Chinese mills were unlikely to materialize in the short-term amid China's strong exports of steel, which uses iron ore as a raw material, they added.


TODAY'S TOP HEADLINES

Japan Inflation Picks Up, Adding to Hopes for Rate Hikes by BOJ

TOKYO-Japan's consumer inflation picked up in May, adding to market expectations for interest rate increases from the Bank of Japan.

Overall consumer prices in May rose 2.8% compared with the same period a year earlier, due mainly to higher electricity bills, compared with the 2.5% increase in April, government data showed Friday.


U.K. Consumer Confidence Inches Up as Views of Economy Improve

U.K. consumer confidence improved slightly in June on an improved assessment of the economy as inflation eases and ahead of national elections, a monthly survey said.

Research group GfK's consumer-confidence barometer climbed to minus 14 in June, the highest since November 2021, from minus 17 in May, it said Friday. The reading bettered consensus of minus 16 from economists polled by The Wall Street Journal.


France's Jews Consider the Unthinkable: Voting for a Party With an Antisemitic Past

PARIS-Serge Klarsfeld is a world-renowned Nazi hunter, a historian of the Holocaust and a moral authority in France who has pushed the country to reckon with its dark history of antisemitism.

That is why many in France were shocked this week when Klarsfeld defended the far-right party of Marine Le Pen, which counts among its founders a former Nazi paramilitary soldier. Klarsfeld, an 88-year-old Holocaust survivor, said the main threat to France's Jews now comes from the far left and that he wouldn't hesitate to vote for Le Pen's party, the National Rally, in the coming parliamentary elections if the alternative were a coalition of leftist parties, the New Popular Front.


Europe Has a New Economic Engine: American Tourists

LISBON-The Americans are here, and this sun-bleached coastal city is booming.

At bars, hotels and restaurants that line winding cobblestone streets, business is so good that Mayor Carlos Moedas recently slashed local income tax for residents. With economic growth of 8.2% last year and a 20% rise in tax revenue from prepandemic times, he's also made public transportation free for young people and the elderly.


Nvidia Dips Into the Red. Microsoft Reclaims the Market Cap Title.

Nvidia stock did an about-face on Thursday, dipping 3.5% into the red and closing just below Microsoft on the list of largest companies by market cap.

Nvidia started out with gains, on track to cement its lofty position. The chip maker had passed Microsoft and Apple in terms of market value on Tuesday, closing up 3.5%. The stock market was closed Wednesday for the Juneteenth holiday.


Write to singaporeeditors@dowjones.com


Expected Major Events for Friday

06:00/UK: May Public sector finances

06:00/UK: May UK monthly retail sales figures

06:00/DEN: Jun Business tendency survey

06:45/FRA: Jun Monthly business survey (goods-producing industries)

07:00/SPN: Apr Industrial Orders & Turnover

07:15/FRA: Jun France Flash PMI

07:30/GER: Jun Germany Flash PMI

08:00/POL: May Agricultural prices

08:00/EU: Jun Eurozone Flash PMI

08:30/UK: 1Q Bank of England statistics on UK banks' external claims

08:30/UK: Jun Flash UK PMI

09:00/LUX: 1Q Balance of Payments

10:00/IRL: May WPI

16:59/SPN: 1Q Quarterly Balance of Payments

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

06-21-24 0015ET