North American morning briefing: Stock futures slide ahead of jobs report

MARKET ENVELOPES

To watch:

Employment report for the month of May; Services PMI for May; ISM Business Services PMI Report for May; Canada’s official international reserves for May

Opening call:

US stock futures fell slightly ahead of May’s jobs report, which will provide insight into the state of the labor market and likely guide central bank policy.

Economists polled by the Wall Street Journal expect U.S. employers to add jobs at a healthy pace in May, though they believe the pace of hiring has slowed from the previous month as businesses face to a tight labor market and growing economic uncertainty.

One of the concerns of Federal Reserve officials is that a strong labor market will add to high inflation, as competition for workers strengthens wage bargaining power. Fed Vice Chair Lael Brainard said Thursday she backs plans to raise interest rates by half a percentage point at a meeting later this month and again. in July.

Frank Øland Winther, chief global strategist at Danske Bank, said he would look to see if wages had risen in the past month. That, plus a slowdown in hiring, could cause markets to weaken, he said.

“It’s an unfortunate cocktail,” he said. “Then inflation gets wider, and then the Fed will continue to tighten.”

Forex:

Monthly U.S. jobs data later today should remain strong and could help lift the dollar, UniCredit Research said.

“The US jobs report for May is clearly the key test on the macro front today and comes after a disappointing jobs survey from ADP,” UniCredit added.

For now, the dollar’s recovery from comments by Federal Reserve Vice Chair Lael Brainard that she doesn’t see the case for a “pause” in September rate hikes is missing. of momentum, UniCredit said.

Energy:

Oil futures fell, paring gains made on Thursday after OPEC+ agreed to increase oil production.

The market is skeptical whether the group could actually achieve the 650,000 barrels per day increase it agreed on.

Nigeria, Angola and Russia have recently struggled to meet their targets and a further increase in crude production evenly distributed among OPEC+ members seems unlikely, SPI Asset Management said.

“Traders believe the incremental increase is too small compared to the growing supply downside risks associated with the EU embargo amid expected increased demand from China,” SPI said. .

Metals:

High prices for many global commodities could ultimately lead to demand destruction, making it a less attractive investment at the moment, said Daniel Hurley, principal portfolio analyst at T. Rowe Price.

He is underweight commodities and expects oil prices to fall within a year. An exception could be copper, he noted, given the state of demand in electric vehicle industries.

Copper could be boosted on hopes that industrial activity in China will pick up as the country eases Covid-19 restrictions, ANZ said.

“With [Covid-19 curbs] now lifted, the market is looking to stimulate demand as economic activity picks up,” ANZ said.

“Potential supply disruptions in Peru, due to protests at Southern Copper’s Los Chancas mine, are also contributing to higher copper prices,” ANZ added.

   
 
 
   
 
 

THE BEST TITLES OF THE DAY

 
 

Frontier Airlines to pay Spirit $250 million in severance fees if deal falls through

Frontier Airlines will pay Spirit Airlines Inc. a $250 million break fee if regulators block a merger between the two carriers, under a new agreement between the companies on Thursday.

The move comes as Spirit tries to win investor support for its merger with Frontier and fend off a hostile bid from rival JetBlue Airways Corp.

   
 
 

Fitch withdraws ratings from Evergrande and its subsidiaries

Fitch Ratings withdrew its credit ratings on China Evergrande Group and two subsidiaries, citing insufficient information.

“Evergrande and its subsidiaries have elected to no longer participate in the ratings process,” the ratings company said in a statement Thursday. “As a result, Fitch will no longer provide ratings or analytical coverage for Evergrande and its subsidiaries,” namely Hengda Real Estate Group Co. Ltd. and Tianji Holding Limited.

   
 
 

Sycamore and Franchise Group submit offers for Kohl’s

Kohls Corp. received takeover bids from private equity firm Sycamore Partners and holding company Franchise Group Inc., according to people familiar with the matter.

Sycamore’s offer values ​​the Wisconsin department store chain at around $50 a share, while Franchise Group offered around $60, some people said, which equates to around $7 billion or $8 billion. Kohl’s stock closed Thursday at $41.18.

   
 
 

How a strong dollar is hitting Microsoft and other big US companies

Microsoft Corp. on Thursday cut its forecast for sales and earnings, citing gains in the U.S. dollar in currency markets. Here’s why the dollar has soared so much this year and what that means for companies and stocks.

   
 
 

The strength of the eurozone services sector helped support robust economic growth in May

The eurozone economy continued to grow at a strong pace in May as recently eased pandemic-related restrictions supported a sustained rise in activity levels, S&P Global said.

The Eurozone composite purchasing managers index fell to a four-month low of 54.8 in May from 55.8 in April. While the main measure was still indicative of economic growth in the eurozone, it also highlighted a loss of momentum.

   
 
 

India’s tech IPO market thaws, just a little

After a rocky start to 2022, India last week saw a surprisingly successful listing of a company-backed startup on public stock exchanges. But investors shouldn’t expect healthy animal spirits to return to India’s IPO market just yet.

Delhivery, which makes a living doing logistics for other e-commerce businesses in India and counts SoftBank, Tiger Global and Carlyle among its investors, raised about $675 million. The shares, which debuted at 487 Indian rupees each, closed Thursday at 570 rupees. A 17% jump may seem paltry by the standards of the go-go days of 2020 and 2021, but it looks like a success as markets around the world remain turbulent with little visibility on when they will hit bottom. .

   
 
 

Biden urges gun legislation after mass shootings

WASHINGTON — President Biden stepped up his calls for legislation to reduce gun violence in a speech Thursday night, as House Democrats pursued their own bill and Senate negotiators worked to reach a close bipartisan agreement after a series of deadly mass shootings.

Mr Biden, in a somber speech from the White House, said too many places in America had become killing fields, marked by names such as Columbine, Sandy Hook and Parkland. “For God’s sake, how much more carnage are we willing to accept?” He asked.

   
 
 

North Korea continues nuclear test preparations, US says

SEOUL-North Korea appears to be continuing preparations for its seventh nuclear test, the US point man has said on the country, even as Pyongyang takes the helm of a top nuclear disarmament forum at the United Nations.

Sung Kim, the US special envoy for North Korea, met with his South Korean and Japanese counterparts in Seoul on Friday and discussed strengthening deterrence against the North.

   
 
 

Email [email protected] TODAY IN CANADA

Earnings:

BRP 1Q

Economic indicators (ET):

08 May 15 Official international reserves

   
 
 

Major events expected for Friday

00:30/JPN: May Japan PMI Services

06:00/RUS: May Russian Services PMI

06:00/GER: Apr Foreign Trade

06:45/FRA: April Industrial Production Index

07:45/ITA: May Italy PMI Services

07:50/FRA: May France PMI Services

07:55/GER: May Germany PMI Services

12:15 p.m./CAN: Official International Reserves for May

12:30/CAN: 1Q Labor productivity, hourly compensation and unit labor cost

12:30 p.m./US: Weekly US Export Sales

12:30 p.m./United States: May employment report in the United States

1:45 p.m./US: US services PMI in May

14:00/US: May ISM Business Services PMI Report

All times in GMT. Powered by Kantar Media and Dow Jones.

   
 
 

Earnings expected for Friday

Bridgford Foods Corp (BRID) is expected to report for Q2.

Brp Inc (DOO.T, DOOO) is expected to earn $1.11 for Q1.

Hurco Cos (HURC) is expected to report for Q2.

Statera Biopharma Inc (STAB) is expected to report for the first quarter.

Powered by Kantar Media and Dow Jones.

   
 
 

ANALYST RATINGS ACTIONS

Analyst rating actions unavailable on Friday.

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

 

(END) Dow Jones Newswire

June 03, 2022 05:38 ET (09:38 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.

About Meredith Campagna

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