Market of the Day: Rising oil prices weigh on stocks

Big picture today

Asia-Pacific stock indexes closed mixed today: Japan’s Nikkei fell 0.33%, India’s Sensex fell 0.64%, Australia’s ASX All Ordinaries rose 0.90%, South Korea’s KOSPI rose 0.61%, Taiwan’s TAIEX and China’s Shanghai Composite both rose 1.19%. Hong Kong’s Hang Seng Index led gains, closing the day up 1.38%. By midday, major European stock indexes were down across the board, with Eurozone CPI hitting another all-time high (see below), with the exception of a small gain in the UK, while US futures pointed to a weaker opening later this morning.

Pressure on these exchanges is another rise in oil prices. EU leaders reached an agreement to ban 90 percent of Russian crude oil by the end of the year as part of a sixth sanctions package under development against Russia. The gradual reopening of Shanghai is expected to unfold in the next few days, and oil prices have also been boosted. Over the weekend, Shanghai authorities announced they would work to ease “unreasonable” coronavirus rules, and earlier today began removing fences around residential complexes. Starting tomorrow (June 1), restrictions on about 22.5 million people in low-risk areas will be eased, and businesses will no longer need so-called “whitelist” approvals to allow employees to work on-site. Complicating the return to normality, workers are still required to show a negative Covid test 72 hours before taking public transport.

The above will make the next OPEC+ meeting, scheduled for Thursday, June 2, even more interesting. However, the group is expected to continue to reject calls to boost oil production.Meanwhile, the latest data from AAA shows that the average U.S. gasoline price is in the A record $4.622 per gallon It was $4.178 a month ago, and it was $3.046 this time last year.

Fed Governor Chris Waller planted the flag in the “hawks” camp yesterday, Comment He supports “50 basis points of rate hikes at every meeting until we see a big drop in inflation”. Those comments echoed Fed Governor Bullard, who advocated for the central bank to raise interest rates to 3.50% by the end of the year, above the neutral rate of 2.50%. Still, some at the Fed want to pause after the summer meeting to assess the impact of rate hikes before hitting the brakes for the rest of the year. Don’t forget that these rate hikes will be accompanied by a $95 billion monthly balance sheet shrinkage, nearly double the 2017-19 balance sheet shrinkage, which ran about $50 billion a month.

Later today, President Biden will meet with Federal Reserve Chairman Jerome Powell to discuss inflation and the state of the economy.Before that gathering, Biden shared that he would support the Fed in tackling inflation and pushing the economy column Wall Street Journal. Now see what other comments were made at the end of the Biden-Powell meeting this afternoon.

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International economic

Last night saw the release of China’s manufacturing and non-manufacturing PMIs for May. The manufacturing PMI came in at 49.6, up 1.1 percentage points unexpectedly, near a neutral 50, and the non-manufacturing PMI also jumped to 47.8 from 41.9 previously. Both figures are positively impacted by the easing of “virus-zero” policy restrictions, and at this rate, barring further setbacks, we will soon see PMI data showing expansion rather than contraction.

The Eurozone’s preliminary (fast) CPI for May came in at 8.10%, beating expectations of 7.80% and hitting a new high, as energy prices continue to impact manufacturing and distribution costs for goods across the EU.

domestic economy

At 9:45am ET, the Chicago PMI for May is expected to be unchanged from the April reading of 56.40.

At 10:00 am ET, the consumer confidence index for May is expected to edge down to 103.70 from the previously reported 107.30, as inflation continues to weigh on consumers across the country.

market

Stocks ended a turbulent week on a very positive note, with the S&P 500 up 2.47%, while the Nasdaq Composite rose and the Dow Jones Industrial Average gained 1.76%, marking its sixth straight gain and ending its longest weekly decline trend since 1932. Including Friday’s moves, here’s how the major market indicators have accumulated so far this year:

  • Dow Jones Industrial Average: -8.60%
  • S&P 500: -12.76%
  • Nasdaq Composite: -22.46%
  • Russell 2000: -15.92%
  • Bitcoin (BTC-USD): -33.2%
  • Ether (ETH-USD): -48.6%

Stocks to Watch

No companies are expected to report their quarterly results before U.S.-listed stock trading begins.

Tesla (Tesla) It has restored weekly production at its Shanghai plant to nearly 70% of what it was before the city’s COVID-19 lockdown.

MoneyGram International (MGI) It is preparing to launch a service in partnership with the Stellar blockchain that will allow users to send stablecoins and easily convert them into hard currency.

according to a Report Published by daily business newswhich cites a source Samsung (SSNLF) On the supply chain side, the company has notified suppliers that it plans to scale back orders midway through 2022, which means it will ship 280 million units this year, 30 million less than its original target of 310 million.

This foot Report Qualcomm(Qualcomm) Interested in acquiring equity SoftBank’s (SFTBY) The ARM Holdings chip unit will “create an alliance to maintain the neutrality of UK chip designers in the competitive semiconductor market.”

Reuters Report Credit Suisse (CS) The company is in the early stages of weighing options to bolster its capital after a series of losses eroded its financial buffers.

Norwegian Air ASA has Boeing (Bachelor of Arts) Recommitment to buy 50 Boeing 737 MAX 8 aircraft.

Gold Fields Co., Ltd. (GFI) and Yamana Gold Inc. (AUY) announced that they have reached a definitive agreement under which Gold Fields will acquire all outstanding common stock of Yamana for $6.7 billion.

initial public offering

Shares of Zhongyang Financial Group (TOP) are expected to start trading on June 1. Doctor + Rum (BLCO), Pepgen (polyethylene glycol)and Austin Gold (Australian University of Technology) Finally, analysts at the companies underwriting these deals are allowed to issue their respective investment ratings.Readers looking to dig deeper into the upcoming IPO calendar should visit Nasdaq’s latest and upcoming IPOs page.

after market close today

Ambarella (AMBA), ChargePoint (CHPT), HP (HPQ), Salesforce (CRM), Trip.com (TCOM) and Victoria’s Secret (VSCO) will report their latest quarterly results.Those wanting to learn more about which companies report when, go to Nasdaq’s Earnings Calendar.

on the horizon

Wednesday 1 June

  • Japan: Markit/JMMA PMI Manufacturing – May
  • China: Caixin PMI Manufacturing – May
  • Germany: Retail Sales – April
  • Eurozone: Markit PMI Manufacturing – May
  • UK: CIPS Manufacturing PMI – May
  • United States: Weekly MBA Mortgage Application
  • US: Markit Manufacturing PMI – May
  • US: ISM Manufacturing Index – May
  • US: Construction Spending – April
  • USA: JOLTS Job Openings – April
  • United States: Federal Reserve Beige Book

Thursday, June 2

  • Eurozone: PPI – April
  • US: ADP Employment Survey – May
  • United States: Unit Labor Costs and Productivity – Q1 2022
  • US: Durable Orders – April
  • US: Factory Orders – April

Friday, June 3

  • Japan: Services PMI – May
  • Eurozone: Markit Services PMI – May
  • Eurozone: Retail Sales – April
  • US: Employment Report – May
  • US: Markit PMI Service – May
  • US: ISM Non-Manufacturing Index – May

thoughts of the day

“The most important quality for an investor is temperament, not intelligence.” ~ Warren Buffett

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The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Nasdaq Corporation.