Financial reviews of corporate and financial news, elections in France and the USA
• The euro and stock indices rose. This happened on assumptions that the far right in France would not be able to win enough seats to win an absolute majority in the parliamentary elections, writes Bloomberg. Currently, the base case scenario for the European market appears to be a "hung French parliament", which threatens political paralysis for the remainder of President Emmanuel Macron's term in office until 2027. Shares rose, especially in France, where the CAC 40 jumped more than 1%. Some recovery could be an immediate reaction on Tuesday morning, with pan-European Stoxx 50 futures down around 0.1%.
• The euro remains resilient, even in the face of renewed dollar strength. The dollar's other rivals are not proving so resilient, especially the yen, which is still languishing near a 38-year low, keeping traders on high alert for another round of official Japanese intervention. The dollar-yen pair is particularly sensitive to long-term U.S. bond yields, which have risen sharply as the risk of a second Donald Trump presidency mounts, which traders and analysts link to higher tariffs and more spending.
• US Manufacturing grew less than expected
US Manufacturing PMI increased from 51.3 to 51.6 (51.7 was expected).
• The Institute for Supply Management's (ISM) Manufacturing PMI in June showed the sector contracting further, hitting a four-month low with an
ISM of 48.5 in June, below May's 48.7 and below the 49.1 expected economists. A reading below 50 indicates decreased activity.
- Similar Manufacturing PMI indices in France and Germany fell slightly less than expected:
France - fell from 46.4 to 45.4 (45.3 expected)
Germany - fell from 45.4 to 43.5 (43.4 expected)
- Inflation in Germany fell slightly more than expected
From 2.4% to 2.2% (expected 2.3%).
• Global maritime traffic is growing the most since 2010 following the Red Sea attacks. Global maritime transport is headed for its biggest annual jump since 2010 after attacks in the Red Sea forced ships to travel longer distances
• US construction spending fell unexpectedly in May. Higher mortgage rates have suppressed single-family homebuilding, and the recovery is likely to be muted by improving housing supply.
• Cathie Wood's Ark Invest has destroyed $14 billion in wealth over the past decade - Morningstar. The analysis showed that Ark Invest topped the list of companies that destroy investor wealth. “These funds have managed to lose shareholder value even during a bullish market.”
• Hollywood is nervous: the return of Donald Trump could change the rules in the film industry, - The Economist. As the publication writes, Hollywood is the territory of Democrats. Joe Biden raised ~$30 million there during a recent fundraiser featuring actors like George Clooney and Julia Roberts. But one of the leaders of the world-famous platform predicts: if Trump is re-elected, then “he will persecute people who create content that he does not like.”
• The SEC returned Forms S-1 to potential issuers of Ethereum spot ETFs with only a few comments.
They will be resubmitted by July 8, meaning at least one more round of applications will be needed before the ETFs begin trading.
• SONY will launch a cryptocurrency exchange in Japan Sony, a Japanese diversified conglomerate, has decided to acquire Amber Japan, a well-known crypto firm. With this deal, Sony makes its debut in the cryptocurrency exchange sector.
• Chewy shares initially rose 20% after an SEC filing showed Roaring Kitty has a 6.6% stake in the company,
making him Chewy's third-largest shareholder, according to Factset. Earlier, Roaring Kitty posted a picture with a dog, shares soared by 30%. But yesterday's trading of CHWY shares ended with a fall of 7%.
• Tech titans want to buy energy from nuclear plants to power AI needs - WSJ
• Cheap toilet paper worries some investors - WSJ. Companies that sell everyday products from food to paper towels say low-income consumers are struggling, but others are spending freely.
• Robinhood is buying Pluto to add artificial intelligence tools to its investing app. The company says Pluto will allow Robinhood to add tools to more quickly identify trends and investment opportunities and help users with their investment strategies.
• Meta changes "Made with AI" to "AI info" to indicate the use of AI in photos. After Meta began tagging photos with the "Made with AI" label in May, photographers complained that the social network was labeling real photos.
• BlackRock's Fink: Buying Preqin unlocks "availability of all alternatives." BlackRock CEO Larry Fink made clear Monday that his company's acquisition of London-based data provider Preqin is part of a much broader vision he has to make private markets far more investable.
• Nvidia Corp Vice President Simone Jankowski becomes Lightmatter Inc.'s CFO. By joining a chip startup that aims to be part of the artificial intelligence boom.
• China will put more effort into developing technologies like Musk's Neuralink. China said Monday it plans to task a committee with developing standards that will govern the use of brain-computer interfaces - a sign that the country intends to step up its own development of this new technology.
• Deere (DE) announces layoffs of nearly 600 workers. As the farm equipment maker struggles with declining demand. DE shares fell 3%.
• Bridgewater launches $2 billion fund based on machine learning. Machine learning is used as a basis for decision making.
• The Mercedes-Benz Group is preparing for a near-record production of new models. After its first generation of battery-powered cars failed.
• BlackRock launches stock ETF with 100% downside hedge. So-called buffer or risk-managed ETFs help investors maximize the return of an asset while providing downside protection over a specified period. The new product will likely be of interest to investors hoping for a rally in stock markets.
• The Supreme Court upheld attempts by Texas and Florida to regulate social media platforms. The Supreme Court on Monday upheld efforts by Texas and Florida to limit regulation of Facebook, TikTok, X, YouTube and other social media platforms over content posted on their pages.
• Meta Platforms received a warning from the EU. This is because of its subscription model for ad-free services on Instagram and Facebook, which comes with potentially large fines.
• Tesla shares rose 6% on expectations of a delivery report. Analysts expect the manufacturer's deliveries to decline 5.4% to 441,019 vehicles - Bloomberg.
• APPLE (AAPL) Expects Big iPhone 16 Sales Based on Chip Orders - Apple Insider.
• Chinese electric vehicle manufacturer BYD recorded sales growth in June of 35% y/y and 3% m/m. But investors hoped for more and US stocks fell 2%.
• Salesforce (CRM) shareholders rejected a compensation plan for Benioff and other top executives. CRM shares react neutrally and remain weak overall.
• The stock market was trading mixed - Growth was generally growing, while Value was under pressure. Value's weakness could partly be explained by the sell-off in long-term US government bonds. For the second day in a row, they fell significantly in price for no apparent reason - either the quarterly rebalance is affecting them, or China or Japan are selling. Analysts also say the bond market is spooked by Trump's possible victory. Ironsides Macroeconomics research director Barry Knapp writes that "Trump deals, long financials, energy, health care, healthcare, merger arbitrage, stronger trade dollar... are likely to gain traction."
"We are entering a period of greater uncertainty for stocks, but much greater certainty about sustained protectionist policies (both Trump and Biden made this clear Thursday night) and an era of much higher inflation compared to the 2010-2020 regime." , writes Larry MacDonald of Bear Traps.
• The US currency and yields also rose on the idea that the Federal Reserve will not ease policy at an accelerated pace as inflation remains quite high and the labor market is very tight.
• The parade of potentially important jobs data will begin on Tuesday with the JOLTS jobs report, the Fed's favorite, followed by ADP data the next day and the all-important monthly payrolls data on Friday.
• Federal Reserve Chairman Jerome Powell will have the opportunity to present his latest view on the economy when he takes part in a panel discussion at the ECB forum in Sintra, Portugal, later in the day.
• The data calendar for Europe is rather sparse: preliminary eurozone inflation data for June and unemployment for May.
• Apple and Microsoft came under regulatory scrutiny last month over App Store rules and the integration of Teams with Office 365, respectively.
• Nvidia faces antitrust allegations for the first time, with sources telling Reuters that French regulators are preparing to charge the AI bellwether with anticompetitive business practices.
Key events that could affect markets on Tuesday:
- Deadline for applications to participate in the second round of elections in France.
- Eurozone, preliminary HICP (June), unemployment rate (May).
- USA JOLTS (May).
- Fed Chairman Jerome Powell speaks at an ECB forum.