US Index Futures pull back on the return of yesterday’s US holiday. By 6:44 AM, Dow Jones futures (DOWI:DJI) was down 122 points, or 0.35%. S&P 500 futures were down 0.37%, while Nasdaq-100 futures were down 0.43%. The 10-year Treasury yield was at 3.775%.
On the international scene, China lowered its key interest rates to stimulate the economy. Producer prices in Germany saw their smallest annual increase in nearly two years, indicating a rapid easing of inflationary pressures. In May, the Index posted a 1% increase, compared with 4.1% in the previous month, falling short of consensus expectations of 1.7%.
Tuesday’s US Economic Indicators schedule will provide details on US new home construction at 8:30 AM.
In the commodities market, the September iron ore futures contract was down 0.9% and ended at RMB 806.50, equivalent to US$112.47 per tonne, due to disappointment with the level of relief in China, which had already been anticipated. On the other hand, the oil contract for August showed an increase of 1.22%, reaching US$77.04 per barrel, on a day that marked the expiration of the July contract.
On Monday, the day was of low liquidity due to the Juneteenth holiday in the US. Amid the expectation of worsening of the Chinese economy, commodities, especially oil, retreated in the session. Still, this economic slowdown leads to speculation that the Chinese government is preparing a fiscal package to avoid this scenario. Last night the PBoC is expected to announce further cuts in medium and long-term interest rates. On the other hand, on Wednesday and Thursday, Fed President Jerome Powell will be questioned in the US Congress to report on the Central Bank’s monetary policy. Last week, the FOMC reported in its projection report a scenario with two more interest rate hikes this year, even after carrying out a “pause” in increases at last week’s meeting.
On the quarterly earnings front, reports from FedEx and La-Z-Boy are expected after Tuesday’s close. During the week, traders will be watching reports from Darden Restaurants, Accenture and CarMax.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) – Japan plans to increase competition in smartphone app payments by banning app store operators such as Apple and Google from imposing their own payment systems on developers. In addition, operating system vendors should offer alternatives to app stores. Legislative measures are being considered.
Alphabet (NASDAQ:GOOGL) – Google is seeking suppliers in India to manufacture its Pixel smartphones, following Apple’s lead, in order to diversify beyond China. The company has started talks with Indian companies such as Lava International, Dixon Technologies and Bharat FIH, a unit of Foxconn Technology Group (USOTC:FXCOF). India has become an alternative manufacturing hub, boosted by the financial incentives of the Modi government. There is still no guarantee that the talks will result in a deal.
Microsoft (NASDAQ:MSFT) – Microsoft confirmed that disruptions to its services earlier this month were caused by cyber-attacks, but said there was no evidence of access to or compromise of customer data. The company is investigating the DDoS attacks and working to ensure the continued availability of its services.
Meta Platforms (NASDAQ:META) – On Friday, Meta Platforms announced its intention to lower the recommended age range for users of its Quest Pro headset from 13 to 10 years old, which has raised privacy and security concerns from groups surveillance and parents. This is the second time the company has lowered age restrictions on its products. In April, Meta allowed under-18s to use Horizon World, its virtual reality social networking platform.
Adobe (NASDAQ:ADBE) – Antitrust regulators in Europe are preparing to launch a formal investigation into Figma’s $20 billion acquisition of Adobe, according to the Financial Times. This concern about tech giants acquiring smaller companies reinforces global concerns about limiting competition. Adobe is in the preliminary phase of the regulatory process and is in constructive discussions with regulators, while Figma is continuing separate conversations with regulators. Past EU regulators have indicated that antitrust approval would be required for the deal.
Intel (NASDAQ:INTC) – Intel will invest more than €30 billion in the construction of two chip factories in Magdeburg, Germany. The German government grant deal exceeded 10 billion euros and is considered the largest foreign investment in the country’s history. In addition, Intel has agreed to build a new factory in Israel to diversify its chip production sources.
Taiwan Semiconductor Manufacturing (NYSE:TSM) – During his visit to Europe, Taiwanese Foreign Minister Joseph Wu said that European countries should strengthen ties with Taiwan Semiconductor Manufacturing Co (TSMC) to continue investing in the production of semiconductors. Wu highlighted the importance of considering the broader picture of relations with Taiwan when seeking investment from TSMC. He also urged the European Union (EU) to consider further cooperation with Taiwan, including a possible bilateral investment agreement. The sensitivity of Wu’s visit was underscored by the lack of formal diplomatic relations between Taiwan and European countries, as well as China’s warnings about official relations.
Spotify (NYSE:SPOT) – Bill Simmons, executive podcaster at Spotify, called Prince Harry and Meghan Markle “con artists” after the royal couple prematurely ended their unproductive podcast production deal with the streaming platform. Simmons expressed his dissatisfaction, stating that the couple’s podcast series did not live up to expectations. Spotify’s podcast initiative has faced challenges, including the dismantling of Gimlet and recent layoffs. Simmons criticized Harry’s relevance and talent, suggesting that his opinions are only valued when he talks about the royal family.
Grab Holdings (NASDAQ:GRAB) – Grab Holdings is preparing for a major round of layoffs in response to growing competition in the ride-sharing and meal delivery industry in Southeast Asia. The company is still not profitable and faces pressure from investors to cut costs. The layoffs are expected to be announced shortly.
JD. com (NASDAQ:JD) – Sales during JD.com’s mid-year shopping festival, the first major event since China’s reopening, exceeded expectations. Estimates indicate growth of 6% to 8%, surpassing projections of 2% to 5%. However, growth fell short of last year’s figures. The fierce competition between the platforms resulted in a series of offers and subsidies to attract consumers. Moderate buyer sentiment reflects concerns about the job and housing markets.
Alibaba (NYSE:BABA) – Alibaba Group CEO and Chairman Daniel Zhang will step down to focus on the company’s cloud division. Eddie Yongming Wu will take over as CEO, while Joseph Tsai will serve as chairman. The restructuring is part of the plan to split Alibaba into six business units.
FedEx (NYSE:FDX) – FedEx financial results will be released shortly, reflecting demand for shipments and serving as an indicator of consumer spending appetite. The company implemented a cost-cutting program to boost profits. Analysts expect weaker demand, but are keeping a close eye on cost-cutting plans and the outlook for shipping prices and volumes.
United Parcel Service (NYSE:UPS) – The International Brotherhood of Teamsters union said members voted in favor of a possible strike at the United Parcel Service (UPS) if a new collective agreement is not reached. That could increase UPS’s costs, which have been closely watched by investors. UPS and the union have been in talks since April, with more than 70% of UPS employees in the US being union members. Despite this, there is still time for an agreement to be reached before the current contract expires in July. Investors have been concerned about UPS expenses, especially with the forecast drop in revenue for 2023.
Lockheed Martin (NYSE:LMT) – European hopes of winning a US military order to refuel planes are fading. The Pentagon scaled back its order, dimming the prospect of a new transatlantic “Tanker War”. Airbus and Boeing are in the running, but scaled-down US Air Force bids have raised questions about the bid.
Raytheon Technologies (NYSE:RTX) – During an investor day, Raytheon revealed it will face a $500 million hit to free cash flow due to supply chain issues with the GTF engine manufactured by Pratt & Whitney. Late deliveries will catch up in the third quarter. The company also mentioned durability issues and delays in the maintenance overhaul of GTF engines. RTX is focused on resolving these issues and improving the situation in the second half of the year. In other news, Raytheon has been awarded a $264 million modification contract by the US Navy to produce and deliver 571 short-range AIM-9X Sidewinder missiles. The company will also supply associated parts, training systems and support equipment.
Airbus (USOTC:EADSY) – Airbus is in advanced talks with Mexican operator Viva Aerobus for a major new order. The number discussed is at least 100 narrow-body aircraft. A deal could be announced at this week’s Paris Airshow. In other news, IndiGo, India’s largest airline, has struck a deal with Airbus for the purchase of 500 planes, the largest order in aviation history. SCOPA Industries also signed an agreement with Airbus to produce civil and military helicopters in Saudi Arabia, with the first helicopters expected to be presented in 2023 and investments of more than 25 billion rials in 20 years. Biman Bangladesh Airlines has decided to buy 10 planes from Airbus, marking a shift from its Boeing-dominated fleet.
Boeing (NYSE:BA) – Boeing stock was up 0.46% premarket despite the announcement at the Paris Air Show that rival Airbus had secured a contract for 500 passenger aircraft from IndiGo. Boeing forecasts spending of $8 trillion on commercial aircraft between 2023 and 2042, indicating robust demand.
Qantas (USOTC:QABSY) – Airline Qantas and Airbus have completed an additional order for nine Airbus A220-300s, as announced by the companies at the Le Bourget aerospace event in Paris today. Qantas had already expressed its intention to order more A220s in February this year.
General Electric (NYSE:GE) – General Electric has suspended maintenance on gas turbines at thermal power plants in Russia since the invasion of Ukraine, with the exception of medical equipment and support for existing energy services in the region. The outage occurred without explanation. In other news, Larry Culp, GE chairman and CEO of GE Aerospace, said the company would consider all options, including investing in a new engine for a possible larger version of the Airbus A220 jet. GE co-owns CFM International with Safran and the A220 is currently powered by competing engines from CFM Pratt & Whitney.
Enbridge (NYSE:ENB) – A US judge ordered the Enbridge company to close portions of a pipeline on tribal lands in Wisconsin within three years and pay the tribe nearly $5.2 million. Enbridge plans to appeal the ruling. The judge cited environmental risks and called for a more conservative closure plan. The tribe argued that erosion threatened the local environment.
Berkshire Hathaway (NYSE:BRK.A) – Warren Buffett’s Berkshire Hathaway has revealed that it has increased its holdings in Japan’s top trading houses, boosting the country’s stock market. The company now owns more than 8.5% average stake in Itochu, Marubeni, Mitsubishi Corp, Mitsui & Co and Sumitomo. The additional purchases are in line with its plans to maintain and grow holdings over the long term. These investments reflect Buffett’s optimism about Japan’s prospects and corporate governance reforms. Japanese trading stocks have posted significant gains this year.
Goldman Sachs (NYSE:GS) – Goldman Sachs has lowered its forecasts for China’s economic growth, citing weak confidence and housing market concerns as more challenging factors than expected. The growth forecast for 2021 was reduced from 6% to 5.4%, while that for 2024 was reduced from 4.6% to 4.5%. Analysts singled out the housing slowdown as the main reason for the persistent headwinds. The Chinese government seeks to stimulate growth through measures such as interest rate cuts.
JPMorgan Chase (NYSE:JPM) – JPMorgan has made a strategic investment in Cleareye.ai, a fintech company focused on trade finance. The partnership aims to streamline processes and reduce manual checks, while JPMorgan receives millions of documents annually in its trade finance business. In other news, Jamie Dimon, CEO of JPMorgan Chase, will not be subjected to a second cross-examination in the case involving the bank’s ties to Jeffrey Epstein, after a judge blocked the attempt to reopen the depositions. The US Virgin Islands is suing the bank for allegedly benefiting from Epstein’s sex trafficking. The federal court denied Dimon’s request to question Dimon again. The case proceeds with the evidence already obtained.
Morgan Stanley (NYSE:MS) – Strategist Michael Wilson of Morgan Stanley is not buying into stock market optimism and warns that investors could face difficulties. He highlights weakening fiscal support, lower liquidity and falling inflation as factors that will affect the recovery of US equities. Wilson also expresses concern about overvalued equities and believes that many investors could be in for a rude surprise if growth does not accelerate as expected.
HSBC (NYSE:HSBC) – HSBC has revised down its forecast for China’s economic growth due to pressure from the real estate sector and subdued household and business confidence. GDP growth of 5.3% is now expected in 2023, compared to the previous forecast of 6.3%. Other brokerages, including JP Morgan and BofA Global Research, also lowered their country’s growth outlook.
Deutsche Bank AG (NYSE:DB) – Deutsche Bank AG has applied for regulatory approval to offer custody services for digital assets, including cryptocurrencies. This move is part of the bank’s strategy to increase fee income in its corporate sector and reflects efforts by the DWS Group, the investment arm of Deutsche Bank, to expand its offering of digital assets.
SVB Financial Group (NASDAQ:SIVB) – On Sunday, SVB Financial Group announced the sale of its investment banking division to a group led by the unit’s CEO, Jeff Leerink, with backing from The Baupost Group. The price was not disclosed. SVB Securities will be renamed and will continue to focus on investments in the healthcare sector. The transaction is subject to US bankruptcy court approval and other closing conditions.
UBS (NYSE:UBS) – UBS Group AG faces potential fines of hundreds of millions of dollars over Credit Suisse’s misuse of Archegos Capital, following findings from investigations by regulators in the UK, Switzerland and the US, according to the Financial Times. UBS has asked regulators to publish their findings and jointly announce penalties in late July. The UK Prudential Regulation Authority can impose a fine of up to £100 million, while the US Federal Reserve can impose a fine of up to $300 million.
SoftBank (USOTC:SFTBY) – SoftBank Group CEO Masayoshi Son has revealed that he is a “frequent user” of ChatGPT, OpenAI’s AI-based chatbot. He also mentioned his regular conversations with OpenAI CEO Sam Altman. SoftBank is looking to capitalize on interest in AI and is focused on Arm’s planned listing.
Medibank Private (USOTC:MDBPF) – Medibank Private, Australia’s largest private health insurer, has reported that there has been a cybersecurity breach where a file containing employee names and contact details was compromised. This is the second breach faced by the company in recent months. Medibank is investigating the incident and says there is no evidence that its customers’ data was compromised. Australia has been facing a series of cyberattacks, which has led to an overhaul of cybersecurity rules in the country.
Disney (NYSE:DIS), Warner Bros (NASDAQ:WBD) – Releases from major Hollywood studios were disappointing. ‘The Flash’ by Warner Bros. Discovery grossed $55.1 million in its opening weekend, below expectations. Disney’s Elemental, made by Pixar, took in just $29.5 million, making it the second-worst opening in Pixar history.
McDonald’s (NYSE:MCD) – McDonald’s announced it will raise prices at 184 branches in Japan’s inner city, about 6% of its stores, to cope with higher rents and labor costs. The company has implemented three price increases since March 2022 in response to higher energy costs and imported raw materials. The new prices will take effect in July.
Rio Tinto (NYSE:RIO) – Rio Tinto is working to recover around 30 cars from an autonomous train that derailed in Western Australia last Saturday. Although there were no injuries, the incident has the potential to disrupt the mining company’s exports. The company is in the process of recovering the derailed wagons.
Orange (NYSE:ORAN) – Orange SA’s $19 billion offer to combine its Spanish operations with Masmovil Ibercom SA faces objections from the European Commission due to competition concerns. The regulator is about to issue a statement of objections, outlining possible reasons for vetoing the deal.
Tesla (NASDAQ:TSLA) – Elon Musk, CEO of Tesla Inc. and richest person in the world, said President Joe Biden’s proposed tax hikes for the super-rich will hurt low-to-middle income groups. Musk believes that actions will be limited, as they would affect donors, while middle-to-low income earners will bear the brunt of excessive government spending. Biden responded by saying that the super-rich must pay their fair share of taxes.
Suzuki Motor (USOTC:SZKMF) – Suzuki Motor Corp announced an agreement with SkyDrive to manufacture flying cars. Utilizing a Suzuki factory in Japan, production of electric vertical take-off and landing (eVTOL) aircraft is scheduled to begin next spring. SkyDrive will establish a wholly owned subsidiary for manufacturing, while Suzuki will assist with preparations, including hiring talent. The companies had already signed an agreement last year to collaborate in the research, development and commercialization of flying cars.
Hyundai (USOTC:HYMLY) – Hyundai Motor plans to invest $85.4 billion through 2032, allocating a third to electric vehicles (EVs). The automaker will increase production of EVs in the US, aiming for them to represent 75% of its production by 2030. The company will also invest in state-of-the-art batteries and is seeking partnerships to ensure a stable supply. In China, it will reduce production and the number of models available. In other news, US auto safety regulators are investigating approximately 40,000 Hyundai Ioniq 5 electric vehicles due to reports of them losing power while driving due to a battery charging issue. The National Highway Traffic Safety Administration has received complaints from consumers about loss of acceleration, and preliminary investigation indicates that the problem is related to the Integrated Charging Control Unit (ICCU).
Ford (NYSE:F) – Ford Chief Executive Bill Ford said the United States is not yet ready to compete with China in producing electric vehicles. He acknowledged China’s rapid development in this sector and highlighted the importance of preparing for competition.
Fisker (NYSE:FSR) – As reported by Chinese media Yicai, electric vehicle startup Fisker plans to open its first delivery center in Shanghai, China later this year. Additionally, the company aims to start delivering its mass-production SUV, the Fisker Ocean, in the first quarter of 2024.
Luminar Technologies (NASDAQ:LAZR) – Luminar Technologies Founder and CEO Austin Russell is baffled by the 86% drop in the company’s stock, but the market shouldn’t ignore the potential of automotive Lidar. Although expectations and interest rates have affected shares, Luminar continues to show growth and win important partnerships. The focus now is on generating profits and setting realistic financial goals.
Lanxess (USOTC:LNXSY) – Late on Monday, Lanxess lowered its second-quarter and full-year earnings forecasts due to weak demand and destocking from customers. The company saw no signs of demand recovery in June, particularly in the construction, electronics and consumer products sectors. Lanxess now expects earnings before interest, tax, depreciation and amortization (EBITDA) of around 100 million euros for the next quarter, compared with 189 million euros for the first quarter. For 2023, the forecast is for an EBITDA of between 600 and 650 million euros, instead of the previous 850 to 950 million euros.
Sanofi (NASDAQ:SNY) – The International Chamber of Commerce has rejected Boehringer Ingelheim’s claims that Sanofi should be liable for Zantac-related lawsuits in the US. Thousands of lawsuits claiming the drug causes cancer have been challenged. Sanofi said its defense is strong and there is no credible scientific evidence to support the allegations.
AstraZeneca (NASDAQ:AZN) – AstraZeneca is considering spinning off its China business and listing a separate unit in Hong Kong, according to the Financial Times. The company seeks to hedge against global tensions while continuing to control its business.
TIM (NYSE:TIMB) – Telecom Italia (TIM) is inclined to start negotiations with KKR for the sale of its fixed telephony network, preferring the fund’s offer over a consortium led by CDP. KKR’s offer reaches up to 23 billion euros, while CDP offered 19.3 billion euros, raising antitrust concerns. The final decision will be taken at a meeting on June 22. TIM seeks to reduce its debt and relaunch its operations. Vivendi, a major investor in TIM, is resisting the sale of the main asset at a lower price. KKR is willing to allow TIM to maintain a stake in the fixed network. The Italian government will also have influence on the decision.
Sodexo (USOTC:SDXAY) – Sodexo’s Benefits and Rewards services unit, now called Pluxee, plans to hire around 1,000 people through 2024 for its technology and data operations, targeting the booming employee benefits market. The company will invest in technology and mobility solutions, seeking a balance between personal and professional life. Pluxee targets significant growth in revenue and operating profit margin.
La-Z-Boy (NYSE:LZB) – La-Z-Boy will report its quarterly earnings on Tuesday as it faces expectations of continued sales decline despite consumers continuing to invest in their homes.
Adesso (USOTC:ADSGF) – Adesso announced the appointment of Mark Lohweber as a new member of the Executive Board, effective July 1. He will assume the responsibilities of leading industries, insurance and banking, currently under Chief Executive Michael Kenfenheuer, who will step down at the end of the year. Lohweber will also oversee corporate account management. The company highlighted that Lohweber already worked at Adesso from 2007 to 2021 and later became CEO of CoCoNet, a German fintech. His areas of expertise include financial services, digitization and sales.