Fed promises easing, Trump and Xi confirm G20 sit down, Iran tensions rise Coming into the week expectations were already riding exceedingly high heading into the FOMC meeting. Rates remained under pressure and US stock markets were within a few percent of all-time highs. US manufacturing data was soft suggesting deceleration and an environment conducive to a rate cut. Those expectations were only further strengthened by the ECB’s Draghi who said that if the outlook does not improve then additional stimulus will be needed in the Euro Zone. Draghi’s comments prompted President Trump to complain that Fed policy isn’t providing the US with a “level playing field”, keeping the pressure on Chainman Powell ahead of the rate decision. Wednesday’s FOMC statement appeared to satisfy the markets, setting the table for a rate cut in July. After dropping the word “patient” from the monetary policy statement Chairman Powell acknowledged that many committee members, perhaps even himself, saw a stronger case for stimulus amid the risks presented by trade disputes, weak global growth and stubbornly low inflation. On Thursday, stock indices opened at all-time highs despite a 5% pop in WTI crude after Iran tensions were ratcheted significantly by the downing of a US surveillance drone near the Straight of Hormuz. Rates trended lower, pressuring the US 10-year back below 2% for the first time since before the 2016 election. Gold prices broke above the $1,400 mark for the first time since 2013 and the Greenback rolled over. Friday saw equities consolidate at or just below record highs on very robust volumes due to options expiration. Bond yields lifted helped by marginal improvement on some key European manufacturing PMI readings. Also, trade sentiment was further buoyed by a report VP Pence would be postponing a key China policy address indefinitely amid "positive signs" of progress ahead of Trump/Xi meeting.
For the week, the S&P hit new highs up 2.2%, the DJIA gained 2.4%, and the Nasdaq added 3%. In corporate news this week, Pfizer announced it would acquire Array BioPharma for $48/share in a cash deal valued at $11.4B as part of an effort to expand its colorectal cancer drug portfolio. Auction house Sotheby’s sold itself to collector and Altice founder Patrick Drahi for $57/share in cash. American steel makers described an industry slowdown: Steel Dynamics said it saw lower Q2 earnings due to weaker prices; Nucor tempered its Q2 expectations citing decreasing performance in its steel mill business; and US Steel said it would idle some capacity to better align global production.
After a slow start at the Paris Air Show, Boeing announced its first order from the event on Tuesday, as IAG signed a letter of intent for 200 Boeing 737 MAX aircraft to join its fleet.
Oracle posted an earnings beat for Q4 and said it expected a strong Q1. Carnival Corp cut its FY outlook, noting US-Cuba policy changes and other global headwinds.
Macro :
- Erdogan Dealt Stunning Blow as Istanbul Elects Rival Candidate
- New Sanctions Coming on Iran But Trump Would Be Happy to Talk
- Bitcoin at $10,000 Is About More Than Zuckerberg: Lionel Laurent
Keep an eye on :
- AIR FP : Airbus Plans to Shut Down Subsidiary Under Bribery Investigation
- ATL IM : Telepass may be listed following sale of 30% stake by Atlantia - report
- BEI GY : Beiersdorf Planning New Acquisitions, Boersen-Zeitung Reports
- CA FP : Carrefour announces the sale of a controlling stake in its activities in China to Chinese group Suning.com
- DAI GY : Daimler Cuts 2019 Ebit Forecast on Diesel Provisions
- BN FP : Saudi Dairy Firm Nadec Abandons Plan to Buy Danone Unit
- EVR LN : Russia’s Evraz Eyes British Steel Business in France, FT Reports
- B$B GY : Metro Gets Takeover Offer From Czech Billionaire, Partner (2)
- B4B GY : METRO AG: EP Global Commerce's unsolicited offer substantially undervalues METRO
- RNO F : Fiat Chrysler and Renault Hope Merger Talks Will Restart Soon -WSJ
A vote by Nissan shareholders this week could pave the way for Fiat Chrysler and Renault to resume their $40 billion merger talks