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Dow Jones and S&P 500 are down 0.3-0.5%. Nasdaq is on the weak side

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The U.S. stock indexes Dow Jones Industrial Average and S&P 500 ended Thursday trading lower but well above intraday lows, while the Nasdaq Composite came out with a small plus.

Traders were assessing the prospects of the Federal Reserve (Fed) raising the benchmark interest rate at its July meeting, as well as U.S. bank reports for the past quarter.

U.S. Labor Department data published on Wednesday, which showed an increase in inflation in the country to a maximum of nearly 41 years, 9.1%, led investors to revise their forecasts about the pace of the Fed’s rate hike. At first, the rate futures quotes showed that traders were 85% confident in the likelihood of the U.S. Central Bank rate hike by 100 basis points (bps) in July.

However, Fed Board of Governors member Christopher Waller said that the market may be “getting a little ahead of itself” by expecting a 100bp rate hike. He noted that he still favors a 75-bp rate hike in July, but acknowledged that economic data to be released shortly could change his mind in favor of a sharper hike. 

“If this data turns out to be substantially stronger than expected, I might lean toward a larger rate hike in July because it would mean that demand in the economy is not weakening fast enough to contain inflation,” he said.

Following Waller’s statements, the futures market’s estimate of the chances of a rate hike of 100 bps in July dropped to 42%; Market Watch notes. On Friday, the University of Michigan will release the preliminary value of its consumer confidence index for July. The index fell to a record low of 50 points in June. 

The University of Michigan data also includes trends in Americans’ inflation expectations, which last month stood at 5.3 percent for the medium term (next year) and 3.1 percent for the long term (five years). “We’re waiting on this data to see if inflation expectations in the U.S. have strengthened,” notes LPL Financial analyst Quincy Crosby. – If they rise, the Fed will probably discuss a 100-bp rate hike. Or the central bank will have to hike the rate at a 75-bp pace longer than it anticipated.”

Data released Thursday showed an acceleration in U.S. producer price growth in June to 11.3 percent annualized from 10.9 percent a month earlier. The rate of increase in producer prices reached a record 11.6% in March of this year. Negative for the market Thursday were weak financial reports from banks JPMorgan Chase & Co. and Morgan Stanley for the past quarter.

“High inflation, weakening consumer confidence, uncertainty about how high rates will be raised and unprecedented quantitative tightening and its impact on global liquidity are very likely to have a negative impact on the global economy,” said JPMorgan Chief Executive James Dimon. – We’re prepared for whatever happens.”

  • The Dow Jones Industrial Average index fell 142.62 points (0.46%) to 30630.17 points in trading Thursday.
  • Standard & Poor’s 500 fell 11.4 points (0.3%) to 3,790.38 points.
  • The Nasdaq Composite rose 3.6 points (0.03%) to 11251.19 points.

The decline in net income at JPMorgan, the largest U.S. bank, by assets, exceeded analysts’ forecasts. In addition, the financial institution said it was suspending its share buybacks. Morgan Stanley also reported weaker-than-expected quarterly adjusted earnings and revenue. JPMorgan’s shares fell 3.5% in trading on Thursday, while Morgan Stanley’s fell 0.4%.

Conagra Brands, a prepared foods maker, fell 7.3 percent. The company nearly halved its net income in the fourth quarter of fiscal 2022, and its revenue was worse than market forecasts.

Shares of Cisco Systems Inc. fell 0.9 percent after experts at JPMorgan cut recommendations for the securities of the U.S. network equipment maker to “neutral” from “above market. The bank also lowered its outlook on Cisco shares to $51 from $62.

The value of Tesla Inc. securities rose by 0.5%. The day before, it became known that Andrei Karpaty, director of artificial intelligence and head of the development group for autopilot in cars, Tesla, left the company.

Citigroup Inc. and Wells Fargo & Co. will publish their results for the past quarter on Friday. The consensus forecast by analysts surveyed by FactSet suggests that S&P 500 index companies’ overall earnings rose an average of 4.3% in the past quarter, the slowest pace since late 2020. 

Commodities

Oil ends lower, posts weekly decline as US rate cut hopes dim

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Oil ends lower, posts weekly decline as US rate cut hopes dim
© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

By Nicole Jao

NEW YORK (Reuters) -Oil prices fell nearly 3% lower on Friday and posted a weekly decline after a U.S. central bank policymaker indicated interest rate cuts could be delayed by at least two more months.

futures settled down $2.05, or 2.5%, at $81.62 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were down $2.12, or 2.7%, to $76.49.

For the week, Brent declined about 2% and WTI fell more than 3%. However, indications of healthy fuel demand and supply concerns could revive prices in the coming days.

Federal Reserve policymakers should delay U.S. interest rate cuts by at least another couple of months, Fed Governor Christopher Waller said on Thursday, which could slow economic growth and curb oil demand.

The Fed has held its policy rate steady in a 5.25% to 5.5% range since last July. Minutes of its meeting last month show most central bankers were worried about moving too quickly to ease policy.

“The entire energy complex is reacting, because if inflation begins to come back it will slow demand for energy products,” said Tim Snyder, economist at Matador Economics.

“That is not something the market wants to digest right now, especially as it is trying to figure out a direction,” he added.

Some analysts, however, say demand has remained largely healthy despite the impact of high interest rates, including in the United States.

JPMorgan’s demand indicators are showing oil demand rising by 1.7 million barrels per day (bpd) month over month through Feb. 21, its analysts said in a note.

“This compares to a 1.6 million bpd increase observed during the prior week, likely benefiting from increased travel demand in China and Europe,” the analysts said.

Meanwhile, Gaza truce talks were underway in Paris in what appears to be the most serious push in weeks to halt the conflict in Palestine and see Israeli and foreign hostages released.

Ceasefire talks could prompt the market to anticipate an easing of geopolitical tensions, Tim Evans, an independent oil market analyst, said in a note.

Still, tensions in the Red Sea continued, with attacks by Iran-backed Houthi militants near Yemen on Thursday forcing more shipping vessels to divert from the trade route.

U.S. energy firms this week added the most oil rigs since November, and the most in a month since October 2022, energy services firm Baker Hughes said.

The oil rig count, an early indicator of future output, rose by six to 503 this week, and increased by four this month.

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Angry French farmers storm into agriculture fair in Paris

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Angry French farmers storm into agriculture fair in Paris
© Reuters. Protesters wearing shirts with the logos of the FNSEA and Jeunes Agriculteurs farmers’ unions gather to protest at the opening of the 60th International Agriculture Fair (Salon de l’Agriculture) at the Porte Versailles exhibition centre in Paris, France,

2/2

By Stephanie Lecocq and Manuel Ausloos

PARIS (Reuters) -A group of French farmers stormed into a major Paris farm fair on Saturday ahead of a planned visit by President Emmanuel Macron amid anger over costs, red tape and green regulations.

Facing dozens of police officers inside the trade fair, the farmers were shouting and booing, calling for the resignation of Macron and using expletives aimed at the French leader.

“This is our home!”, they shouted, as lines of French CRS riot police sought to contain the demonstration. There were some clashes with demonstrators and the police arrested at least one of them, a Reuters witness saw.

Pascal Beteille, one of the demonstrators said he did not expect anything from Macron’s visit.

“This is our home and he’s welcoming us with CRS,” he told Reuters.

Macron, who met French farmers’ union leaders over breakfast, was scheduled to walk within the alleys of the trade fair afterwards.

“I’m saying this for all farmers: you’re not helping any of your colleagues by smashing up stands, you’re not helping any of your colleagues by making the show impossible, and in a way scaring families away from coming,” Macron told reporters after his meeting with union leaders.

The protests delayed the opening of the show to the public by at least an hour.

The French president said he would convene farmers’ union representatives and other stakeholders of the sector at the Elysee palace in three weeks after he canceled a debate he wanted to hold at the fair with farmers, food processors and retailers.

He denied a reports that he planned to invite controversial environmentalist group Soulevements de la Terre to that debate, which had further stirred anger among French farmers.

An impromptu heated discussion between Macron and demonstrators was being broadcast live on French news channels.

The Paris farm show – a major event in France, attracting around 600,000 visitors over nine days – is a political fixture, where presidents and their opponents are expected to engage with the public under intense media scrutiny.

Farmers’ protests which have spread across Europe, have stoked concerns in France and beyond about their political fallout, given they represent a growing constituency for the far right, expected to make gains in European Parliament elections in June.

French farmers earlier this month largely suspended protests after Prime Minister Gabriel Attal promised new measures worth 400 million euros ($433 million).

But protests resumed this week to put pressure on the government to provide more help and deliver on promises, ahead of the Paris farm show.

($1 = 0.9244 euros)

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Commodities

Oil ends lower, posts weekly decline as US rate cut hopes dim

letizo News

Published

on

Oil ends lower, posts weekly decline as US rate cut hopes dim
© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

By Nicole Jao

NEW YORK (Reuters) -Oil prices fell nearly 3% lower on Friday and posted a weekly decline after a U.S. central bank policymaker indicated interest rate cuts could be delayed by at least two more months.

futures settled down $2.05, or 2.5%, at $81.62 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were down $2.12, or 2.7%, to $76.49.

For the week, Brent declined about 2% and WTI fell more than 3%. However, indications of healthy fuel demand and supply concerns could revive prices in the coming days.

Federal Reserve policymakers should delay U.S. interest rate cuts by at least another couple of months, Fed Governor Christopher Waller said on Thursday, which could slow economic growth and curb oil demand.

The Fed has held its policy rate steady in a 5.25% to 5.5% range since last July. Minutes of its meeting last month show most central bankers were worried about moving too quickly to ease policy.

“The entire energy complex is reacting, because if inflation begins to come back it will slow demand for energy products,” said Tim Snyder, economist at Matador Economics.

“That is not something the market wants to digest right now, especially as it is trying to figure out a direction,” he added.

Some analysts, however, say demand has remained largely healthy despite the impact of high interest rates, including in the United States.

JPMorgan’s demand indicators are showing oil demand rising by 1.7 million barrels per day (bpd) month over month through Feb. 21, its analysts said in a note.

“This compares to a 1.6 million bpd increase observed during the prior week, likely benefiting from increased travel demand in China and Europe,” the analysts said.

Meanwhile, Gaza truce talks were underway in Paris in what appears to be the most serious push in weeks to halt the conflict in Palestine and see Israeli and foreign hostages released.

Ceasefire talks could prompt the market to anticipate an easing of geopolitical tensions, Tim Evans, an independent oil market analyst, said in a note.

Still, tensions in the Red Sea continued, with attacks by Iran-backed Houthi militants near Yemen on Thursday forcing more shipping vessels to divert from the trade route.

U.S. energy firms this week added the most oil rigs since November, and the most in a month since October 2022, energy services firm Baker Hughes said.

The oil rig count, an early indicator of future output, rose by six to 503 this week, and increased by four this month.

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