Asian Stocks Cautious Ahead of Key US Indicators: Markets Wrap
(Bloomberg) — Asian stocks were muted in early trade, following a subdued session on Wall Street as investors positioned for this week’s Federal Reserve decision and US inflation data. Markets in Japan posted early gains while those in Australia edged lower as they reopened after a public holiday. Futures in Hong Kong were little changed.
Singapore Ramps Up Scrutiny of Family Offices, Hedge Funds
(Bloomberg) — Singapore authorities are demanding more information from family offices and hedge funds while stepping up closures of dormant firms after a string of scandals highlighted cracks in the financial hub’s oversight. The government’s push to tighten various investment regimes has accelerated since March, with agencies setting out additional requirements that must be met in the coming months and ramping up the removal of inactive corporate entities, according to people familiar with the matter.
Sunak Faces Late Tory Revolt Over UK Manifesto Tax Cuts
(Bloomberg) — Rishi Sunak faced last-minute calls by cabinet ministers to add new tax cuts and a tougher migration policy to the Conservative manifesto after early drafts provoked disquiet over the lack of big-ticket pledges that might prevent a heavy defeat in the UK general election. The British prime minister is due to publish his policy platform for the July 4 vote on Tuesday, at an event that is widely-seen as one of his last chances to shift public opinion, which has changed little since he called the vote just under three weeks ago, suggesting Labour is heading for a landslide victory that would put its leader Keir Starmer in Downing Street.
France’s Snap Election Shakes Investor Confidence in Economy
(Bloomberg) — French President Emmanuel Macron’s bid to block Marine Le Pen’s path to power by calling snap elections rattled investors, raising further questions about already stretched public finances and the future of his pro-business agenda. The nation’s assets sold off sharply on Monday, with investors demanding the highest yield to own French bonds rather than those of Germany since December.
Bond Traders Will Follow the New Fed Dots All the Way Into 2025
(Bloomberg) — Bond traders who have come to terms with the prospect of higher-for-longer interest rates through 2024 are looking toward this week’s Federal Reserve meeting for clues on how to game out 2025 and beyond. Central bank officials will update their quarterly economic and interest rate projections — known as the dot plot — on Wednesday.
Fewer Job Promotions Leave Entry-Level US Workers ‘High and Dry’
(Bloomberg) — A main feature of the 2024 labor market is that fewer people are quitting their jobs. A lesser-known one is that fewer are getting promoted. That leaves little room for new workers to break through, as the ranks of employees above them stay in place. And it makes it more difficult for young graduates to get their foot in the door.
Trump to Meet with Senate Republicans Before CEO Meeting
(Bloomberg) — Donald Trump will meet with Senate Republicans on Thursday, the latest effort among Washington policymakers to plot out priorities if the former president wins a second term. Senator John Barrasso of Wyoming, who serves in Republican leadership, invited Trump to speak to GOP senators, according to an email obtained by Bloomberg.
New Peaks in India Signal Polls in Rearview Mirror: Taking Stock
(Bloomberg) — Three sessions. That’s all it took for Indian stocks to more than recover from the near-$400 billion wipeout sparked by Prime Minister Narendra Modi’s upset at the election. The NSE Nifty 50 ended at a record high on Friday, indicating that investors are comfortable backing Modi’s coalition.
BOJ Expected to Mull Bond Buying Cuts as Rate Hike Timing Nears
(Bloomberg) — The Bank of Japan is broadly expected to discuss cutting bond purchases at a policy meeting ending Friday, with some investors expecting the central bank to also lay the groundwork for raising interest rates next month. Governor Kazuo Ueda and his fellow board members will keep the policy rate in a range between 0 and 0.1% at the end of their two-day gathering, according to all but one economist surveyed by Bloomberg.
Elliott Disrupts CEO Summer Plans With $400 Billion in New Marks
(Bloomberg) — Executives hoping for a quiet summer have found a wrench thrown in their plans: Elliott Investment Management isn’t planning on letting them rest. Elliott, the activist hedge fund founded by billionaire Paul Singer, has unveiled seven new stakes in companies around the world since April, targeting corporations with a combined market value of more than $400 billion, according to data compiled by Bloomberg.
Abu Dhabi’s Taqa, Criteria Drop Talks to Buy $26 Billion Utility
(Bloomberg) — Abu Dhabi National Energy Co. and Criteria Caixa SA have ended talks to jointly take over a €24 billion ($26 billion) Spanish utility. Talks between Spanish industrial group Criteria and Taqa, as the Abu Dhabi-based group is known, to acquire control of Naturgy Energy Group SA “have been ended without any agreement,” Criteria said in a regulatory filing Monday.
Market Chatter: Apollo, Kyndryl May Make Joint Bid for DXC Technology
Apollo Global Management (APO) and Kyndryl Holdings (KD) are in talks about making a joint bid for DXC Technology (DXC), Reuters reported Monday, citing people familiar with the matter. Apollo and Kyndryl are mulling an acquisition bid for the company of $22 to $25 a share, one of the sources said, Reuters reported.
Apple Inc. took the wraps off long-awaited new artificial intelligence features, including a partnership with ChatGPT maker OpenAI
A new AI platform called Apple Intelligence was the highlight of the company’s Worldwide Developers Conference presentation on Monday, which also included updates to the iPhone maker’s operating systems. The technology will help summarize text, create original images and retrieve the most relevant data when users need it. The push also includes a revamped version of Siri, the company’s once-pioneering digital assistant. The partnership with OpenAI will let customers access ChatGPT via Siri at no extra cost. Apple Intelligence will begin rolling out later this year, but some features — including the ability for Siri to precisely control features within apps — won’t come until next year. Support for languages beyond English also won’t arrive until later. Ensuring that customer data is secure was a major theme of the presentation. A system called Private Cloud Compute will help keep users’ information safe when it’s being sent to data centres, Federighi said. Apple Intelligence will also support AI-created emoji called Genmoji and automated photo editing. Investors gave a tepid reaction to the event. Shares fell 1.9%, leaving the stock little changed for the year.
Advanced Micro Devices shares fell 4.5% after Morgan Stanley downgraded the chipmaker to equal-weight from overweight, saying investor expectations for the chipmaker’s AI business “seem too high.”
While AMD products are likely to win share in the client and server CPU markets this year, high expectations for its AI business “don’t leave room for much upside,” analyst Joseph Moore wrote. The stock looks expensive compared with Nvidia and Broadcom, which are more likely to see upward revisions on AI business. Price target maintained at $176.
Constellation Energy shares jumped 8.4% leading utilities and electrical equipment stocks higher.
Utilities stocks were notable outperformers on Monday, with the group’s 1.27% rise outpacing the S&P 500 Index’s 0.26% gain. BMO analyst James Thalacker says he continues to see CEG as uniquely positioned to continue to leverage its intrinsic and expanding extrinsic value given the scale of its carbon-free asset portfolio and commercial capabilities. Says is incrementally positive on the company’s exposure to improving power fundamentals following meetings with CEG management last week. Reiterates outperform rating and $248 PT.
Southwest Airlines shares rose 7% on Monday, after the Wall Street Journal reported that Elliott Investment Management has built an almost $2 billion stake in the US carrier.
The report said that the size of the holding makes the activist firm one of the largest investors in the company. Elliott called for sweeping changes to Southwest Airlines Co.’s leadership to reverse what it sees as years of underperformance by one of the biggest US carriers. Raymond James analyst Savanthi Syth says she is “not surprised by activist interest in Southwest given the very strong franchise with valuable tangible and intangible assets. There is also the opportunity to address technology shortcomings and introduce capabilities it lacks relative to the industry.” Melius analyst Conor Cunningham says not surprised to see an activist take a stake in Southwest, looking for change. Notes that Elliott could see an opportunity to push for a more concrete view that the company will not grow until ROIC exceeds WACC.
Huntington Bancshares shares fell 6.1% on Monday, after lowering its guidance for the year on net interest income. The lender also tempered expectations for its loan growth this year, which an analyst said had been a differentiating factor.
HBAN sees full year net interest income down 1% to 4%, revised from its previous guidance of down 2% to up 2%. Sees average loans up 3% to 4%, saw up 3% to 5%. Still sees noninterest expense up about 4.5%. Sees average deposits up 3% to 4%, had seen up 2% to 4%. Piper Sandler (neutral): Analyst R. Scott Siefers says that part of the stock’s story has been its “differentiated” loan growth outlook, and that “while weak industry loan growth will affect everyone, we would not have expected HBAN to be the first to bring down its guide.” JPMorgan (overweight): Analyst Steven Alexopoulos says that the midpoint of the new net interest income outlook would imply pre-provision net revenue below the prior consensus. Notes that “higher-than-expected [commercial real estate] payoffs/paydowns also contributed to a modest drag in loan growth guidance.”