- Asian Stocks Slip as Traders Weigh Bond Selloff: Markets Wrap
(Bloomberg) — Stocks in Asia broadly had a weak start to the day as traders assessed a selloff in bonds, mixed economic data and remarks from Federal Reserve speakers for clues on the policy outlook. Shares in Australia and South Korea fell, while those in Japan climbed. Futures for equity benchmarks in Hong Kong indicated a lower open. - Merck Nears $1.3 Billion Deal for Eye-Drug Company Eye Bio WSJ
Merck & Co. is close to a $1.3 billion deal to buy Eye biotech, a move that would push the big drugmaker into the large and growing market for eyecare. Under the terms, Merck would pay the $1.3 billion in cash upfront to acquire the closely held biotech, according to people familiar with the matter. - Oil Extends Gain as Geopolitical Risks Simmer Before OPEC+ Meet
(Bloomberg) — Oil extended gains as another attack on a ship in the Red Sea added to heightened geopolitical tensions in the Middle East ahead of an OPEC+ meeting. Brent futures rose above $84 after ending 1.4% higher on Tuesday, while West Texas Intermediate traded near $80. - White House Says Israel’s Rafah Strike Doesn’t Cross Red Line
(Bloomberg) — The White House said an Israeli strike on an encampment in Rafah that left dozens of dead was devastating but would not cause President Joe Biden to freeze additional arms shipments to the country. “As a result of this strike on Sunday, I have no policy changes to speak to,” White House National Security Council spokesman John Kirby told reporters. - US Consumer Confidence Rises for First Time in Four Months
(Bloomberg) — US consumer confidence unexpectedly rose in May for the first time in four months as views about business conditions and the labour market were less negative. The Conference Board’s gauge of sentiment increased to 102 from an upwardly revised 97.5 in April, according to data out Tuesday. - Fed’s Kashkari Says Interest-Rate Hikes Not Entirely Ruled Out
(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari said the US central bank’s policy stance is restrictive, but policymakers haven’t entirely ruled out additional interest-rate increases. “I don’t think anybody has totally taken rate increases off the table,” Kashkari said Tuesday at an event in London. - Toyota Investors Urged to Vote Against Founding Family Chair
(Bloomberg) — Toyota Motor Corp.’s proposal to re-elect Chairman Akio Toyoda to its board is coming under pressure by two leading proxy advisory firms, which urged shareholders of the world’s largest carmaker to vote against the founding family scion. Institutional Shareholder Services Inc., which advises large investors. - Gold subdued as U.S. dollar, yields firm; traders await inflation data
Gold prices edged lower on Wednesday as the U.S. dollar and Treasury yields held firm ahead of key inflation data, which could offer more clarity on the Federal Reserve’s interest rate trajectory. Spot gold eased 0.2% to $2,356.92 per ounce as of 0334 GMT. Prices had hit an all-time high of $2,449.89 on May 20. U.S. gold futures rose 0.1% to $2,357.80. - Yen Weakens Against Euro, Providing Earnings Boost for Exporters
(Bloomberg) — The yen has weakened about 9% against the euro so far this year providing a potential earnings boost for Japanese companies with significant sales in Europe. Companies with the largest percentage of sales in Europe have an average forecast of 156 yen to the euro, about 15 yen lower than the current rate of 170.79. The yen has fallen against all major currencies this year. - Treasuries Hit as US Sales Struggle to Lure Buyers: Markets Wrap
(Bloomberg) — The world’s biggest bond market sold off after weak Treasury sales, with traders also weighing mixed economic data and remarks from Federal Reserve speakers for clues on the policy outlook. Treasuries extended losses after the US sold $70 billion of five-year notes at 4.553% — above the pre-auction level of 4.540%. - Catalyst Quant Fund Shorts 10-Year Treasuries as Key Macro Bet
(Bloomberg) — A top-performing quant fund is shorting five-to-10-year US Treasuries on expectations that interest rates will stay on hold this year as prices remain elevated. The Catalyst/Millburn Hedge Strategy Fund is selling Treasury futures while buying short-dated bills and corporate debt. - T-Mobile to Buy US Cellular Assets for Roughly $2.4 Billion
(Bloomberg) — T-Mobile US Inc., the second-largest mobile carrier in the US, has agreed to buy US Cellular Corp.’s wireless operations and some of its spectrum assets for about $2.4 billion. The deal includes US Cellular’s wireless customers, retail stores and 30% of its spectrum assets, according to statements from the companies. - Cleveland-Cliffs Said in Talks to Buy US Plants of Russia’s NLMK
(Bloomberg) — Cleveland-Cliffs Inc. is in talks to acquire the US Midwest assets of Russia’s largest steelmaker NoVo Lipetsk Steel PJSC, according to people familiar with the matter. New York-listed Cliffs has expressed interest in a potential deal to NLMK, as the steelmaker is also known, the people said, asking not to be identified because the matter is private. - DraftKings and Flutter (parent of FanDuel) shares fell 10.3% and 7.3% respectively, after a progressive tax on online sports betting passed in the Illinois senate. Analysts note the potential for other states to follow suit as the primary concern for investors.
If approved in the House, the new tax would take effect from July 1: operators will be liable for increasing tax rates based on their adjusted gross revenue, paying between 20% and 40% based on revenue thresholds, compared with a current 15%. Bloomberg Intelligence: “DraftKings’ premarket selloff echoes reasonable concern that the Illinois Senate’s passage of a sports-bet tax-rate rate increase — to an effective 34%, based on our analysis, vs. 15% — might augur hikes elsewhere,” writes analyst Brian Egger. Adds that the cost hit is particularly large in Illinois, the second-biggest sports-bet state, where DraftKings’s 32% share follows FanDuel’s 42% lead. - PepsiCo shares fell 2.6% after analysts at Citi and Morgan Stanley reported that Nielsen industry data showed non-alcoholic beverage sales at Pepsi declined in the latest four-week period, while Coca-Cola’s sales rose.
Pepsi’s salty snack sales also fell for the period ended May 18, as did its category market share, Morgan Stanley analyst Dara Mohsenian writes, citing the Nielsen data. Separately, Pepsi announced in a filing postmarket Friday that it has entered into two new revolving credit facilities of $5 billion each to replace two $4.2 billion revolvers. - Norwegian Cruise Line Holdings shares gained 3.5% after Mizuho Securities upgraded the cruise operator to buy from neutral, citing its attractive valuation and incremental cost cuts that should drive greater-than-anticipated operating leverage.
“NCLH has been a consensus short over the last two years, but we believe sentiment is beginning to shift,” analyst Ben Chaiken writes in a note. He adds that with the favourable industry backdrop of limited supply and healthy demand, there is likely upside to yields from NCLH simplifying its fleet itineraries. PT to $24 from $21. - American Airlines disclosed the departure of its chief commercial officer and cut its profit guidance heading into the crucial summer travel season.
Adjusted earnings will be $1 to $1.15 a share in the second quarter, down from a previous expectation of as much as $1.45, according to a regulatory filing Tuesday. The carrier also reduced its expectations for operating margin, costs and a key revenue gauge. American separately announced that Vasu Raja, a 20-year veteran of the airline who was appointed commercial chief about two years ago, would step down next month. - Alibaba Health Information Technology shares surged 10.10% on Tuesday, after the company reported better-than-expected earnings results for the financial year.
Alibaba Health reported an adjusted net income of RMB1.44 billion, beating estimates of RMB1.04 billion. Net income came in at RMB883.5 million, beating estimates of RMB695.6 million. Revenue was at RMB27.03 billion, while estimates were RMB28.08 billion. The company also posted a steady increase in active users for its healthcare platform. - China’s $47.5 billion chip fund will likely focus on AI amid U.S. export curbs
China’s new third semiconductor fund will focus on advanced chips for AI and establishing the entire supply chain, said Winston Ma, adjunct professor at NYU School of Law “And now, because [Fund 3] is established in the middle of the AI boom, I believe they will put more effort, emphasis on advanced computing chips and memory chips for future AI,” Ma told CNBC’s “Squawk Box Asia” Wednesday. - IMF upgrades China’s growth forecast to 5% on ‘strong’ first quarter and policy measures
The International Monetary Fund raised its forecast Wednesday for China’s growth this year to 5%, from 4.6% previously, due to “strong” first quarter figures and recent policy measures. China’s economy grew by a better-than-expected 5.3% in the first quarter, supported by strong exports. - Stock futures are lower after the Nasdaq Composite posts a record close
Stock futures were little changed Wednesday after the Nasdaq Composite rose to a fresh record. Futures tied to the Dow Jones Industrial Average inched lower by 152 points, or 0.39%. S&P 500 futures ticked down 0.41%, while Nasdaq 100 futures lost 0.39%. American Airlines slid more than 6% in after-hours trading after slashing its sales outlook for the second quarter. - HubSpot shares jump on talks of potential Google deal
HubSpot shares rose Tuesday after CNBC’s David Faber reported that Alphabet is in talks about an all-stock bid for the company. Reports of a potential deal surfaced in April, when Reuters published a story saying Alphabet was talking to advisors about making an offer for HubSpot. HubSpot’s market cap has swelled to $33 billion, which means it would be by far Google’s largest deal ever.
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