Market Snapshot
Asia: Japan +0.03% at 20570. Hong Kong +0.6% to 27597. China +4.7% to 4829. India +0.1% to 27849.
Europe: London -0.2%. Paris +0.1%. Frankfurt -0.1%.
Futures: Dow flat. S&P flat. Nasdaq flat. Crude -1.3% to $59.54. Gold -0.3% to $1186.40.
Ten-year Treasury Yield -3 bps to 2.1%
Economic News
8:30 Chicago Fed National Activity Index
10:00 Existing Home Sales
Key earnings before the open
PVH, QUNR
Markets
U.S. stock futures edged higher on Monday in a critical week for economic data, which kicks off with readings on consumer spending and manufacturing, and ends with all-important jobs numbers. Economists are looking for consumer spending to rise 0.2% after a 0.4% gain in April, and core inflation to rise 0.2% after a 0.1% gain. The ISM manufacturing index for May comes at 10 a.m. Eastern, along with construction spending for April at the same time.The biggest piece of data for investors comes Friday though, when the U.S. employment report for May is expected to produce another solid gain in jobs, though investors will zero in on wage growth as well.
Futures took some inspiration from gains in Asian markets, which came after weak manufacturing data for China triggered hopes of more stimulus there. But nervousness over a looming deadline for a Greek repayment to the International Monetary Fund was keeping overall advances in check.
China’s official manufacturing PMI, which surveys large companies, rose to 50.2 from 50.1 in April, in line with expectations. However, the final reading from a private survey compiled by HSBC/Markit, which focuses on small and medium sized enterprises, stayed in contraction for a third month at 49.2, but beat the 49.1 figure in April. Shanghai closed +4.7%; Shenzhen +5.1%.
Euro zone factory growth was weaker than previously thought last month as the bloc’s core countries continued to struggle as prices deteriorated. Markit’s final May manufacturing PMI was 52.2, below a preliminary flash reading of 52.3 but just ahead of April’s 52.0.
The euro tumbled today after Greece missed a self-imposed Sunday deadline for reaching an agreement with its lenders to unlock aid, keeping alive fears of a debt default and exit from the euro zone. The chances for a deal aren’t looking any better after Alexis Tsipras’ comments on Sunday. Yesterday, the prime minister accused bailout monitors of making “absurd” demands and seeking to impose “harsh punishment” on Athens. Greece is due to repay a €300M loan to the IMF on Friday and three additional payments, totaling about €1.25B, later in June.
Europe’s six largest oil and gas groups – Shell (RDS.A, RDS.B), Total (TOT), BP (BP), BG Group (BRGYY), Statoil (STO) and Eni (E) – have united together in seeking help from the United Nations to stop global warming and create a global carbon pricing system. “We owe it to future generations to seek realistic, workable solutions to the challenge of providing more energy while tackling climate change,” the companies’ executives said in a letter. The step comes as nearly 200 countries prepare to sign a global climate pact at a U.N. conference in December.
Crude prices dip on expectations OPEC output would remain high after rising in May, stoking worries of oversupply despite declining U.S. rig operations. On Friday, the 12-country group is expected to keep its current production ceiling of 30M barrels a day in place for the seventh meeting in more than three years. Crude futures -1.3% to 59.54/bbl.
Stocks
Meanwhile, General Electric (GE) has launched the bidding process for a $40B portion of its U.S. commercial lending assets, as a key step toward escaping a SIFI designation from the Fed. The chunk of the operation represents more than half of GE’s $74B U.S. commercial lending and leasing portfolio that includes loans for equipment purchases, financing and leases for midsize firms.
Harley-Davidson’s (HOG) LiveWire battery-powered motorcycle, announced a year ago and demonstrated across the U.S. and in Europe, is unlikely to hit the market “in the next couple years, but it’s not past 2020 either,” CEO Matt Levatich said in an interview. While the electric bikes are a big part of Harley’s effort to engage young adults and reduce reliance on aging baby boomers, potential buyers have already expressed several concerns. Among them: Cost, driving speed and the motorcycle’s current 50 mile range.
Intel (INTC) is set to announce it’s buying Altera (ALTR) today for $54/share, according to news reports. The price translates to around $16.2B. It also represents an 11% premium to Altera’s Friday close, and a 56% premium to where it traded before reports of a deal on March 27.
Microsoft (MSFT) has finally revealed an exact date for the release of its new operating system, stating that Windows 10 will become available on July 29th. The OS will see the return of the Start menu, a new browser called Microsoft Edge, and the inclusion of voice-controlled assistant Cortana. Windows 7 and Windows 8.1 users will be able to download the new operating system as a free upgrade on both PCs and tablets, while Windows 10 for other devices will be released later this year.
Snapchat has raised less than the $650M CNBC reported the company would be adding to its coffers, however, the WSJ has joined CNBC in reporting the valuation is $16B, or 60% higher than what Snapchat was valued at just 6 months ago. As expected, Alibaba (BABA) is an investor, and so are hedge funds Glade Brook Capital and York Capital. The firms have reportedly agreed to receive common stock rather than the preferred stock VCs typically receive when making investments.