Market Snapshot
Asia: Japan -1.1% to 19991. Hong Kong -0.2% to 26695. China -3.7% to 4786. India +1.1% to 27116.
Europe: London -0.3%. Paris -0.6%. Frankfurt -0.7%.
Futures: Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +1.3% to $61.10. Gold +1.7% to $1197.
Ten-year Treasury Yield -4 bps to 2.27%
Economic News
8:30 Consumer Price Index
8:30 Core CPI
8:30 Current Account
8:30 Jobless Claims
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
Key earnings before the open
KR, RAD
Key earnings after the close
FNSR, RHT, SWHC
Markets
U.S. stock futures rise this morning as investors continue to digest the Federal Reserve’s decision to go-slow when it comes to raising interest rates. Stocks ended higher yesterday after the Fed signaled that interest rates could increase more slowly than officials had expected.
Gathering in Luxembourg for their monthly get-together, eurozone finance ministers have another chance to break the deadlock in talks over Greece’s bailout program today, but neither side has shown any sign of shifting its position. Unless Greece agrees to economic reforms with its creditors by the weekend, officials believe time will run out for Athens to receive the desperately needed €7.2B remaining in its bailout program, which will expire on June 30.
Chinese stocks got hammered again today, suffering heavy losses across the board. The Shanghai Composite closed down 3.7%, while the smaller Shenzhen market fell 3.6%. The ChiNext index, which tracks small startup stocks, saw its biggest drop since 2013, plunging 6.3%. That’s the third-worst trading day in its history after nearly tripling in the past year.
Hong Kong’s legislature has vetoed a China-vetted electoral reform package that had been criticized by pro-democracy lawmakers as flawed and undemocratic. Although the new system would allow the next leader to be directly chosen by voters, Beijing would retain the right to choose the candidates on the ballot. Prior to the vote, Hong Kong’s government made it clear that if the package was defeated, the status quo would prevail and the chief executive would continue to be chosen by a committee of 1,200 members.
The Swiss franc extended its upbeat momentum this morning, despite the Swiss National Bank maintaining its deposit rate at a record low of -0.75% and warning it’s ready to take further action to reduce the impact of the overvalued currency. Consumer prices are falling and the Swiss economy is on the verge of its first recession in six years after the SNB’s shock decision to unpeg the franc from the euro in January. Since then, the currency has risen 15%, undermining exports and pushing down import costs.
Treasuries and German bund yields are heading lower after the Federal Reserve cut its outlook for interest rates and warned of spillover if Greece talks fail. At yesterday’s meeting, the Fed suggested it might raise rates only once in 2015 by a quarter percent, rather than twice as many officials previously anticipated. Both ten-year U.S. and German Bund yields are down 4 bps, to 2.27% and 0.77%, respectively.
Republicans in the U.S. House of Representatives will try to revive legislation central to the Trans-Pacific Partnership by offering a simpler version of a bill that failed last week. Under the new plan, lawmakers are expected to vote on whether to give “fast-track” authority for the TPP, without a companion measure to renew an expiring program helping U.S. workers hurt by trade.
Stocks
Comcast is not interested in buying T-Mobile (TMUS), a source told Reuters, shooting down an earlier report from Germany’s Manager Magazin. The magazine had stated T-Mobile’s parent, Deutsche Telekom (DTEGY), was in talks with Comcast (CMCSA) about taking on its whole U.S. wireless subsidiary.
FitBit has priced its 36.6M-share initial public offering at $20 per share, a dollar above its already heightened price range of $17-$19. At that level, the company will raise $732M, at a valuation of $4.1B. FitBit (FIT) shares will begin trading on the New York Stock Exchange this morning.
General Electric (GE) will move significant manufacturing jobs to Canada and Europe, warned GE CEO Jeff Immelt, should the Export-Import Bank close and the Trans-Pacific Partnership continue to be blocked. The charter of the Ex-Im Bank will expire on June 30, unless Congress acts to reauthorize it, while “fast-track” authority for the TPP remains stuck in the U.S. House.
General Motors and Fiat Chrysler Automobiles have turned to investment banks for help to deal with a stand-off as the latter seeks to force a merger with its Detroit-based rival, Reuters reports. Earlier this year, GM’s (GM) board rebuffed a merger proposal from the Italian-American carmaker and Chief Executive Mary Barra said last week she had no interest in a combination. Barra’s rejection has not stopped FCA (FCAU) boss Sergio Marchionne, who is lobbying GM investors to support his case.
Lagging behind other social networks in mobile use, LinkedIn (LNKD) is developing two new apps and a major mobile messaging overhaul. The apps being tested are LinkedIn Groups, which alerts users when messages are posted to groups to which they belong, and LinkedIn LookUp, which allows users to find information about co-workers at their company.
U.S. commercial drone operations could take off on a large scale by next June, after FAA officials said they expect to finalize regulations for the unmanned aircraft within the next 12 months. The news has commercial drone operators hoping for looser terms than the proposed regulations announced in February. Those rules required drones to fly during daylight hours only, remain within an operator’s visual line of sight and stay at a 500 foot ceiling.
More IPO news: Univar has priced its initial public offering at $22 per share, valuing the company at about $3.03B. The IPO will raise $770M, after 35M shares were priced at the top end of its $20-$22 price range. Shares of Univar (UNVR), one of the largest chemical distributors in North America, will also begin trading on the New York Stock Exchange today.
According to an NYC audit scheduled to be released today, Verizon (VZ) has failed to deliver FiOS fiber connections to anyone who wanted them, a promise the company made seven years ago. When it signed a franchise agreement with NYC in 2008, Verizon said all customers would be served by 2014, although there are still more than 40K requests for service. Verizon says the main reason buildings don’t have service is in its struggle to get access from landlords.