Market Snapshot
Asia: Japan +0.3% to 20868. Hong Kong +0.3% to 27405. China +2.5% to 4690. India -0.3% to 27730.
Europe: London +0.2%. Paris -0.6%. Frankfurt -1.1%.
Futures: Dow -0.3%. S&P -0.3%. Nasdaq -0.2%. Crude +0.5% to $61.29. Gold +0.1% to $1178.20.
Ten-year Treasury Yield -2 bps to 2.39%
Economic News
7:00 MBA Mortgage Applications
8:30 GDP Q1
8:30 Corporate Profits
10:30 Petroleum Inventories
Key earnings before the open
LEN, MON
Key earnings after the close
APOG, BBBY, FUL, MLHR, SCS, WOR
Markets
U.S. stock futures slipped on Wednesday as recent optimism about a bailout deal for Greece faded. European stocks also fell, as Greek Prime Minister Alexis Tsipras attacked the country’s international creditors after they rejected a list of economic measures Greece said it was willing to undertake in exchange for financial aid. Eurozone finance ministers will convene in Brussels tonight with the aim of presenting a final Greek agreement to EU leaders, who begin a two-day emergency summit on Thursday afternoon.
German business confidence weakened for a second straight month in June, suggesting that Greek concerns are busting the mood in Europe’s largest economy. Ifo’s business climate index dropped to 107.4 in June from 108.5 in May, coming in below a consensus forecast for a reading of 108.1. While German economic growth is supported by record-low unemployment, uncertainty over the eurozone’s future is clouding the outlook.
Japan’s Nikkei soared to an 18-year high today, ramping up the gains to around 20% since the start of the year thanks to signs of a pick up in economic growth, earnings optimism and hopes Greece will avoid a debt default. During the session, the index rose as much as 0.6% to 20,942, its highest since December 1996. It is, however, still roughly half the peak hit in the bubble era a quarter of a century ago. The Nikkei closed at a record 38,915.87 on December 29, 1989, before the bursting of the asset bubble that led to Japan’s “lost decade”.
U.S. and Chinese officials on Tuesday discussed Beijing’s bid to have the yuan included in the IMF’s Special Drawing Rights basket, as the latter advances its bid to make the yuan a reserve currency. Last month, the IMF hinted that a promotion may happen in 2015, after saying it doesn’t consider the currency undervalued. According to data from SWIFT, the yuan became the second most used currency in trade finance, the fifth most popular payment currency and the sixth most used foreign exchange currency in the world in December 2014.
Most analysts agree the U.S. economy is rebounding from a weak first quarter, and today’s final GDP will likely offer more evidence that forecast is turning into reality. First-quarter GDP, reported at 8:30 a.m. ET, is expected to have contracted by 0.2%, an improvement over the previous revision’s contraction of 0.7%. Along with other economic data, the figure will lead directly back to the Federal Reserve, which is mulling the timing of a future interest rate hike.
President Obama’s long-pursued trade agenda took a giant step toward becoming law on Tuesday, when the Senate voted 60-37 to advance his bid for “fast-track” negotiating authority. The legislation would let lawmakers set negotiating objectives for trade deals, including the Trans-Pacific Partnership, but would restrict them to yes-or-no votes on final agreements. Final passage of the bill is expected to be announced later today.
Stocks
Boeing has named Dennis Muilenberg as its new CEO effective July 1, succeeding James McNerney, who will remain with the company as chairman. Muilenburg has been Boeing’s (BA) President and COO since 2013, and has worked for the company over three decades in several positions, including CEO of Boeing Defense Space & Security and President of the Global Services & Support business.
The 2010 Deepwater Horizon oil spill could ultimately cost BP (BP) $60.2B-$68.2B, a high bill for a firm wading through an industry downturn. The cost estimate means the remaining legal aftermath of the disaster, which includes impending environmental fines and settlement payments, could run up another $16B-$24B. That’s as much as a fifth of BP’s current market value of $126B.
Dutch food retailer Royal Ahold and Belgium’s Delhaize (DEG) have agreed to merge, creating one of the largest supermarket operators in the U.S. Ahold (AHONY) operates the Stop & Shop and Giant chains, as well as online grocery store Peapod, while Delhaize operates the Food Lion and Hannaford banners. Under the new deal, Delhaize shareholders will receive 4.75 Ahold shares for each share held. Ahold investors will own 61% of the €26.1B combined company and Delhaize shareholders will own the rest.
Scaling a fresh peak, Facebook topped its all-time March 24 high yesterday, climbing 3.7% to close at $87.88/share. The gains came as Instagram rolled out a revamped search engine and Explore page to provide “a real-time visual pulse for what is happening in the world.” Facebook’s (FB) market cap is now $245B.
Ford is jumping into the car-sharing market, launching a pilot program in six U.S. cities and London, England. The new program will enable owners of vehicles financed by Ford Motor Credit to offer their car, SUV or truck to pre-screened clients for short-term rentals. Other new developments: Ford (F) has announced the launch of an engineering program focused on developing autonomous vehicle technology.
Google has launched a free, ad-supported Google Play Music service (much like Songza acquired in 2014) that offers curated playlists organized by genre, mood, decade or activity. Users will still pay the $9.99 a month fee to skip the ads, listen to songs on demand or create playlists. Google’s (GOOG, GOOGL) move comes as Apple (AAPL) Music nears its June 30th launch.
The IPO market is heating up again, with four new companies announcing intentions for public offerings later this year. Among them: Indoor cycling fitness chain SoulCycle, Freeport-McMoRan Oil & Gas, packaging company Ardagh and plus-sized retailer FullBeauty. June is expected to bring forth 32 deals, just one less than the IPO-swamped prior year.
Netflix is planning to split its highflying stock 7-for-1, a move intended to make the shares more attractive to retail investors. Trading at the post-split price will begin on July 15. As of last week, Netflix (NFLX) was the third-most expensive stock in the S&P 500. NFLX +3.6% premarket.
Qualcomm has struck a deal to help China’s biggest semiconductor foundry upgrade its technology, as it looks to boost its standing in the country following a record $975M antitrust fine. Under terms of the agreement, SMIC (NYSE:SMI) will form a joint venture with Qualcomm (QCOM), Huawei Technologies and Belgian chip research center Imec to develop advanced 14-nanometer chips. Qualcomm and SMIC collaborated last year on the production of 28-nanometer chips.
Meanwhile, a federal judge has issued a preliminary injunction blocking Sysco’s (SYY) planned acquisition of U.S. Foods, a ruling that could kill a deal to combine the nation’s two largest food distributors. The decision hands a high-profile victory to the FTC, which filed a lawsuit in February challenging the transaction on antitrust grounds.
Wal-Mart will begin charging fees to almost all vendors for stocking their items in new stores and for warehousing inventory, increasing pressure on suppliers as the world’s largest retailer battles higher costs from wage hikes. The changes will serve “shared customers” and achieve the low prices “they expect and deserve,” Wal-Mart (WMT) said in a letter. Although the chain sometimes imposed such fees in the past, they were not applied uniformly.