Today’s Big Picture
After the major U.S. equity indices closed near their all-time highs last Friday, stocks in Asia-Pacific kicked off the week mostly higher. Japan’s Nikkei rose 0.3%, China’s Shanghai Composite finished up 0.2%, and South Korea’s Kospi rose 0.4% while Hong Kong’s Hang Seng sank 0.3%. By midday trading, the major European equity indices were mixed but little changed, as were U.S. equity futures.
Traders, investors, and smartphone-obsessed consumers will be focused on Apple’s (AAPL) latest keynote address at its 2021 Worldwide Developer Conference that kicks off at 1 PM ET. Later in the week, they’ll be digging through the May CPI report, as well as comments from the latest European Central Bank monetary policy meeting that may offer clues for the Fed’s next FOMC meeting that culminates on Wednesday, June 16. Meanwhile, those watching Washington this week will continue to look for progress on President Biden’s infrastructure plan.
China’s balance of trade in May rose less than expected, to $45.5 billion from $42.9 billion in April, versus expectations for an increase to $50.5 billion. Exports rose less than the expected 32.1% at just 27.9% YoY after rising 32.3% in April and Imports rose slightly less than the expected 51.5% at 51.1% YoY from a 43.1% increase in April.
Factory orders in Germany unexpectedly fell 0.2% MoM in April, following an upwardly revised 3.9% rise in March and the expected 1% increase for April.
Spain's Industrial Production grew by 48.2% YoY in April the largest increase on record as the economy recovered further from the coronavirus crisis after expanding 12.4% in March. Consumer Confidence in the nation jumped more than 11 points MoM to 89.0 in May, the highest level in almost a year.
El Salvador is looking to introduce legislation that will make it the world’s first sovereign nation to adopt bitcoin (BTC) as legal tender, alongside the U.S. dollar.
Finance ministers of Canada, France, Germany, Italy, Japan, the UK, and the U.S., also known as the Group of Seven (G-7), backed a U.S. proposal that calls for corporations around the world to pay at least a 15% tax on earnings. The group will meet at a summit next week, and their agreement would provide needed momentum for upcoming talks planned with 135 countries in Paris. This could very well be a contentious fight, and we’ll be sitting ringside to see how it plays out in the coming months ahead of the G-20 meeting slotted for October.
Over the weekend the U.S. passed the 300 million vaccine dose milestone.
Friday’s payroll report for May missed expectations again, rising 559,000, which was still good enough to consider the recovery on track, but not so good as to indicate an overheating economy that could result in action by the Federal Reserve. The big picture is that outside of leisure/hospitality and education, employment is still over 3% below where it was pre-pandemic. Jobs outside of leisure and hospitality rose just 123,000.
During an interview with Bloomberg News, the former Federal Reserve chair and current U.S. Treasury Secretary Janet Yellen said President Joe Biden’s $4 trillion spending proposal would total about $400 billion each year — a level of spending she argued was not enough to create an inflation over-run.
President Biden rejected the Republican’s counteroffer on infrastructure but agreed to continue talks today. The House Transportation and Infrastructure Committee will have a committee vote on the $547 billion surface transportation bill on Wednesday.
U.S. equity markets posted minor gains last week, that left all within firing range of new all-time highs. The Nasdaq 100 is 1.9% below its prior high and the Nasdaq Composite 2.3%, while the Dow and S&P 500 closed less than 0.1% away from new highs. Friday saw the Technology Select Sector SPDR Fund (XLK) rise to its highest level in a month as Tech was the day’s strongest performer.
The energy sector, which sidelined in March and April, is on fire with oil prices approaching $70. The Energy Select Sector SPDR Fund (XLE) gained nearly 7% last week alone and is up nearly 50% year-to-date. To put that in perspective, that is the biggest gain for any sector at this point in the year going back to at least 1990.
Stocks to Watch
Apple will kick off its Worldwide Developer Conference today and its keynote has become a must-watch software event for what’s to come later in the year to its various devices.
The Information reports Tesla (TSLA) vehicle orders in China fell by nearly half in May compared to April, according to internal data, as the electric car pioneer grappled with public outcry and government criticism over its handling of consumer complaints. Early today Tesla CEO Elon Musk tweeted "Plaid+ is canceled. No need, as Plaid is just so good."
Chinese automaker BYD Company (BYDDF) shipped 100 units of its all-electric Tang SUV, the first batch of vehicles for planned delivery of 1,500 electric cars to Norway by the end of this year.
Goldman Sachs (GS), Citigroup (C), and Bank of America (BAC) are "among firms that have adjusted their risk controls at prime-brokerage operations," according to Bloomberg According to the report, the banks are being conservative and trying to prevent negative consequences from the steep highs and lows that came with trading GameStop (GME), AMC (AMC) and others.
In mid-May, Uber’s (UBER) ride-hailing business returned to pre-pandemic levels in the UK as the easing of lockdown restrictions spurred users to get back on the road faster than the company expected.
Google (GOOGL) agreed to pay a fine of ~$270 million as part of a settlement with French regulators regarding one of the first antitrust cases globally to allege it abused its leading role in the digital advertising sector.
Flex Ltd. (FLEX), the third-largest electronics contract manufacturer, shared its view the global chip shortage will last at least another year, lasting until mid to late 2022 “depending on the commodity.” The FT reports “Electronics manufacturers in Asia have also recently warned that the chip shortage was beginning to spread to TVs, smartphones and home appliances, with the situation made worse through stockpiling by Chinese groups hit by sanctions.”
TimkenSteel (TMST) will increase base pricing on all special bar quality products by $50 per ton effective for shipments beginning July 5, 2021.
Vulcan Materials (VMC) and U.S. Concrete (USCR) announced they have entered into a definitive merger agreement wherein Vulcan will acquire all of the issued and outstanding shares of U.S. Concrete common stock for a purchase price of $74.00 per share in cash.
Navistar (NAV) learned of a credible potential cybersecurity threat to its information technology system on May 20. On May 31, the company received a claim that certain data had been extracted from its IT system. Measures are ongoing as Navistar investigates the scope and impact of the cybersecurity incident.
After today’s market close, Coupa Software (COUP), Marvell (MRVL), and Vail Resorts (MTN) will be among the companies reporting their quarterly results. Those looking to get a jump on those reports and others in the coming days should visit Nasdaq’s earnings calendar page.
On the Horizon
- June 8: Balance of Trade, JOLTs Report, API Crude Oil Stocks
- June 9: Wholesale Inventories, Gasoline & Crude Oil Stocks
- June 10: Inflation, Weekly Jobless Claims, Monthly Budget Statement
- June 11: Michigan Consumer Sentiment
- June 15: Retail Sales, PPI, NY Empire State Manufacturing, Industrial Production, Business Inventories, NAHB Housing Market Index, Tic Flows, Foreign Bond Investment, Weekly API Crude Oil stock
- June 16: Building Permits, Housing Starts, Import/Export Prices, Weekly energy stocks, FOMC Economic Projections, and Interest Rate decision
- June 17: Weekly Jobless Claims, Philadelphia Fed Manufacturing
- June 21: Chicago Fed National Activity Index
- June 22: Existing Home Sales, weekly API Crude Oil Stock
- June 23: Current Account, Markit Manufacturing & Service PMI, New Home Sales, EIA Energy Stock
- June 24: Durable Goods Orders, Wholesale Inventories, Weekly Jobless Claims, GDP Price Index Q1, Goods Trade Balance, Corporate Profits Q1
- June 25: Personal Income & Spending, PCE Price Index, Michigan Consumer Sentiment
Thought for the Day
“Two things define you: Your patience when you have nothing and your attitude when you have everything.” ~ George Bernard Shaw
- Marvell (MRVL) is a constituent in the Tematica BITA Digital Infrastructure and Connectivity Index.
- Tesla (TSLA) is a constituent in Tematica Research’s Cleaner Living Index.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.