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Boeing plea, Paramount merger, French election - what's moving markets

Published 2024-07-08, 04:26 a/m
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Investing.com -- Wall Street looks set to start the new week on a negative note, as investors await the release of key inflation data and testimony from Fed chief Jerome Powell. Paramount Global agrees to merge with Skydance, while Boeing has accepted guilt to a criminal charge, netting a hefty fine. 

1. Futures lower ahead of key inflation release

U.S. stock futures edged lower Monday, consolidating at the start of a week that includes key inflation data, testimony from Fed chief Jerome Powell and the start of the quarterly earnings reporting season. 

By 04:10 ET (08:10 GMT), the Dow futures contract was 10 points, or 0.1%, lower, S&P 500 futures dropped 4 points, or 0.1%, and Nasdaq 100 futures fell by 20 points, or 0.1%.

The broad-based S&P 500 index registered its fourth positive week in the last five last week, amid growing hopes that cooling inflation and a slowing economy could lead to a Federal Reserve interest rate cut later this year.

The June consumer price index, which will be released Thursday, and comments from Federal Reserve Chair Jerome Powell to both the Senate and House during the week, will be in focus as investors seek more clues over future monetary policy.

The week also sees the start of the new earnings season, with a number of major banks, including Citigroup (NYSE:C) and JPMorgan Chase (NYSE:JPM), set to release their results at the end of the week. PepsiCo (NASDAQ:PEP) and Delta Air Lines (NYSE:DAL) are also set to post results.

2. Skydance and Paramount Global to merge

Skydance Media and Paramount Global (NASDAQ:PARA) have agreed to merge, the companies announced late Sunday evening, ending months of speculation.

Paramount’s class A stockholders will receive $23 per share in cash or stock, while Paramount’s class B shareholders will receive $15 per share. 

The total cash consideration in the deal for public shareholders will be $4.5 billion, while the overall deal is valued at over $8 billion as it will include a $4.2 billion investment in Paramount by a group comprising the Ellison Family and Redbird Capital.

The deal will see Skydance get access to Paramount's studio assets, streaming service Paramount+ and channels such as Nickelodeon, MTV and Comedy Central. 

The new entity will be led by Skydance’s David Ellison as chairman and CEO, and former NBC Universal CEO Jeff Shell (LON:SHEL) as president, and is the culmination of months of sometimes rocky talks.

“Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment,” Paramount Global chair Shari Redstone said. 

3. Boeing pleads guilty to criminal charge

Boeing (NYSE:BA) has agreed to plead guilty to a criminal fraud conspiracy charge to resolve a U.S. Justice Department investigation into two 737 MAX fatal crashes.

Under the deal, which requires a judge’s approval, Boeing has agreed to pay a $243.6 million fine. It would also result in the planemaker being branded a convicted felon, and could complicate the company's ability to secure lucrative government contracts.

“We can confirm that we have reached an agreement in principle on terms of a resolution with the Justice Department, subject to the memorialization and approval of specific terms,” Boeing said in a statement.

However, the plea spares Boeing a potentially costly trial, and could make it easier for the planemaker, which will have a new CEO later this year, to try to move forward as it seeks approval for its planned acquisition of Spirit AeroSystems (NYSE:SPR).

Boeing became exposed to criminal prosecution after the Justice Department in May found the company violated a 2021 settlement involving the fatal crashes.

4. France swings to the left

The leftwing New Popular Front appears to now be the dominant force in France’s National Assembly after Sunday's parliamentary election, after a surge to the left blocked the far-right National Rally party from gaining power.

National Rally had claimed the biggest portion of the national popular vote in the first round of parliamentary elections last week, beating New Popular Front into second and President Emmanuel Macron's centrist bloc into third.

However, the second round of voting has seen the left winning 182 seats, Macron's centrist alliance 168 and Le Pen's National Rally (RN) and allies 143.

There will be some relief within European circles that the far-right won’t be holding the reins of power in France, but the hugely fragmented parliament will likely herald a period of political instability, making it hard for anyone to push through a domestic agenda in the eurozone's second largest economy.

5. Crude hands back some gains

Crude prices slipped lower Monday, handing back some of the gains seen over the last four weeks, on easing geopolitical tensions in the Middle East.

By 04:10 ET, the U.S. crude futures (WTI) fell 0.7% to $82.57 a barrel, while the Brent contract dropped 0.6% to $86.03 a barrel.

Talks over a U.S. ceasefire plan aimed at ending the nine-month-old war in Gaza are under way, and being mediated by Qatar and Egypt.

Concerns over the Israel-Hamas conflict spreading to the wider Middle East region, potentially disturbing the supply of crude, have provided support for the oil markets.

Elsewhere, Hurricane Beryl is expected to make landfall in the middle of the Texas coast later on Monday, potentially passing through the biggest oil exporting regions in the state.

 

 

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