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PCE, Spending Data, Europe's Gas Woe, SEC's Crypto Blow - What's Moving Markets

Economy Jun 30, 2022 07:00
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By Geoffrey Smith -- The U.S. releases the latest updates for personal income and spending, as well as the Federal Reserve's preferred measure of inflation. Stocks are expected to open in fragile mood. Europe's natural gas prices surge as Uniper, a big German energy group, says it needs a bailout. China's economy returns to growth in June, but there are more signs of weakness in Europe, where Sweden jacked up its key interest rate by half a point. Oil drifts as OPEC meets with allies, but the meeting is seen as a foregone conclusion. Here's what you need to know in financial markets on Thursday, June 30.

1. PCE prices, spending and income data

The U.S. will release figures for the Federal Reserve’s favored gauge of inflation in May. Core personal consumer expenditures, which reflect more accurately than the Consumer Price Index the real-time changes in the cost of living, are expected to have risen by 0.4% in May, a modest acceleration from April, while the annual increase is expected to moderate to 4.8% from 4.9% due largely to base effects.

Also of interest will be personal income and spending data for May, with spending growth expected to show a clear slowdown from April. Those numbers will be an important cross-check of the consumer confidence numbers that made the market fall out of bed on Friday.

Rounding off the day’s data excitement will be weekly jobless claims numbers. These have been trending gently, but nonetheless clearly, upwards for the last few weeks.  

2. China returns to growth; Europe weakens and Sweden hikes rates

China’s economy returned to growth in June, if its official purchasing managers index is a reliable guide. The PMI, which covers mainly the large state-owned enterprises, rose to 54.1 from 48.4 in May, with both manufacturing and services rising back above the 50 line that typically separates growth from contraction.

The economic news was less upbeat from Europe, where German unemployment leaped by 133,000 as Ukrainian refugees looking for work were added to the jobless rolls for the first time. German retail sales fell 3.6% on the year in May, while French inflation rose to 5.8% on the year.

Outside the Eurozone, U.K. house prices grew at their slowest rate in nine months, according to the lender Nationwide, while Sweden’s central bank raised its key rate by 50 basis points and said it would run down its asset purchases faster than planned to stop inflation becoming entrenched.  

3. Stocks set to open lower on caution ahead of data dump; Spirit postpones takeover vote

U.S. stocks are set to open lower again, amid the usual angst around higher inflation and higher interest rates, which was hardly eased by comments from Fed Chair Jerome Powell and other central bank chiefs on Wednesday. That’s left few in a mood to take risks ahead of the morning’s data dump.

By 06:15 AM ET (1015 GMT), Dow Jones futures were down 382 points, or 1.2%, while S&P 500 futures were down 1.5%, and Nasdaq 100 futures were down 1.8%. The S&P is on course to close out its worst first half to a year since the 1970s.

Stocks likely to be in focus later include chipmaker Micron (NASDAQ:MU), brewer Constellation Brands (NYSE:STZ), and Walgreens Boots Alliance (NASDAQ:WBA), all of which report earnings. WBA is likely to draw particular interest after its efforts to sell U.K. pharmacy chain Boots ran into trouble earlier this week.

Elsewhere, Spirit Airlines (NYSE:SAVE) has postponed its planned shareholder vote on rival offers from JetBlue (NASDAQ:JBLU) and Frontier Group (NASDAQ:ULCC) for another week. Xerox (NASDAQ:XRX) will also be in focus after announcing the death of its CEO John Visentin at 59.

4. Crypto slides as SEC rejects Grayscale's application for ETF status

Bitcoin slid further below $20,000 and Ethereum flirted with the $1,000 level after the Securities and Exchanges Commission again rejected Grayscale’s efforts to register its Bitcoin Trust as an Exchange-Traded Fund. Grayscale has sued the SEC in response.

ETF status would have set a precedent that could have greatly expanded the potential investor base for both the trust and crypto investment funds in general.

A decent amount of speculation on SEC approval had been baked into Bitcoin’s price for months, despite increasing signs of a tougher line toward crypto from the SEC under chairman Gary Gensler.

5 Oil drifts but European gas prices spike again as Uniper seeks bailout

Crude oil prices drifted ahead of a meeting of OPEC and its allies that is widely expected to be a formality, paving the way for an increase in output of 648,000 barrels a day from August.

Whether the so-called OPEC+ bloc can actually deliver that is, of course, another question, given the lack of spare capacity in the market and the increasing problems experienced by various members of the bloc due to past mismanagement of their oil industries.

TTF prices, meanwhile, surged another 5% to a new three-month high after German energy giant Uniper (F:UN01) said it is in talks for a government bailout, unable to cover the cost of replacing Russian gas shipments that have been cut by 60%.

PCE, Spending Data, Europe's Gas Woe, SEC's Crypto Blow - What's Moving Markets

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