By Geoffrey Smith
Investing.com -- It’s a relatively quiet end to a busy week, with few economic data or earnings on the calendar and Federal Reserve Chairman Jerome Powell unlikely to add much to what he told Congress when he takes part in a conference later. His colleagues Eric Rosengren and Loretta Mester may have something fresher to say. EU leaders meet to discuss their recovery plan, but markets are subdued ahead of the quarterly expiry of options and futures on stock products. Oil prices are rising again as the economic re-opening narrative dominates ‘second-wave’ fears. Here’s what you need to know in financial markets on Friday, June 19th
1. A Flurry of Fed Speakers
Four senior officials from the Federal Reserve will fill the vacuum created by the lack of economic data and earnings on a light day for the diary. Boston Fed President Eric Rosengren gets the ball rolling at 8:15 AM ET (1215 GMT), to be followed by Chairman Jerome Powell, top banking supervisor Randall Quarles and the Cleveland Fed’s Loretta Mester in the course of the day.
With Powell having already spent two days this week talking to Congress, it’s not clear what more remains to be said about the course of the economy, beyond the officials’ reaction to the latest labor market data and the sustainability of the rebound so far.
2. Europe leaders meet
European Union leaders will discuss the European Commission’s proposal for a 750 billion euro ($840 billion) recovery package, which controversially includes 500 billion euro worth of grants to member states, in what has been seen as a big step towards more formal fiscal transfers within the bloc.
They’ll also be discussing the EU’s new multi-year budget framework, which of course means that there is no chance of major decisions at the meeting, given that the EU invariably thrashes these things out over months. However, the mood music will be important, with leaders anxious to convey to markets and voters that they’re serious about managing the current crisis better than they did the last one.
3. Stocks set to open higher ahead of 'quadruple witching'
Stocks are set to open slightly higher again, after a mixed close on Thursday. Friday marks the so-called ‘quadruple witching’ of expiry dates for derivative products on both indexes and individual stocks, which traditionally generates some elevated volatility.
By 6:30 AM ET (1030 GMT), the Dow Jones 30 Futures contract was up 220 points or 0.9%, while the S&P 500 Futures contract was up 0.7% and the Nasdaq 100 futures contract was up 0.8%.
The mood is being supported by, among other things, news that movie theater operator Cinemark (NYSE:CNK) will reopen most of its theaters by the end of July, without requiring visitors to wear masks, while JetBlue (NASDAQ:JBLU) will start selling tickets for 30 new routes under its post-pandemic strategy.
4. Sterling slides as U.K. retail rebound overshadowed by debt news
U.K. retail sales rebounded more sharply than expected in May, but the news was overshadowed by other data showing the steep rise in government debt as a result of the pandemic.
Retail sales rose 12% from what will probably turn out to have been the low point of the cycle in April, well ahead of expectations. However, the Office for National Statistics said in a separate release that national debt had exceeded 100% of GDP for the first time since 1963, due to the heavy borrowing started by the government to pay for its crisis mitigation measures.
The pound hit a three-month low against the euro and a new low for the month against the dollar, with sentiment still being hurt by the Bank of England’s apparent reluctance to increase monetary stimulus on Thursday. The BoE increased the overall envelope for its quantitative easing purchases by 100 billion pounds ($125 billion), but indicated that the pace of bond-buying will slow.
5. Crude hits $40 after OPEC+ reassurance
U.S. crude oil prices rose above $40 a barrel for the first time in 11 days after reassurance that the OPEC+ group of producers are largely sticking to their deal on output restraint.
By 6:30, WTI futures had retraced slightly to be up 2.7% at $39.87, while the global benchmark Brent contract was up 2.1% at $42.38 a barrel.
Elsewhere, Kirill Dmitriev, head of the Russian sovereign wealth fund and a key negotiator in the OPEC+ talks, said he saw little point in further extending the current output cuts beyond the end of July, given the rebound in demand. The cuts are due to start tapering in August.