Here are five things you need to know for Tuesday, June 7:
1. – Stock Futures Edge Lower As Treasury Yield Rise
US equity futures edged lower Tuesday, while Treasury bond yields and the dollar continued their upward march, as investors peeled away from risk markets amid concern for the impact of central bank tightening on global rate markets.
The Reserve Bank of Australia spooked markets overnight with its second rate hike in as many months – and the biggest single-meeting move in 22 years – when its lifted its base rate by 50 basis points to 0.85% and said more increases were likely in the near future.
The bigger-than-expected hike pushed the Japanese yen to a fresh 20-year low of 132.72 against the US dollar, while adding further fuel to bond yields in key markets around the world, all of which are seeing a surge in headline inflation powered by higher energy prices and stubbornly high core rates linked to supply chain disruptions.
With the European Central Bank set to meet later this week, and the Fed’s June policy meeting just around the corner, traders are now looking for hawkish surprises and paring bets on growth stocks and risk markets.
The CME Group’s FedWatch tool is pricing in a 97.2% chance of a 50 basis point rate hike next week, while also placing a 12.1% probability on a 75 basis point move when the Fed meets next in July.
Still, the Atlanta Fed’s GDPNow forecasting tool pegs current US growth at 1.3%, a tally that would indicate a modest rebound from last quarter’s contraction and suggest that a solid economy underpins the current market, and indicates at least some confidence that the Fed can deliver. the ‘soft landing’ it’s aiming for.
European stocks were weaker across the board, with the region-wide Stoxx 600 down 0.53% in early Frankfurt trading, following on from a 1.1% decline for the MSCI ex-Japan benchmark in Asia.
In the US, benchmark 10-year Treasury bond yields held at 3.025% in overnight dealing while and the dollar index gained 0.22% against a basket of six global currencies to 102,656 in European trading.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 140 point opening bell dip while those linked to the S&P 500 are priced for a 21 point move to the downside. Futures linked to the Nasdaq are looking at 70 point opening bell slide.
2. – Kohl’s Shares Surge Amid Exclusive Takeover Talks
Kohl’s Corp. (KSS) – Get Kohl’s Corporation Report shares surged in pre-market trading after the struggling retailer said it’s in exclusive talks with the Franchise Group (FRG) – Get Franchise Group Inc. carry over a possible $ 8 billion takeover.
Franchise Group said it’s prepared to pay $ 60 a share for Kohl’s, and has entered a three-week exclusive discussion window that Kohl’s said would allow it to “FRG and its financing partners to finalize due diligence and financing arrangements and for the parties to complete the negotiation of binding documentation. “
Earlier this year, Sycamore Partners, a New York-based private equity group was ready to offer $ 65 a share for Kohl’s, a price that would be worth the Menomonee Falls, Wisconsin-based retailer at around $ 9 billion.
The move came just days after several media outlets said investor-backed activists Acacia Research offered $ 64 a share for Kohl’s following public criticism of the group’s management from activist investors Macellum Advisors, which owns 5% of the retailer, and the urging of a whole -enterprise sale after what it called a ‘lost year’ for the department store icon.
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Kohl’s shares were marked 12.8% higher in pre-market trading to indicate an opening bell price of $ 47.50 each.
Twitter (TWTR) – Get Twitter Inc. carry shares moved lower in pre-market trading as investors continue to discount the chances of Tesla (TSLA) – Get Tesla Inc. carry CEO Elon Musk completing his $ 44 billion takeover bid for the micro-blogging website.
Musk, who threatened to tear-up his merger agreement yesterday amid yet another dispute over the size and scope of so-called ‘fake accounts’ on the Twitter platform, was given support in the form of an investigation by Texas Attorney General Ken Paxton, who echoed Musk’s call for more data support its fake account claims.
“If Twitter is misrepresenting how many accounts are fake to drive up their revenue, I have a duty to protect Texans,” Paxton said.
Twitter said it stood by its earlier filings with the Securities and Exchange Commission, which suggest less than 5% of total accounts are spam or fake, but the injection of a Texas lawmakers – where Musk has recently moved his corporate headquarters – suggests and even deeper reluctance on the part of the world’s richest man to follow-through on his earlier effort to buy the group.
Twitter shares were marked 1% lower in pre-market trading to indicate an opening bell price of $ 39.18 each, a level that is 27.7% below Musk’s ‘best and final’ offer of $ 54.20 per share.
4. – Bitcoin Tumbles Back Below $ 30,000 As Rate Moves Clip Demand
Bitcoin prices retreated sharply in overnight trading, taking it back below the $ 30,000 mark, as surging interest rates reduced demand for the world’s largest cryptocurrency.
Bitcoin prices were last seen 5.7% lower on the session at $ 29,568.62, a move that extends its year-to-date decline to around 36%, with Coindesk reporting that over $ 200 million in positions have been liquidated over the past seven days.
The downside moves come as Congress begins to study a major bi-partisan bill brought by Senators Cynthia Lummis (R) of Wyoming and Kirsten Gillibrand (D) of New York that would place cryptocurrencies within the oversight scope of the Commodity Futures Trading Commission.
The bill would also give the Securities and Exchange Commission the prime role in overseeing digital assets that grant the owner “profits, liquidation preferences or other financial interests in a business entity.”
5. – Boris Johnson Damaged After Narrowing Winning No-Confidence Vote
UK Prime Minister Boris Johnson narrowly survived a no-confidence vote last night but vowed to carry on leading the government despite losing the support of nearly half of his Conservative Party peers.
Johnson, who has been heavily criticized for both his leadership style and series of rule-breaking headlines culminating with a Metropolitan Police fine for breaching Covid restrictions at 10 Downing Street during the peak of the 2020 pandemic, won last night’s vote by a 211 to 148 tally and cannot now, under current Party rules, face another challenge for at least a year.
“This is a government that delivers on what the people of this country care about most,” Johnson said in a statement. “We are on the side of hard-working British people, and we are going to get on with the job.”
However, the Rebels party has suggested the rules could be changed, and some analysts are predicting the level of support against the Prime Minister – at more than 40% of elected Conservative Party Members of Parliament – suggest Johnson may not be able to hold onto power through the summer.