This article was published on June 12th, 2024.

MARKET WRAPS

Stocks:

European stocks traded slightly higher as investors awaited Wednesday's two main catalysts: the U.S. consumer price index data and the latest Federal Reserve interest-rate decision.

"Markets are bracing for the Fed to leave rates unchanged but focus on whether policymakers stick to projecting three rate cuts for 2024 or scale back that outlook given sticky inflation," IG said.

"Today is a big day in terms of economic data and Fed announcement-it could determine the global market mood for the rest of the month, and a good part of summer," Swissquote Bank said.

Stocks to Watch

Galp 's decision to sell half its stake in a block located in the recent major oil discovery offshore Namibia will likely garner significant interest from a string of integrated oil majors, Citi said.

U.S. Markets:

Stock futures were rising slightly and bond yields saw meagre moves as investors eschewed big bets before the CPI report and the Fed decision.

Stocks to Watch

Oracle announced new artificial-intelligence deals with Google, Microsoft and OpenAI on Tuesday, overshadowing weaker-than-expected quarterly results. Shares rose 9%.

Paramount Global was down 2.3% after Shari Redstone ended discussions to sell her controlling stake to Skydance Media and merge the two companies.

Forex:

The euro has taken a significant hit in the aftermath of the European parliamentary elections and is expected to drop further towards support at $1.07, Swissquote Bank said.

The euro "remains heavily offered" against the dollar and "is preparing to test the $1.07 support to the downside."

The euro could face turbulence against the dollar later in the day, though, when U.S. inflation data are released and the Fed makes its policy announcement.

The dollar could fall if inflation data undershoot expectations and Powell signals interest-rate cuts are on their way, ING said.

The data could show core inflation fell to 0.2% month-on-month in May versus expectations it held at 0.3%, it said.

And the Fed could remove its statement about a lack of progress towards its inflation target. "Powell typically delivers a dovish press conference and the dollar has ended lower on the day over the last four consecutive FOMC meetings."

Bonds:

Inverted yield curves--where longer-dated bond yields trade below their shorter-dated counterparts--isn't a new norm and they should normalize, Pimco said.

"The long end of the yield curve will normalize from the fiscal side, while front-end yields will fall as interest rate cuts will be delivered."

In Europe, risks to the fiscal outlook are increasing, Pimco added. It also said that global yield curves will steepen as central banks cut rates.

Energy:

Oil prices rose on reports of falling U.S. crude oil inventories and on higher global demand views.

Commercial crude stocks are expected to have fallen by 1.2 million barrels last week, according to a Wall Street Journal survey.

The EIA raised its 2024 forecast for global oil consumption growth by around 200,000 barrels a day to 1.1 million barrels a day, while OPEC kept its bullish demand-growth estimates unchanged.

Metals:

Gold futures edged higher, remaining largely rangebound ahead of the U.S. CPI data and the Fed's rate decision.

DHF Capital SA said gold could rebound if core inflation data is weaker than expected, supporting an earlier interest-rate cut.

The metal could also find safe haven support from political events in Europe, with French President Emmanuel Macron's decision to call snap elections increasing political uncertainty in France, the eurozone's second-largest economy, DHF Capital added.

Commonwealth Bank of Australia said it isn't too surprising to see iron-ore prices fall back into the $100--$110-a-metric-ton range. It reckons such prices align with trends in Chinese steel demand and output, which have been fairly flat.

Sources: Morningstar

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