MARKET WRAPS
Watch For:
Empire State Manufacturing Survey for May; Canada Housing Starts for April; earnings from Catalent, Freyr Battery, Monday.com, Tower Semiconductor
Today's Headlines/Must Reads
- China's Central Bank Keeps Key Policy Rates Unchanged
- Investors Are Nervous-and That Could Support Stocks
- $14 Billion Deal to Create Mega-Pipeline Company
- The World's Biggest Gold Miner Bets Big on Copper
- G-7 Leaders Expected to Take Aim at Chinese 'Economic Coercion'
Follow WSJ markets coverage here .
Opening Call:
Stock futures rose on Monday, with traders starting the week on a positive note as hopes build that the debt ceiling deadline can be resolved.
Despite a generally well-received earnings season and signs easing inflation can allow the Federal Reserve to halt its monetary tightening cycle, stocks have been unable to break out of their recent range as first banking sector anxiety and lately worries about a technical government debt default have restrained bulls.
But news over the weekend that talks between the White House and congressional leaders had been "constructive" and a second round of discussions is set for Tuesday boosted optimism that a solution can be reached.
"There has been some short covering on U.S. futures and oil markets after U.S. President Biden hinted that progress is being made on debt ceiling negotiations," SPI Asset Management said.
However, RBC Capital Markets warned against complacency given previous debt-ceiling deadlines have required significant market volatility to encourage politicians to reach agreement.
"[W]e've continued to remind investors that since 2011, getting Congress to strike a deal has seemed to occur only after the stock market has thrown a temper tantrum," RBC said.
Investors will also be looking to a slew of updates on the health of the U.S. consumer in coming days. These include retail sales data for April and results from Home Depot to be published on Tuesday, and Walmart earnings on Thursday.
Overseas Markets
Turkey's benchmark stock index fell more than 6% after results from its election suggested President Erdogan had performed better than expected, but not enough to avoid a runoff vote.
Other overseas stock indexes mostly gained. The Stoxx Europe 600 rose 0.3% while in Asia, the Nikkei 225 index added 0.8%, the Hang Seng rose 1.7%, and the Shanghai Composite index added 1.2%.
Stocks in the News
Newmont stock inched lower premarket, after it agreed to buy Australia's Newcrest Mining, concluding weeks of talks and marking a move into copper.
Oneok agreed to buy smaller rival Magellan Midstream Partners for about $14 billion. Oneok stock slipped in early premarket trading.
Other Stocks to Watch
NeoGames rose almost 120% after Australia's Aristocrat Leisure, a developer of mobile and casino games, agreed to buy the company for $29.50 a share in cash.
Shake Shack gained 0.8% after The Wall Street Journal reported that Engaged Capital, which has a roughly 6.6% stake in the burger chain, was planning to run a proxy fight for three board seats at the company.
Forex:
The Bank of England could leave interest rates steady in June, potentially weakening sterling, if data on Tuesday show U.K. wage growth moderated, ING said.
Sterling will be "ultra sensitive" to the data as the BOE has stressed its next policy decision will largely depend on wages and inflation figures, ING added.
The "downside risks are quite material" for sterling if wage growth eases and prompts the BOE to hold rates in June as markets are pricing in 20 basis points of rate rises, it said.
"We expect this to be mirrored in a higher EUR/GBP, which we expect to rebound to above 0.8800 by the end of this month."
Read EUR/USD May Have Peaked at April High of 1.1095 for Now, Charts Show
Energy:
Oil prices edged lower, adding to sharp losses this month, as demand signals look weak while supplies have remained strong.
"The sell-off in the market has been unrelenting over recent weeks, with negative sentiment rising following concerns over the macro environment and what it could eventually mean for oil demand," ING said.
Oil supplies could also get a boost in the coming days if a pipeline linking them to Turkey restarts as suggested by Iraqi officials last week. (
Metals:
Base metals were mixed in London and gold nearly flat, with concerns about the macroeconomic outlook still weighing on investors at the start of a light data week for policy makers.
"China's uneven recovery has weighed on sentiment in the base metals market," ANZ Research said but added that physical demand indicators are showing signs of improvement.
"Stockpiles held on exchange are down, while operating rates of downstream processors in China have bounced sharply."
TODAY'S TOP HEADLINES
$14 Billion Deal to Create Mega-Pipeline Company
Pipeline operator Oneok agreed Sunday to buy smaller rival Magellan Midstream Partners for about $14 billion, a deal that would form one of the biggest U.S. companies involved in transporting and storing energy.
The deal's price tag, including $8.8 billion in equity and $5.1 billion in cash, amounted to a 22% premium over Magellan's common units as of Friday. Oneok said it would assume Magellan's $5 billion in net debt. The deal was expected to close in the third quarter, pending the approval of regulators and investors.
The World's Biggest Gold Miner Bets Big on Copper
SYDNEY-Newmont said it has agreed to acquire Australia's Newcrest Mining for $17.5 billion, concluding weeks of talks over a sweetened offer by the U.S. company that wants to complete the largest-ever M&A deal in the gold-mining industry.
Newmont's pursuit of Newcrest illustrates how gold producers are seeking to make deals as the industry is struggling to make large discoveries of the precious metal. It also extends a battle for control among miners for commodities essential for making electric vehicles and renewable-energy infrastructure, as Newcrest's gold mines also produce significant amounts of copper.
Activist Shareholder Plans Proxy Battle at Shake Shack
Activist investor Engaged Capital is planning to run a proxy fight for three board seats at high-end burger chain Shake Shack, according to people familiar with the matter.
Including swaps, Engaged has a roughly 6.6% stake, the people said.
KKR-Backed Envision Healthcare Files for Chapter 11 to Put Lenders in Control
Envision Healthcare has filed for chapter 11, beginning one of the largest healthcare-related bankruptcy cases ever and likely wiping out the $3.5 billion stake that private-equity firm KKR acquired in the physician-staffing company in 2018.
KKR's loss on Envision would be among the steepest write-downs the private-equity firm has swallowed in recent years and highlights some of the continuing instability in the healthcare industry. KKR has already written off its investment in Envision, The Wall Street Journal reported previously.
Vice Media to Sell Itself as It Files for Bankruptcy
Vice Media, the once-hot digital news startup that was valued at $5.7 billion at its peak, said it has received a rescue offer and filed for bankruptcy protection.
The company, whose assets include Vice News, Vice TV, Refinery29 and Motherboard, on Monday said a group of its creditors, including Soros Fund Management, Fortress Investment Group and Monroe Capital, has agreed to buy Vice for about $225 million and take on "significant liabilities." The agreement is subject to higher bids from other parties, it said.
Aristocrat Agrees to Pay $1.2 Billion for Nasdaq-Listed NeoGames
SYDNEY-Australian gaming technology developer Aristocrat Leisure agreed to pay $1.2 billion for Nasdaq-listed NeoGames.
Aristocrat on Monday said that it had offered $29.50 a share in cash and will fund the transaction with its existing cash reserves. NeoGames shares last traded at $12.84, having dropped 11% on Friday following its first-quarter results.
Parts Maker Rejects Demand to Recall Air-Bag Inflators Regulators Call Unsafe
An auto-parts manufacturer is rejecting a demand from federal regulators that it recall 67 million air-bag inflators that the regulators say are unsafe, setting up a potential legal battle that would have wide-ranging ramifications for the industry.
In a letter released publicly Friday, the National Highway Traffic Safety Administration said it had tentatively concluded that the inflators made by Tennessee-based ARC Automotive contain a "safety-related defect" and should be recalled. The inflators have been linked to exploding incidents that have killed two people and injured others.
Abortion Bans Can Help Make This Cheap, Accessible Birth Control Pill a Hit
As efforts to crack down on abortion increase around the U.S., contraceptives are bound to play an increasingly important role in family planning. But for many women, cost and access are still prohibitive factors. A cheaper, over-the-counter option could help close that gap while creating a sizable market for generic drugmaker Perrigo.
Advisers to the Food and Drug Administration earlier this week recommended that Perrigo's oral contraceptive, called Opill, be made available without prescription. If the recommendation is adopted by the FDA, it would help widen access to birth control around the country.
Exxon Goes Lean With End of 'God Pod' Era
After inhabiting a palatial executive suite known as the "God Pod" for more than 25 years, Exxon Mobil's top brass is downsizing to less-celestial chambers.
(MORE TO FOLLOW) Dow Jones Newswires
05-15-23 0619ET
